A new USDA report lowers forecasts of wheat production, consumption, exports and stocks

In a June report, USDA experts lowered their forecasts for world wheat production, consumption and ending stocks compared to May, which led to another jump in stock prices.

Compared to the May report, the estimate of initial wheat stocks in 2022/23 MY was reduced by 0.32 million tons to 279.4 million tons (291.57 million tons in 2021/22 MY and 297.92 million tons in 2020/21 MY) .

The forecast of world wheat production decreased by 1.4 million tons to 773.43 million tons (779.03 million tons in 2021/22 MY and 775.72 million tons in 2020/21 MY), in particular for the EU - by 0.4 million tons to 136.1 million tons (138.42 million tons in 2021/22 MY) and for India due to drought - by 2.5 million tons to 106 million tons (109.59 million tons). This partially offsets the increase in production in Russia by 1 million tons to 81 million tons (75.16 million tons) and the United States - by 0.21 million tons to 47.26 million tons (44.79 million tons). For Ukraine, Canada and Australia, production forecasts remained unchanged. At the same time, the Russian agency ICAR has raised the forecast of wheat harvest in the country by 2 million tons to 87 million tons.

World consumption forecast decreased by 1.53 million tons to 785.99 million tons (791.21 million tons in 2021/22 MY) due to reduced use, including feed, in India and reduced production of food, seeds and industrial use in Argentina and Sri Lanka.

The estimate of world exports was reduced by 0.3 million tons to 204.59 million tons (199.39 million tons), in particular for India - by 2 million tons to 6.5 million tons (8.03 million tons), but for Russia it increased by 1 million tons to 40 million tons.

The forecast of world imports was raised by 0.2 million tons to 201.46 million tons (195.39 million tons), but for China it was left at 9.5 million tons.

The forecast of final stocks was reduced by 0.17 million tons to a 6-year low of 266.85 million tons (279.4 million tons in 2021/22 MY and 291.57 million tons in 2020/21 MY).

According to the report, prices for American wheat almost did not react, while for European wheat rose:

• fell by $ 0.18 / t to $ 393.4 / t in July futures for soft winter SRW wheat in Chicago (-10% for the month),
• increased by $ 3.22 / t to $ 427.1 / t in July futures for hard winter HRW wheat in Kansas City (-9.2%),
• fell from $ 0.92 / t to $ 448.8 / t July futures for dormant HRS wheat in Minneapolis (-7.4%),
• increased by $ 1 / t to $ 403.25 / t August futures for Black Sea wheat in Chicago (+ 2.7%),
• September wheat futures on Paris-based Euronext (-5.6%) rose by € 5.5 / t to € 391.75 / t or $ 411 / t.

Despite a significant drop in prices during the month, they remain high, and may even resume growth if Ukraine does not unblock export ports in the near future with the help of Western allies.