Wheat prices rose to a 9-month high amid lower USDA estimates of ending stocks in 2024/25 MY

Wheat prices continue to rise amid frosts in northern Europe and Russia, as well as the USDA’s lowering of global wheat stocks to a 10-year low.

In the May WASDE supply and demand report, the forecast for global wheat production was raised to a record level. However, the increase in consumption and exports in 2024/25 MY will lead to the reduction of ending stocks.

Compared to the balance sheet for 2023/24 MY, the new wheat balance sheet for 2024/25 MY has undergone the following changes:

• The estimate of beginning stocks was reduced to 257.8 mln tonnes (270.4 mln tonnes in 2023/24 MY) due to higher consumption in the previous season.
• The forecast for global production has been increased to a record 798.19 million tons (787.82 million tons in 2023/24 MY, 789.19 million tons in 2022/23 MY, 781.3 million tons in 2021/22 MY and 775.72 million tons in 2020/21 MY), in particular for the United States – by 1.3 to 50.6 million tons, Canada – by 2.1 to 34 million tons, Australia – by 3 to 29 million tons, Argentina – by 1.1 to 17 million tons, India – by 3.4 to 114 million tons, Kazakhstan – by 2.4 to 14.5 million tons, China – by 3.4 to 140 million tons, which compensates for the reduction of the harvest in Ukraine by 2 to 21 million tons (although the UGA estimates it at 20 million tons, and the Ministry of Agrarian Policy – at 19.2 million tons), in Russia – by 3.5 to 88 million tons (IKAR estimates it at 91 million tons, SovEcon – at 89.6 million tons), the EU – by 2.2 to 132 million tons, the UK – by 2.8 to 11.2 million tons.
• The estimate of global consumption was increased to a record 802.37 mln tonnes (800.34 mln tonnes in 2023/24 MY, 791.02 mln tonnes in 2022/23 MY, 782.22 mln tonnes in 2021/22 MY), with the largest increase for India. At the same time, the global consumption of wheat for feed will decrease, and most of all – in China.
• The forecast of global exports was increased to 216 million tons (215.65 million tons in 2023/24 MY, 220.17 million tons in 2022/23 MY and 202.98 million tons in 2021/22 MY), in particular for the United States – by 1.5 to 21.09 million tons, Canada – by 0.5 to 24.5 million tons, Australia – by 2 to 22.5 million tons, Argentina – by 2.5 to 11.5 million tons, Kazakhstan – by 1 to 10.5 million tons. At the same time, the estimates were lowered for Ukraine – by 3.5 million tons to 14 million tons, Russia – by 1.5 million tons to 52 million tons, and the EU – by 1 million tons to 34 million tons.
• The forecast for global imports was lowered to 209.42 (213.74, 211.74, and 199.37) million tons, in particular for the EU – from 13.5 to 11 million tons and China from 11.5 to 11 million tons due to increased domestic production in the main importing countries.
• Estimates of ending stocks were lowered to the lowest level since 2015/16 MY of 253.61 mln tonnes, which is 1.6% lower than in 2023/24 MY, although analysts estimated them at 257.37 mln tonnes. The decline in stocks in the EU from 16.7 to 14.44 mln tonnes and in Russia from 11.44 to 7.99 mln tonnes is partially offset by the increase in the US from 18.71 to 20.85 mln tonnes and in India from 7.5 to 8.5 mln tonnes.

According to the report, the July wheat futures rose:

• by 4% to 243.8 $/t – for soft winter SRW wheat in Chicago (+17.2% compared to the data after the report in April),
• by 3.3% to 247.4 $/t – for hard winter HRW wheat in Kansas City (+16.4%),
• by 1.4% to 264.6 $/t – for hard spring HRS wheat in Minneapolis (+11.6%),
• by 1.9% to 249.5 €/t or 268.7 $/t – September wheat futures on the Paris Euronext (+16.3%).

According to the Commitment of Traders from the CFTC, the number of short positions in wheat futures in Chicago as of May 7 decreased by 5506 to 42360 contracts, and in Kansas City – by 5597 to 24013 contracts, which is the largest reduction in such positions since October 2023 and indicates that traders are taking profits after speculative price increases.

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