Wheat prices fell after significant reductions in export and import forecasts in USDA report

In the February supply and demand report, USDA experts slightly increased the forecast for world wheat production and significantly increased the forecast for world consumption, as a result of which they lowered the estimate of world ending stocks in 2024/25 MY. A sharp reduction in wheat export forecasts for major exporters and imports for China led to a drop in stock prices, which rose by 5.6-8.7% during the month against the background of frosts in the USA and rising corn prices.

Compared to January estimates, the new world wheat balance for the 2024/25 MY has undergone the following changes:

• The initial reserve estimate was left at 267.49 million tons (274.27 million tons in 2023/24 MY).
• The forecast for world production was increased by 0.55 to 793.79 million tons (791.24 million tons in 2023/24 MY and 789 million tons in 2022/23 MY), in particular for Kazakhstan - by 0.58 to 18.5 (12.11) million tons and for Argentina - by 0.2 to 17.7 (15.85) million tons, while for Australia the forecast was left at 32 (26) million tons, although local agencies estimate the harvest at 33-35 million tons.
• The forecast for world consumption is increased by 1.83 to 803.72 (797.83) million tonnes due to increased feed use in the EU, Kazakhstan and Thailand. For Ukraine, the estimate is increased by 0.2 to 6.9 (6.7) million tonnes.
• The estimate of world exports was reduced by 3 to 209 (221.22) million tons, in particular for the EU – by 1 to 28 (38) million tons, the Russian Federation – by 0.5 to 45.5 (55.5) million tons, Ukraine – by 0.5 to 15.5 (18.58) million tons, while for Turkey and Mexico the forecasts were reduced due to a drop in demand from importers.
• The estimate of world imports was reduced by 3.67 to 204.81 (221.83) million tons, in particular for China - by 2.5 million tons to a 5-year low of 8 (13.64) million tons due to reduced purchases and cancellation of previously purchased batches.
• The forecast for world ending stocks has been reduced by 1.26 to 257.56 (267.47) million tonnes, in particular for China – by 2.5 million tonnes, which is partially offset by an increase in stocks in Kazakhstan, Ukraine and the Russian Federation. Analysts estimated stocks at 258.6 million tonnes.

According to the report, March wheat futures fell slightly:

• by 0.4% to $212/t – for soft winter SRW wheat in Chicago (+8.7% compared to data after the release of the January report),
• by 0.7% to $217/t – for durum winter HRW wheat in Kansas City (+7.5%),
• by 0.7% to $227.2/t – for durum spring HRS wheat in Minneapolis (+5.8%),
• by 0.3% to €236/t or $244.5/t – for wheat on the Paris Euronext (+1.3%).

Forecasts of a worsening global economic situation, especially in importing countries, are slowing down wheat imports, which will increase pressure on quotations in the near future, especially against the backdrop of China's refusal to import wheat from Australia and Canada.

It is also worth considering the significant wheat stocks in the EU, where in the 7 months of the 2024/25 MY, exports decreased by 57% compared to the previous season to 13 million tons, which is 46% of the forecast.