Wheat prices fell after a significant decline in export and import forecasts in the USDA report

In the February supply and demand report, USDA experts slightly increased the forecast for global wheat production and significantly raised the forecast for global consumption, leading to a reduction in the estimate of global ending stocks for the MY 2024/25. A sharp reduction in wheat export forecasts for major exporters and imports for China led to a decline in exchange quotations, which had risen by 5.6-8.7% over the month due to frosts in the USA and the rise in corn prices.

Compared to the January estimates, the new global wheat balance for the 2024/25 marketing year underwent the following changes:

• The estimate of initial stocks remained at 267.49 million tons (274.27 million tons in the 2023/24 marketing year).
• The forecast for global production was increased by 0.55 to 793.79 million tons (791.24 million tons in the 2023/24 marketing year and 789 million tons in the 2022/23 marketing year), including an increase for Kazakhstan by 0.58 to 18.5 (12.11) million tons and for Argentina by 0.2 to 17.7 (15.85) million tons, while the forecast for Australia remained at 32 (26) million tons, although local agencies estimate the harvest at 33-35 million tons.
• The forecast for global consumption was increased by 1.83 to 803.72 (797.83) million tons due to increased use for feed in the EU, Kazakhstan, and Thailand. For Ukraine, the estimate was increased by 0.2 to 6.9 (6.7) million tons.
• The estimate for global exports was reduced by 3 to 209 (221.22) million tons, including a reduction for the EU by 1 to 28 (38) million tons, Russia by 0.5 to 45.5 (55.5) million tons, and Ukraine by 0.5 to 15.5 (18.58) million tons, while forecasts for Turkey and Mexico were reduced due to a decline in demand from importers.
• The estimate for global imports was reduced by 3.67 to 204.81 (221.83) million tons, including a reduction for China by 2.5 million tons to a 5-year minimum of 8 (13.64) million tons due to reduced purchases and rejection of previously purchased batches.
• The forecast for global ending stocks was reduced by 1.26 to 257.56 (267.47) million tons, including a reduction for China by 2.5 million tons, which is partially compensated by an increase in stocks in Kazakhstan, Ukraine, and Russia. Analysts estimated stocks at 258.6 million tons.

Based on the report data, March futures for wheat slightly decreased:

• by 0.4% to $212/t for soft winter SRW wheat in Chicago (+8.7% compared to the data after the January report release),
• by 0.7% to $217/t for hard winter HRW wheat in Kansas City (+7.5%), by 0.7% to $227.2/t for hard spring HRS wheat in Minneapolis (+5.8%),
• by 0.3% to €236/t or $244.5/t for wheat on the Paris Euronext (+1.3%).

Forecasts of a worsening global economic situation, especially in importing countries, are slowing down wheat import themes, which will soon increase pressure on quotations, especially amid China’s rejection of wheat from Australia and Canada.

Additionally, it is worth considering the significant wheat stocks in the EU, where exports over 7 months of the MY 2024/25 decreased by 57% compared to the previous season to 13 million tons, which is 46% of the forecast.

Tags: USDA Report, wheat, crop forecast, prices