Wheat quotes fall amid improving wheat balance for MY 2024/25

In the May supply and demand report, USDA experts improved the world wheat balance for MY 2024/25 and presented the first balance for MY 2025/26, in which they increased the forecast for world wheat production to a record level. Against this background, wheat quotes on US exchanges fell by 1.7-1.8% yesterday, losing 3-9.8% for the month after a decrease of 2.4-3.5% in the previous month.

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

• The estimate of initial reserves was increased by 0.05 million tons to 269.11 million tons (274.27 million tons in MY 2023/24).
• The global production forecast has been increased by 2.86 million tons to 799.71 million tons (791.24 million tons in MY 2023/24 and 789 million tons in MY 2022/23) due to adjusted estimates for the EU and other countries.
• The forecast for global consumption has been reduced by 1.58 million tons to 803.62 million tons (797.83 million tons in MY 2023/24).
• The forecast for world ending stocks was increased by 4.51 million tons to 265.21 million tons (269.5 million tons in MY 2023/24), although analysts estimated them at 261 million tons.

The increase in the forecast for production, consumption, and opening stocks in the 2025/26 MY improved the wheat balance in the new season.

According to the USDA forecast, in the MY 2025/26, global wheat production will increase by 8.8 million tons compared to the previous season to a record 808.5 million tons, in particular in the EU – by 13.9 to 136 million tons, Argentina – by 1.5 to 20 million tons, Russia – by 1.4 to 83 million tons, and Canada – by 1 to 36 million tons. This more than compensates for the decrease in production in Kazakhstan by 4.1 to 14.5 million tons, Australia – by 3.1 to 31 million tons, the USA – by 1.4 to 52.3 million tons, and in Ukraine by 0.4 to 23 million tons, although the USDA FAS estimated the harvest at 17.9 million tons the day before.

It is expected that world wheat consumption in MY 2025/26 will increase by 4.4 million tons compared to the previous season to 808 million tons, and ending stocks will remain at 265.73 million tons. In June, the estimate of stocks may be increased due to the adjustment of the balance for MY 2024/25 to the EU, where only 17 million tons of wheat were exported out of the USDA forecast of 26.5 million tons.

According to the forecast, wheat exports from Russia in the MY 2025/26 will increase compared to the current season from 43.5 to 45 million tons, and from Ukraine – from 16 to 16.5 million tons, of which 14 million tons have been exported so far.

A positive world wheat balance will increase pressure on world prices and reduce demand for expensive Ukrainian and Russian old-crop wheat, which may lead to an increase in ending stocks.

According to the report, July wheat futures fell:

• by 1.7% to $189.3/t – for soft winter SRW wheat in Chicago (-4.4% compared to data after the April report was released),
• by 1.9% to $186.7/t – for hard winter HRW wheat in Kansas City (-9.8%),
• by 1.7% to $214.6/t – for durum spring HRS wheat in Minneapolis (-3%).

Meanwhile, September wheat futures on the Euronext Paris exchange rose 0.9% yesterday to €204.5/t or $227/t (-5.9%).

Increased precipitation in Ukraine and Russia improves crop conditions and wheat harvest prospects. In the US, 66% of the planned area has been sown with spring wheat (59% on average over 5 years), the number of winter wheat crops in good or excellent condition increased by 3% to 54% in a week, and weather conditions are conducive to crop development.

Tags: prices, wheat