USDA experts cut forecasts for world wheat production, consumption and exports, but quotes remain low

In the December supply and demand report, USDA experts slightly lowered their forecasts for world wheat production, consumption and exports. Following the MY 2023/24 balance sheet adjustment, the opening stock estimate has been raised, resulting in an increased forecast for MY 2024/25 ending stocks, although they will still be the lowest since MY 2015/16.

Wheat quotations, after falling in November by 4.6-7.7% in December, fell by another 2.2-5.6% against the background of weak demand.

Compared to the November estimates, the new wheat balance for the MY 2024/25 has undergone the following changes:

• The estimate of initial reserves has been increased by 1.5 to 267.41 million tons (274 million tons in MY 2023/24) after adjusting the balance for MY 2023/24.
• The global production forecast was reduced by 1.78 to 792.95 million tons (791.24 million tons in MY 2023/24 and 789 million tons in MY 2022/23), in particular for the EU – by 1.3 to 121.3 (134 .87) million tons and Brazil – by 0.4 to 8.1 (8.1) million tons. For Argentina, Canada and Australia, the forecasts were left unchanged.
• The estimate of world consumption was reduced by 0.94 to 802.47 (797.86) million tons, in particular for Ukraine by 0.3 to 6.4 million tons.
• The global export forecast was reduced by 1.02 to 213.65 (221.89) million tons, in particular for the Russian Federation – by 1 to 47 (55.5) million tons and the EU – by 1 to 29 (37.95) million tons, while the estimate for Ukraine was increased by 0.5 to 16.5 (18.58) million tons and the USA – by 0.7 to 23.13 (19.24) million tons.
• The global import forecast was reduced by 0.46 to 209.55 (221.83) million tons, in particular for China – by 0.5 to 11 (13.64) million tons.
• The estimate of world ending stocks was increased by 0.31 to 257.88 (267.41) million tons, although analysts expected their further reduction.

Based on the data of the report, December wheat futures rose:

• by 0.1% to $199.2/t – for soft winter SRW-wheat in Chicago (-5.6% compared to the data after the release of the November report),
• by 1.3% to $201.8/t – for hard winter HRW wheat in Kansas City (-2.7%).
• by 0.1% to $213.95/t – for hard spring HRS-wheat in Minneapolis (-2.2%).
• by 0.8% to €229/t or $241/t – March wheat futures on the Paris Euronext (+6.1%).

In the near term, wheat prices will depend on harvest results in Australia and Argentina, but overall the global balance sheet remains under pressure from significant supply.