The USDA raised its consumption forecast and lowered its estimate of wheat stocks, but prices continued to fall

USDA’s April balance sheet for wheat turned out to be more bearish than analysts expected, as the estimate of ending stocks was significantly lowered due to an increase in the global consumption forecast. However, quotations reacted to the report by falling further.

Compared to the March estimates , the April wheat balance for the 2022/23 MR underwent the following changes:

• The estimate of initial reserves was increased by 0.64 mln t to 272.09 mln t (286.33 mln t in FY 2021/22) as a result of the balance adjustment for FY 2021/22.
• The global production forecast was raised by 0.08 million tons to 789.02 million tons (781.3 million tons in FY 2021/22 and 775.72 million tons in FY 2020/21), although the estimates for the main producing countries were not changed. For the EU, the forecast was reduced by 0.36 to 134.34 million tons, and for Argentina – by 0.35 to 12.55 million tons.
• The estimate of world consumption was increased by 2.87 million tons to 796.06 million tons (793.9 million tons in 2021/22 FY and 782.22 million tons in 2020/21 FY), in particular for the EU due to active feed consumption – on 2 to 111 (108.25) million tons, China – by 2 to 146 (148) million tons, India – by 2 to 107.75 (109.88) million tons, which will be partially compensated by a reduction in consumption in Ukraine, the USA , the Russian Federation and the CIS countries.
• The global export forecast was reduced by 1.2 to 212.7 (202.9) million tons, in particular for the EU – by 2 to 35 (32) million tons, Argentina – by 1 to 5.5 (16) million tons , Brazil – by 0.9 to 3.5 (3.07) million tons, India – by 0.15 to 5.35 (8.03) million tons, while estimates for Ukraine were increased by 1 to 14, 5 (18.87) million tons, the Russian Federation – by 1.5 to 45 (33) million tons, although the local agency SovEkon estimates exports from the Russian Federation at 44.1 million tons.
• The forecast of world imports was reduced by 2.11 to 206.3 (199.24) million tons, in particular for the countries of the Central African Republic – by 2.5 to 24.4 (27.03) million tons, as well as for Nigeria and the countries of the Middle East east For China, the estimate was increased by 2 to 12 (9.57) million tons, which will be a record level since 1995/96 MY. China significantly increased imports of wheat, especially Australian wheat, and became the world’s main wheat buyer in 2022/23.
• The estimate of global ending stocks was reduced by 2.15 million tons to the lowest level since 2015/16 FY of 265.05 million tons (272.09 million tons in FY 2021/22 and 286.33 million tons in FY 2020/21), although analysts they were estimated at 267.06 million tons. A significant reduction in stocks in India, Ukraine, and the Philippines is partially offset by their increase in the EU, the United States, and Syria.

After the release of the report, May wheat futures fell in price:

• by 0.7% to $247.7/t – for soft winter SRW wheat in Chicago (-2.1% for the month),
• by 0.9% to $319/t – for hard winter HRW wheat in Kansas City (+8.5%).
• by 1.5% to $316.8/t – for hard spring HRS-wheat in Minneapolis (+2.9%),
• by 0.1% to $280/t – for Black Sea wheat in Chicago (-3.5%).

May futures for wheat on the Paris Euronext yesterday rose by 0.4% to €252.25/t or $275.6/t (-13.7% for the month).

Tags: prices, USDA Report, wheat