USDA experts surprised the market with a lower forecast of global wheat production and stocks

In the February wheat balance sheet, USDA experts unexpectedly lowered their forecast for global wheat production and stocks for the market, although analysts expected an increase in crop estimates for Argentina and Australia in line with forecasts from local agencies.

Compared to the January report, the new world wheat balance sheet for my 2021/22 made the following changes::

• Rating initial inventory increased by 1 million tons to 289.87 million tons (295.99 million tons in 2020/21 mg and 280.7 million tons in 2019/20 MG) due to the adjustment of production and consumption estimates in 2020/21 MG.
• Forecast world-class production reduced by 2.18 million tons to 776.42 million tons (775.9 million tons in 2020/21 mg and 763.5 million tons in 2019/20 MG) due to a decrease in the harvest in Syria and Iraq due to a long drought. For Argentina, the production forecast was left at 20.5 million tons (17.65 million tons in 2020/21 mg), and for Australia – at 34 million tons (33.3 million tons in 2020/21 MG), although local agencies estimate it at 21.8-22.1 million tons and 35.5 million tons, respectively.
• Rating global consumption wheat increased by 0.61 million tons to 788.08 million tons (782.5 million tons in 2020/21 mg and 748.33 million tons in 2019/20 MG) due to an increase in its feed consumption in Canada by 1.7 million tons, which compensates for a reduction in wheat feed consumption in China by 1 million tons.
• Forecast world exports increased by 2.29 million tons to 206.69 million tons, in particular for India by 1.75 million tons to a record 7 million tons due to increased supplies to Asia, for Argentina – by 0.5 million tons to a record 14 million tons, Canada – by 0.2 million tons to 15.2 million tons. export at the beginning of the season.
• Forecast import increased by 2.2 million tons to 204.76 million tons (194.18 million tons in my 2020/21) due to an increase in imports by North African countries by 1.5 million tons.
• As a consequence, the forecast global final reserves reduced by 1.74 million tons to the lowest level since 2016/17 MG - 278.2 million tons (288.82 million tons in 2020/21 mg and 299.22 million tons in 2019/20 mg), while analysts estimated them at 280 million tons. Argentina – by 0.63 million tons, the United States – by 0.56 million tons.

The New Balance Sheet surprised market participants who expected an increase in global inventory estimates, so it supported prices.

• March futures for soft winter SRW wheat in Chicago rose на 2.3/ton to.288.4/ton ((278.4/ton a month ago).

At the same time prices for European and Black Sea wheat decreased:

• on Paris Euronext from 1.75 €/t to 262.75 €/t or 300 € /t (310 € /t a month ago),
• on the Chicago Stock Exchange by 1 1/ton to 3 315/Ton (3 327.5/ton a month ago).

Low export rates and reduced demand will increase pressure on wheat prices in the second half of the season.