An increase in export forecasts for Ukraine and the Russian Federation, as well as stocks in the USA, lowers wheat prices

In the April WASDE supply and demand report, USDA experts increased their forecast for 2023/24 wheat production, consumption and exports, while lowering their estimate of global ending stocks. The main attention is paid to the change in the structure of exports and the redistribution of final balances between exporters, which led to a decrease in wheat quotations on the US and EU exchanges by 1.3-2.2%.

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

• The estimate of initial reserves was reduced by 0.1 to 271 mln t (272.4 mln t in FY 2022/23) as a result of the balance sheet adjustment for FY 2022/23.
• The global production forecast was increased by 0.66 to 787.36 million tons (789.34 million tons in 2022/23 FY, 781.3 million tons in 2021/22 FY, 775.72 million tons in 2020/21 FY), in particular for EU - by 0.5 to 134.15 (134.2) million tons.
• The estimate of world consumption was increased by 1.12 to 800.1 million tons (791.02 million tons in 2022/23 MR and 782.22 million tons in 2021/22 MR), in particular for India - by 2 to 106.2 million tons , while the use of wheat for feed will decrease in the USA and the Russian Federation.
• The global export forecast was increased by 1.34 to 213.47 million tons (220.17 million tons in 2022/23 MR and 202.98 million tons in 2021/22 MR), in particular for Ukraine - by 1.5 to 17.5 (17.12) million tons thanks to the lowest prices for Ukrainian wheat on the world market, for the Russian Federation - by 1 to 52 (47.5) million tons against the background of high export rates, for Australia - by 0.5 to 20.5 (31, 82) million tons, Brazil – by 0.3 to 2.5 million tons, while the estimate for Argentina was reduced by 0.5 to 10 (3.66) million tons, Kazakhstan – by 0.5 to 9.5 (10 .87) million tons and the EU - by 2 to 34.5 (35.08) million tons due to increased competition with Black Sea grain. For the USA, the forecast was left at the level of 19.32 (20.65) million tons.
• The forecast of world imports was increased by 1.13 to 212.34 (211.74 and 199.37) million tons, in particular for the EU - by 0.5 to 13.5 (12.1) million tons thanks to active deliveries from Ukraine, for countries of North Africa - by 0.7 to 30.1 million tons against the background of low prices for the new crop.
• The estimate of global ending stocks was reduced by 0.56 to 258.27 million tons, which will be the lowest since the 2015/16 MY level and will be 5% inferior to the indicator of 2022/23 MY, although analysts expected an increase in stocks to 259.14 million tons. decreased for India by 2.1 to 6.9 (9.5) million tons, Ukraine – by 1.7 to 1.58 (2.9) million tons, while increased for the EU – by 1.52 to 16, 69 (16.04) million tons, the USA - by 0.6 to 18.98 (15.5) million tons, and Kazakhstan - by 0.5 to 2.13 (3.27) million tons.

Based on the data of the report, July futures fell in price:

• by 1.3% to $208.1/t – for soft winter SRW-wheat in Chicago (+5.3% compared to the data after the release of the report in March),
• by 1.6% to $212.6/t – for HRW hard winter wheat in Kansas City (-1.7%).
• by 2.2% to $237.1/t - for HRS hard spring wheat in Minneapolis (-2.7%).
• by 1.5% to €214.5/t or $230/t – September wheat futures on the Paris Euronext (+10.8%).