A sharp increase in the forecast of world wheat production collapsed stock market quotations

After USDA experts reduced the forecast of world wheat production in June by 7.44 million tons, in July the estimate was increased by 5.44 million tons, after which wheat quotations fell by 1.5-3%, losing 5.5-14 for the month. 7%. In addition, the forecast for wheat exports from the Russian Federation in 2023/24 was increased by 1.5 to 55.5 million tons.

Compared to the June estimates, the world wheat balance for the 2024/25 MR has undergone the following changes:

• The estimate of initial reserves was increased by 1.43 to 260.99 mln t (271.04 mln t in FY 2023/24) following a review of the balance sheet for FY 2023/24.
• The forecast of world production was increased by 5.44 to 796.19 million tons (788.95 million tons in 2023/24 MR and 789 million tons in 2022/23 MR), in particular for the USA - by 3.6 to 54.7 (49 ,3) million tons due to high productivity and the expansion of sowing areas, Canada - by 1 to 35 (32) million tons against the background of favorable weather, Argentina - by 0.5 to 18 (15.85) million tons, Pakistan - by 1, 4 to a record 31.4 million tons. For the EU, the forecast was reduced by 0.5 to 130 (134.15) million tons, and for Ukraine and the Russian Federation it was left at the levels of 19.5 and 83 million tons, respectively.
• The estimate of world consumption was increased by 1.9 to 799.94 (798.98) million tons due to increased consumption of food products, seeds and industry.
• The forecast of world exports was left at the level of 212.89 (220.61) million tons, as estimates for the USA increased by 0.7 to 22.5 (19.24) million tons and Canada by 0.5 to 25 (25) million tons will be compensated by their decrease for the EU by 0.5 to 34.5 (37) million tons.
• The global import forecast was reduced by 0.8 to 206.7 (218.8) million tons, primarily for the countries of Southeast Asia, although it was increased by 1 to 12 (14) million tons for China.
• The estimate of world ending stocks was increased by 4.97 to 257.24 (260.99) million tons, while analysts estimated them at 252.2 million tons. The stocks will grow the most in the United States, in China, Argentina, Pakistan and Canada, but will decrease in the EU, Iran and the Russian Federation. In the US, stocks will grow by 22% or 2.64 million tons per year to a 5-year high of 23.3 million tons.

According to the data of the report, July futures decreased:

• by 3.1% to $197.7/t – for soft winter SRW-wheat in Chicago (-14.7% compared to the data after the release of the June report),
• by 1.5% to €220/t or $240/t – September wheat futures on the Paris Euronext (-13.4%).

At the same time, HRW hard winter wheat futures in Kansas City rose by 2.1% to $221.9/t (-5.5%) and remained at $228.2/t futures for hard spring HRS- wheat in Minneapolis (-7.6%).