Wheat Prices Continue to Decline Amid More Optimistic USDA June Report Data Than Traders Expected

Wheat prices continued to decline following the release of the June USDA report, which presented more optimistic data than traders expected, despite a forecasted drop in global production for the 2024/25 MY by 7.44 million tons.

In the global wheat balance for the 2023/24 MY, based on data up to the end of the season, initial stocks were sharply revised upward (+0.6 million tons to 271.04 million tons), export estimates were increased by 3.3 million tons to 218.95 million tons, and the import forecast was raised by 3.46 million tons to 217.2 million tons, while the consumption forecast was reduced by 1.26 million tons to 799.08 million tons, which will increase initial stocks for the new season by 1.76 million tons to 259.56 million tons.

Additionally, the 2023/24 MY wheat export forecast was revised upward for the EU by 2 to 37 million tons, for Canada by 1 million tons to 25 million tons, for Ukraine by 0.6 million tons to 18.1 million tons, and for Russia by 0.5 million tons to 54 million tons, but was reduced by 0.5 million tons for Australia to 20 million tons and for Argentina to 8.5 million tons and Kazakhstan to 9 million tons.

In the June report, the global wheat balance for the 2024/25 MY underwent the following changes compared to the May estimates:

- Initial stock estimates were raised by 1.76 million tons to 259.56 million tons (271.04 million tons in 2023/24 MY) due to a revision of the 2023/24 MY balance.

- The global production forecast was sharply reduced by 7.44 million tons to 790.75 million tons, which is still higher than 787.59 million tons in the 2023/24 MY, including a sharp reduction in the Russian harvest by 5 million tons to 83 million tons (91.5 million tons in 2023/24 MY). Forecasts were also lowered for Ukraine by 1.5 million tons to 19.5 million tons (23 million tons), for the EU by 1.5 million tons to 130.5 million tons (134.15 million tons), which will be offset by an increase in the U.S. wheat harvest by 0.5 million tons to 51 million tons (49.3 million tons) and an increase in the Argentine harvest by 0.5 million tons to 17.5 million tons (15.9 million tons).

- The global consumption estimate was reduced by 4.33 million tons to 798.04 million tons (799.08 million tons in 2023/24 MY), mainly due to lower consumption in the EU by 2 million tons, in Russia by 1 million tons, and in Ukraine by 0.5 million tons.

- The global export forecast was reduced by 3.19 million tons to 212.81 million tons (218.95 million tons in 2023/24 MY), including reductions for Russia by 4 million tons to 48 million tons, Ukraine by 1 million tons to 13 million tons, and Australia by 0.5 million tons to 22 million tons. This reduction will be offset by an increase in exports from the U.S. by 0.7 million tons to 21.8 million tons (19.6 million tons) and the EU by 1 million tons to 35 million tons (37 million tons), as prices for American and European wheat will be more competitive amid reduced exports from the Black Sea region.

- The global import forecast was reduced by 2.34 million tons to 207.08 million tons (217.2 million tons), including a reduction for the EU by 1 million tons to 10 million tons (13 million tons) due to rising global prices and increased corn consumption for feed purposes.

- The ending stocks estimate was reduced by 1.34 million tons to 252.27 million tons, which will be 2.9% less than in the 2023/24 MY, although it is higher than analysts' expectations of 251.2 million tons. The reduction in stocks in the EU by 3 million tons to 11.44 million tons (15.19 million tons) and in Canada by 0.5 million tons to 2.62 million tons (1.87 million tons) will be partially offset by an increase in stocks in Argentina by 0.9 million tons to 3.25 million tons (4.29 million tons) and in Australia by 1 million tons to 3.77 million tons (3.57 million tons).

Following the report's release, July wheat futures declined:
- by 1.6% to $226.7/t for soft red winter (SRW) wheat in Chicago (-7.5% compared to post-May report data),
- by 2.9% to $234.1/t for hard red winter (HRW) wheat in Kansas City (-5.7%),
- by 1.6% to $245.5/t for hard red spring (HRS) wheat in Minneapolis (-7.8%),
- by 2.7% to €249.5/t or $259.2/t for September wheat futures on the Paris Euronext (-4%).