USDA Raises World Wheat Production, Consumption and Export Forecasts, But Lowers 2023/24 Stocks Estimate

In a December report, USDA experts raised their forecasts for world wheat production and exports for the first time after four months of declines, sending wheat prices, which hit a four-month high last week, down slightly.

Upgrading crop and export forecasts for Canada and Australia will put upward pressure on prices in the near term, especially amid a possible increase in Argentina's crop and new export policies.

Compared to the November estimates, the December wheat balance for the 2023/24 MR underwent the following changes:

• The estimate of initial reserves was increased by 0.3 mln t to 269.85 mln t (272.4 mln t in 2022/23 MY) as a result of data adjustments for 2022/23 MY.
• The global production forecast was increased by 1 to 783.01 million tons (789.49 million tons in 202/23 FY, 781.3 million tons in 2021/22 FY and 775.72 million tons in 2020/21 FY), in particular for Australia - by 1 to 25.5 (40.55) million tons, Canada – by 0.95 to 31.95 (34.34) million tons, while for Brazil the forecast was reduced by 1 to 8.4 (10.6) million t, and for Argentina, Ukraine and the Russian Federation, the estimates remained unchanged.
• Global consumption forecast increased by 1.82 to 794.66 mln t (792.12 mln t in FY 2022/23 and 782.22 mln t in FY 2021/22) due to an increase in feed use in the EU by 0.5 and in China by 0.5 million tons, as well as in Thailand and South Korea.
• The estimate of world exports was increased by 2.18 to 207.19 million tons (220.5 million tons in 2022/23 MR and 202.98 million tons in 2021/22 MR), in particular for Australia by 1 to 18.5 (31, 82) million tons, the USA – by 0.7 to 19.7 (20.65) million tons, Canada – by 0.5 to 23.5 (25.6) million tons, Ukraine – by 0.5 to 12, 5 (17.12) million tons.
• The estimate of world imports was increased by 2 to 206.73 (211.74 and 199.37) million tons, in particular for the EU - by 1 to 8.5 (12.1) million tons, the CIS countries - by 0.9 million tons, China - by 0.5 to 12.5 (13.4) million tons.
• The forecast for global ending stocks was cut by 0.49 to the lowest level since 2015/16 MR of 258.2 (269.85) million tonnes, while analysts estimated them at 258.86 million tonnes.

Based on the data of the report, the March wheat futures decreased:

• by 1.7% to $232.1/t - for soft winter SRW-wheat in Chicago (+8.8% compared to the data after the release of the November report),
• by 1% to $242.9/t - for hard winter HRW wheat in Kansas City (+2.1%).
• by 1% to $268/t - for HRS durum wheat in Minneapolis (-0.7%).
• by 0.8% to €230.25/t or $247.8/t - for wheat on the Paris Euronext (-1.3%).