A fairly neutral wheat balance in the USDA report adds pressure on quotes

In November's supply and demand report, USDA experts left little to no change in the global wheat balance sheet, as a sharp increase in the crop forecast for Kazakhstan was offset by production cuts elsewhere, so there was no impact on 2024/25 stocks.

 

During the month, world wheat quotations fell by 4.6-7.7% against the background of harvesting in Australia and Argentina, as well as a decrease in prices in the EU, in particular due to the fall in the exchange rate of the euro against the dollar.

 

Compared with the September estimates, the new wheat balance for 2024/25 MR has undergone the following changes:

 

• The estimate of initial reserves was increased by 0.03 to 266.25 mln t (273.59 mln t in FY 2023/24) as a result of the balance sheet adjustment for FY 2023/24.
• The global production forecast was increased by 0.65 to 794.73 million tons (790.42 million tons in 2023/24 FY and 789 million tons in 2022/23 FY), in particular for Kazakhstan - by 2 to 18 (12.1) million t, while estimates for Argentina were reduced by 0.5 to 17.5 (15.85) million tons, Brazil – by 0.5 to 8.5 (8.1) million tons, the EU – by 0.4 to 122.6 (134.87) million tons, the Russian Federation – by 0.5 to 81.5 (91.5) million tons. For the USA and Ukraine, the forecasts were left unchanged.
• The global consumption forecast was increased by 0.87 to 803.41 (797.75) million tons, primarily for Kazakhstan.
• The estimate of world exports was reduced by 1.15 to 214.67 (221.31) million tons, in particular for Kazakhstan – by 0.5 to 10 (8) million tons and Turkey.
• The estimate of world imports was reduced by 0.76 to 210.01 (221.83) million tons, in particular for China – by 0.5 to 11.5 (13.64) million tons, Kazakhstan – by 0.5 to 0.5 (2.5) million tons, while the forecast for North African countries was increased by 0.5 to 32.4 (31.27) million tons and the countries of Southeast Asia - by 0.3 to 30.05 (30.6) million tons.
• The estimate of world ending stocks was reduced by 0.1 to 257.6 (266.25) million tons, although analysts predicted their decrease to 256.79 million tons. Reduction of stocks in Argentina, China and Brazil is offset by their increase in Kazakhstan and Turkey.

 

According to the report, the December futures changed:

• grew by 0.2% to $210.36/t - for soft winter SRW wheat in Chicago (-4.6% compared to the data after the release of the October report),
• fell by 0.8% to $207.33/t - for HRW hard winter wheat in Kansas City (-7.1%)
• fell by 0.8% to $218.64/t - HRS durum spring wheat in Minneapolis (-7.7%)
• rose by 0.2% to 215.75 €/t or $231.2/t - for wheat on the Paris Euronext (-6.1%).

 

Recent tenders in Algeria and Egypt have confirmed the presence of a significant amount of fairly cheap wheat on the world market, which is supported by harvests in Australia and Argentina.

 

In November and December, analysts' attention will be focused on precipitation on winter wheat crops in Ukraine and the Russian Federation, the shortage of which may lead to a speculative increase in prices.