Posted on May, 14, 2024 at 10:19 am
CRM Agri has reported the wheat futures extended gains, after the USDA, in its first global grain supply and demand estimates for 2024/25, forecasted that wheat inventories would shrink to a nine-year low.
The decline in stocks was led by major exporters, whose supply levels are particularly important in setting world prices.
Chicago wheat futures for July-24, which had strengthened ahead of the US Department of Agriculture's (USDA’s) monthly Wasde briefing, on worries for damage to Russia’s winter crop from dryness and cold, edged higher in the aftermath to trade up 3.6%.
Paris milling wheat for September-24 stood up 2.3% in late deals, back above €250/t for the first time in nine months.
Best-traded London feed wheat for November-24 gained 1.2% to settle at £218.60/t, its best finish in 14 months.
The USDA’s May Wasde report is viewed as particularly important by the market, in issuing first full world crop supply and demand forecasts for the next season, in this case 2024/25.
The USDA forecast US wheat stocks expanding less significantly than the market had anticipated in 2024/25, to 20.9 million t, on a modestly lower-than-expected harvest estimate of 50.6 million t, up by only 1.3 million t year on year.
Inventories in most other major exporters, including those in the EU, Russia and Ukraine, are expected to shrink next season, on production decline.
Russia’s harvest was forecast shrinking by 3.5 million t year on year to 88 million t. Separately, SovEcon also cut its Russia wheat production estimate for 2024/25, to 89.6 million t, a dip of 3.2 million t year on year on its estimates.
EU all-wheat production was seen declining by 2.2 million t to 132 million t.
The estimates fed through into a forecast for world wheat stocks of 253.6 million t at the close of next season, shrinking by 4.2 million t year on year to the lowest since 2015/16. The figure was 2.8 million t below that traders had anticipated.
Wheat stocks held by the top seven exporters were seen closing next season at their smallest in 12 years, and the tightest in even longer period, when compared with world consumption.
The UK’s wheat harvest-24 was pegged at 11.2 million t, down by 2.8 million t from 2023, and fostering growth in 2024/25 imports to an expected 3 million t, from the 2.6 million t factored in for the season.
Source: Dry Bulk