Ahead of the USDA report, wheat prices remain low

Wheat futures on world exchanges fell in price during the past week, only on Monday they were supported by data on the state of crops in the USA.

On the eve of the release of the USDA report, traders reduced activity, especially in view of the optimistic forecast of the FAO, in which the world wheat production in 2023/24 MR was estimated at 786 million tons, which would be only 1.3% inferior to the indicator of the current season.

Analysts predict that USDA will leave the estimate of world wheat stocks at 267 million tons, but export forecasts for Ukraine and the EU may be adjusted.

According to the NASS USDA report, during the week of April 3-9, the number of winter wheat crops in good or excellent condition decreased by 1% to 27% (32% last year), in particular in Kansas - up to 13%, Texas - up to 17%, Oklahoma - up to 20%, that is, in the main wheat-producing states, the condition of crops is very bad.

Due to abundant rainfall and low temperatures, 1% of the planned area was sown with spring wheat, compared to 6% last year and 4% on average.

Exports of wheat from the USA as of April 6 amounted to 17.2 million tons (from USDA forecasts), which is 2.5% lower than last year's pace.

May futures for US wheat rose yesterday:

• by 0.4% to $249.3/t - for soft winter SRW wheat in Chicago (-1.6% for the week),
• by 1.3% to $321.9/t - for hard winter HRW wheat in Kansas City (+0.4%).
• by 0.3% to $321.5/t - for hard spring HRS-wheat in Minneapolis (-1.5%).

On Friday, May wheat futures on the Paris Euronext fell 1% to €251.25/t or $273.5/t (-1.6%), while Chicago Black Sea wheat remained at 280, $25/t (+0.3%).

According to the European Commission, in the 2022/23 FY, as of April 2, EU countries exported 23.15 million tons of wheat (with the USDA forecast of 37 million tons), which is 8% higher than the 21.52 million tons of the 2021/22 season. The main buyers of wheat were Morocco - 3.58 million tons or 15.5% of exports (compared to last year's 5%), Algeria - 3.38 million tons, Nigeria - 1.97 million tons, Egypt - 1.63 million tons, Saudi Arabia - 1.24 million tons. Wheat imports to the EU in 2022/23 are expected to grow by 233% compared to the previous season to 6.91 million tons, primarily due to an increase in supplies from Ukraine to 4.45 million tons , which will make 64.4% of total imports.

Wheat exports from Ukraine for April 1-10 decreased to 337,000 tons, and in total in the season reached 13.3 million tons, against the USDA forecast of 13.5 million tons.

Purchase prices for wheat in the ports of Ukraine remain at the level of $195-197/ton, but a small number of traders are actively buying wheat, so the supply will exceed the demand in the near future.