The USDA lowered its forecast for the global wheat crop, but raised its estimate of global stocks, so quotes were almost unchanged

In September's supply and demand report, USDA experts lowered their 2024/25 global wheat production forecast and raised their forecast for consumption and ending stocks (due to an adjustment to opening stocks), which surprised the market. For the USA and the Russian Federation, the balances were left unchanged, although analysts expected a decline in the forecast for the harvest in the Russian Federation and exports from the USA. Wheat quotations on the exchanges yesterday fell by 0.1-0.9%, but in general for the month they increased by 3.8-6.9%.

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

• The opening stock estimate was raised by 2.89 to 265.25mt (271.04mt in 2023/24 FY) after a 2.75mt Canadian stock estimate was adjusted, according to local StatCan data, which revised the previous season's figures.
• The global production forecast was reduced by 1.4 to 796.88 million tons (790.54 million tons in 2023/24 FY and 789 million tons in 2022/23 FY), in particular for the EU - by 4 to 124 (134.87) million t (although the Strategie Grains agency estimates it at 114.4 million t), while the estimate for Australia was increased by 2 to 32 (26) million t due to good weather (the local ABARES estimates the harvest at 31.8 million t) and Ukraine by 0 .7 to 22.3 (23) million tons, which corresponds to the official collection data.
• The forecast of world consumption was increased by 0.88 to 804.9 (798.92) million tons, as the increase in the use of wheat for feed compensates for the reduction of consumption in the EU by 1.5 million tons.
• The estimate of world exports was increased by 1.65 to 216.51 (221.5) million tons, in particular for Ukraine – by 1 to 15 (18.4) million tons (at the limit of 16.2 million tons agreed by the Memorandum), Australia – by 2 to 25 (20) million tons, Canada – by 1 to 26 (25.44) million tons, while it was reduced for the EU by 2.5 to 31.5 (37) million tons.
• The estimate of world imports was increased by 1.87 to 210.27 (218.8) million tons, in particular for the EU - by 0.5 to 11.5 (13) million tons and the countries of Southeast Asia - by 1.8 million tons .
• The forecast for global ending stocks has been raised by 0.6 to the lowest since 2015/16 MR at 257.22 (265.25) million tons, as a reduction in stocks in Australia, Turkey and some other countries by 0.6 to 257.2 million tons will compensated by their increase in Canada, Brazil and Kazakhstan. At the same time, analysts estimated reserves at 255.3 million tons.

On the basis of the almost neutral report, September wheat futures fell:

• by 0.1% to $212.56/t – for soft winter SRW-wheat in Chicago (+7.8% compared to the data after the August report was released),
• by 0.3% to $215.4/t – for hard winter HRW wheat in Kansas City (+6.9%).
• by 0.9% to $228.45/t - for hard spring HRS-wheat in Minneapolis (+5%).
• by 0.1% to €222.75/t or $247/t - for wheat on the Paris Euronext (+3.8%).

Against the background of high rates of wheat exports from Ukraine and the Russian Federation at the start of the season, as well as a reduction in wheat export offers to the EU, many countries - importers from North Africa will have to increase purchases of expensive wheat in Canada, Australia and the USA in the second half of the season.