USDA lowers 2023/24 wheat stocks estimate but raises wheat production, consumption and export forecasts

In a February report, USDA experts again raised their forecasts for global wheat production, consumption and exports in FY 2023/24, while lowering their estimate of ending stocks to the lowest level since FY 2015/16. However, after the publication of the balance sheet, stock market quotations fell by 2-3% under the pressure of increased offers.

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

• The initial reserves estimate was reduced by 0.35 to 271.21 mln t (272.4 mln t in FY 2022/23) as a result of balance sheet adjustments for FY 2022/23.
• The global production forecast was increased by 0.8 to 785.7 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 Argentina - by 0.5 to 15.5 (12.55) million tons, as well as Iraq and Kazakhstan. At the same time, the estimate for the EU was reduced by 0.3 to 134 million tons, Brazil – to 8.1 million tons, Great Britain – to 14 million tons.
• The global consumption forecast was increased by 1.1 to 797.5 million tons (790.93 million tons in 2022/23 FY and 782.22 million tons in 2021/22 FY), in particular for India - by 1.1 to 111 (108 .68) million tons against the background of the government's sale of reserves to combat inflation.
• The estimate of world exports was increased by 1.15 to 210.69 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 15 (17.12 ) million tons, Argentina – by 0.5 to 10.5 (3.66) million tons, Australia – by 0.5 to 19.5 (31.82) million tons, while estimates for Great Britain were reduced by 1, 1 to 0.8 million tons, Brazil – by 0.3 to 2.2 (2.69) million tons, India – by 0.1 to 0.3 (5.38) million tons.
• The estimate of world imports was increased by 0.74 to 209.85 (211.74 and 199.37) million tons, in particular for the EU - by 1 to 12 (12.1) million tons thanks to active deliveries from Ukraine. At the same time, estimates for China were reduced by 0.5 to 12 (13.28) million tons, as well as for the countries of the Middle East and North Africa.
• The forecast for global ending stocks was reduced by 0.7 to the lowest since 2015/16 MR 259.4 (271.56) million tons, in particular for India, China and Ukraine, although analysts expected an increase in the estimate to 260.5 million tons. production in the new season, there may be a significant shortage of wheat, given the constant increase in its consumption.

After the release of the report, March wheat futures fell:

• by 2.3% to $215.5/t – for soft winter SRW-wheat in Chicago (-1.6% compared to the data after the release of the January report),
• by 3% to $220.8/t – for HRW hard winter wheat in Kansas City (-2.4%).
• by 1.9% to $251.2/t - for HRS durum spring wheat in Minneapolis (-2.3%).
• by 1.8% to €205.25/t or $220.2/t - for wheat on the Paris Euronext (-5.2%).

An increase in wheat export forecasts from Ukraine, Australia and Argentina and a decrease in the import forecast for China added pressure on quotations, and the market has not yet reacted to the lower end stocks estimate.