USDA expects a record wheat harvest and reduced wheat stocks in MY 2023/24

In the May report, USDA experts released the first wheat balance for 2023/24 MY, which led to an increase in stock prices.

• In 2023/24 MY, global wheat production is expected to increase compared to the previous season by 1.5 million tons to a record 789.8 million tons, in particular in Argentina (which will recover from the drought) by 6.9 to 19.5 million t, in Canada due to the expansion of sowing areas – by 3.2 to an almost record 37 million tons, in the EU – by 4.7 to 139 million tons due to favorable rainfall (except for Spain and Portugal), in the USA – by 0.3 to 45.2 million tons (although analysts estimated it at 48.7 million tons), in India – by 6 to 110 million tons, in China – by 2.3 to 140 million tons, which is partially compensated by a decrease in production in Australia – by 10 to 29 million tons (the local ABARES estimates it at 28.2 million tons), Ukraine – by 21% or 4.4 million tons to 16.5 million tons (UZA estimates it at 17 million tons), Kazakhstan and the Russian Federation – by 10, 5 to 81.5 million tons due to a decrease in the area of sowing and productivity (while SovEkon estimates it at 86.8 million tons).
• The forecast of world consumption of wheat in 2023/24 has been reduced compared to the previous season by 3 million tons to 791.7 million tons, against the background of a reduction in its use for feed in Ukraine, India, the USA, China, and the Russian Federation.
• The global wheat export forecast was reduced by 5.5 million tons to 209.7 million tons, in particular for Ukraine – by 5 to 10 million tons (UGA estimate – 14 million tons), Australia – by 10 to 21 million tons, the United States – by 1 .7 to 19.7 million tons, India – by 0.5 to 4.8 million tons, while for Argentina the estimate was increased by 8 to 13.5 million tons, the EU – by 3.5 to 38 million tons, Canada – by 1.5 to 27.5 million tons, the Russian Federation – by 1 to 45.5 million tons. Despite the reduction in production, the Russian Federation will increase exports thanks to significant transitional stocks, and will remain the world’s largest exporter of wheat in 2023/24 MY.
• The estimate of world wheat ending stocks in 2023/24 was reduced by 1.9 to 264.3 million tons, although analysts estimated them at 259.7 million tons. Stocks will grow in China and India, but will decrease in the USA, the EU and the Russian Federation, and the ratio of stocks to consumption could be the lowest since MY 2014/15.

In the balance sheet for 2022/23 MY, USDA experts lowered estimates for wheat production and consumption, but sharply increased forecasts for exports and stocks, which surprised analysts.

Compared to the April estimates, the new wheat balance for 2022/23 MY has undergone the following changes:

• The forecast of initial reserves was increased by 0.58 to 272.67 million tons (286.33 million tons in MY 2021/22).
• The estimate of world production was reduced by 0.76 to 788.26 million tons (781.3 million tons in MY 2021/22 and 775.72 in MY 2020/21).
• The forecast of world consumption was reduced by 1.41 to 794.65 million tons (793.9 million tons in 2020/21 MR and 782.22 million tons in 2020/21 MY).
• The estimate of world exports was increased by 2.5 to 215.2 (202.98) million tons, in particular for Ukraine – by 0.5 to 15 million tons, Canada – by 1 to 25 million tons, Australia – by 2.5 to 31 million tons, Great Britain – by 0.5 to 1.8 million tons, while it was reduced for the EU – by 0.5 to 34.5 million tons, Brazil – by 0.5 to 3 million tons, Kazakhstan – by 0.5 to 10 million tons, the Russian Federation – by 0.5 to 44.5 million tons (SovEkon estimates 44.4 million tons). For China, the import estimate was increased by 1.5 to 13.5 million tons.
• The forecast of world ending stocks was raised by 1.23 to 266.28 million tons (272.09 million tons in MY 2021/22 and 286.33 million tons in MY 2020/21), although analysts estimated them at 265 million tons.

Based on the data of the report, July wheat futures rose in price:

• by 1.2% to $233/t – for soft winter SRW wheat in Chicago (-6.3% for the month),
• by 4.2% to $322.2/t – for hard winter HRW wheat in Kansas City (+1%).
• by 1.1% to $310.9/t – for hard spring HRS-wheat in Minneapolis (-1.9%),
• by 0.6% to $265.75/t – for Black Sea wheat in Chicago (-5.4%).

Tags: USDA Report, wheat