USDA lowered its global production forecast but raised its estimate of wheat stocks

In the November report, as in the previous four, USDA experts lowered forecasts for world wheat production and exports. But quotations reacted to this by falling, given the increase in the estimate of the harvest in the Russian Federation and final world stocks.

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

• The estimate of initial reserves has been increased by 2 million t to 269.55 million t (272.4 million t in FY 2022/23) as a result of adjustments to data for Argentina and Australia in FY 2022/23.
• The global production forecast was reduced by 1.45 to 781.98 million t (789.49 million t in 2022/23 FY, 781.3 million t in 2021/22 FY and 775.72 million t in 2020/21 FY), in particular for India – by 3 to 110.55 (104) million tons, Kazakhstan – by 1 to 12 (16.4) million tons, Great Britain – by 0.45 to 14.3 million tons, Brazil – by 0.4 to 9 ,4 (10.6) million tons, Argentina - by 1.5 to 15 (12.55) million tons, although the BAGE exchange estimates the harvest at 15 million tons, and the RGE exchange - at 13.5 million tons. For the Russian Federation, the estimate increased by 5 to 90 (92) million tons (against the official forecast of 93 million tons), while the export estimate remained unchanged.
• The global consumption estimate is left at 792.84 million tonnes (792.36 million tonnes in FY 2022/23 and 782.22 million tonnes in FY 2021/22), and will exceed production for the second consecutive season.
• The global export forecast was reduced by 1.29 to 205 million tons (220.42 million tons in 2022/23 FY and 202.98 million tons in 2021/22 FY), in particular for Argentina – by 1.5 to 10 (4) million t, India - by 0.5 to 0.5 (5.4) million tons, while for Ukraine the estimate was increased by 1 to 12 (17.1) million tons.
• The forecast of world imports was left at the level of 204.7 (211.97 and 199.37) million tons, but for China it was increased by 1 to 12 (13.4) million tons.
• The estimate of world ending stocks was increased by 0.56 to 258.69 (269.55) million tons, in particular for the USA, China, Argentina and the Russian Federation, while it was slightly reduced for India, Ukraine and Brazil. Analysts estimate reserves at 258.4 million tons.

For the USA, the production forecast remained at the level of 49.31 million tons, and exports - 19.05 million tons, while the estimate of ending stocks was increased by 0.38 to 18.6 million tons.

Based on the data of the report, the December wheat futures decreased slightly:

• by 2% to $213.4/t - for soft winter SRW wheat in Chicago (+1.6% compared to data after the release of the October report),
• by 1.2% to $237.8/t - for HRW hard winter wheat in Kansas City (-4.3%).
• by 0.1% to $269.9/t - for hard spring HRS wheat in Minneapolis (+1.5%),
• by 1% to €233.25/t or $248.9/t - for wheat on Paris Euronext (0%).

The improvement of weather conditions in the Northern Hemisphere promotes the development of winter crops and puts pressure on stock market quotations for wheat.