GRAIN MARKET REVIEW: WHEAT
As harvests approach, the focus for wheat traders is increasingly on the weather, especially its impact on Russia’s crop with low moisture earlier in the year and continued cold temperatures in May. Although world wheat prices were trending steadily lower over the last year, shifting weather patterns have prompted a recent reversal, USW noted, pointing to a surge in July Chicago Board of Trade (CBOT) wheat futures since April 18.
Helen Plant, senior analyst, Cereals & Oilseeds, at the United Kingdom’s Agricultural and Horticultural Development Board said that “The initial projections from the USDA show global wheat demand exceeding production by over 4 million tonnes.” Wheat production is forecast to rise 10.5 tonnes year-on-year due to recoveries in output for Australia and Kazakhstan, plus rises for the US and Canada. However, this would still not be enough to meet demand, which is up 2 million tonnes, to 802.3 million. “This includes a Russian wheat crop of 88 million tonnes. This is down 3.5 million tonnes year-on-year but in the same ballpark as the latest IKAR and SovEcon estimates.”
USDA predicts stocks held by major exporting countries (Argentina, Australia, Canada, European Union, Russia, and Ukraine) in 2024-25 will climb 6.9 million tonnes, to 31.7 million. Stocks in these countries at the end of 2024-25 are predicted to equate to just 13.3% of combined domestic and export demand. This is down from an estimated 14.5% at the end of 2023-24. Australian quotes rose $17 per tonne with tight stocks constraining exportable supplies. Despite subdued export demand, US quotes rose $14 per tonne as old stocks are declining ahead of the next year’s harvest, which is soon to begin. Russian quotes were up $13 per tonne as expectations for a smaller crop. Canadian quotes surged $27 per tonne on robust demand with tightening stocks. EU quotes increased $16 per tonne maintaining a fairly consistent price premium over Black Sea competitors. Finally, the FAS said that “Argentine quotes experienced the largest increase of these countries, up $32 per tonne as exportable supplies tightened.”
(Link: WorldGrain)
