USDA predicts increased consumption and reduced supply and stocks of wheat in FY 2023/24

In a March report, USDA experts again raised their forecasts for global wheat production, consumption and exports in FY 2023/24, lowering their estimate of ending stocks. Stock market quotations reacted to this by increasing by 0.8-2.4%, although during the month they fell by 2-9%.

In the current season, world wheat consumption is expected to grow by 8.15 million tons compared to the previous season to 799 million tons, which will exceed production by 12.3 million tons (they were the same last year), as a result of which stocks will decrease to 10- annual minimum

Compared to the February estimates, the new wheat balance for the 2023/24 MR has undergone the following changes:

• The estimate of initial reserves was reduced by 0.11 mln t to 271.1 mln t (272.4 mln t in FY 2022/23) as a result of data adjustments for FY 2022/23.
• The global production forecast was increased by 0.96 to 786.7 million tons (789.17 million tons in 2022/23 FY, 781.3 million tons in 2021/22 FY and 775.72 million tons in 2020/21 FY), in particular for Australia - by 0.5 to 26 (40.55) million tons, Argentina - by 0.4 to 15.9 (12.55) million tons, the Russian Federation - by 0.5 to 91.5 (92) million tons , Iraq and Kazakhstan, while for the EU the estimate was reduced by 0.35 to 133.65 (134.2) million tons.
• The estimate of world consumption was increased by 1.46 to 798.98 mln t (790.83 mln t in 2022/23 MR and 782.22 mln t in 2021/22 MR) due to active use of feed in the EU, Indonesia and Kazakhstan.
• The global export forecast was increased by 1.44 to 212.13 million tons (220.17 million tons in 2022/23 MR and 202.98 million tons in 2021/22 MR), in particular for Ukraine by 1 to 16 (17.12) million tons, Australia - by 0.5 to 20 (31.82) million tons, and Turkey, while the estimate for the USA was reduced by 0.41 to 19.32 (20.65) million tons.
• The forecast of world imports was increased by 1.32 to 211.21 (211.74 and 199.37) million tons, in particular for the EU by 1 to 13 (12.1) million tons thanks to active deliveries from Ukraine, Kazakhstan - by 0.5 to 2.5 million tons against the backdrop of increased purchases in the Russian Federation, for the CIS countries - by 0.3 million tons, while the estimate for China was reduced by 1 to 11 (13.28) million tons due to the increase in corn imports.
• The estimate of global ending stocks was cut by 0.61mt to the lowest since 2015/16 MR at 258.83mt, while analysts had estimated them at 259.12mt. The estimate for China was reduced by 1 to 132 (138.82). million tons, Ukraine - by 0.7 to 3.28 (3.5) million tons, the EU - by 0.35 to 15.17 (16.5) million tons, while for the USA it increased by 0.4 to 18 .3 (15.5) million tons and the Russian Federation - by 0.5 to 12.44 (14.64) million tons.

Based on the data of the report, the May futures for wheat rose:

• by 1.7% to $197.6/t - for soft winter SRW-wheat in Chicago (-9% compared to the data after the release of the February report),
• by 2.4% to $216.3/t - for HRW hard winter wheat in Kansas City (-2%)
• by 1.2% to $243.5/t - for hard spring HRS-wheat in Minneapolis (-3.2%),
• by 0.8% to €193.5/t or $211.7/t - wheat futures on the Paris Euronext (-6%).

US wheat inventories are 18% higher than last year, but traders will soon turn their attention to production forecasts and low inventories for the new season, which will turn markets around.