Traders reacted to the WASDE report by taking profits. However, there are good reasons to expect a recovery before the weekend.

Wheat Rally Driven by Black Sea Tensions

In the wheat market, Monday's and Tuesday's rally continued on Thursday. The December future climbed to EUR 226.50 in the afternoon. The rise was triggered by reports from the Ukrainian government that a Russian fighter jet had fired an anti-ship missile at a freighter carrying grain bound for Egypt. The incident reportedly took place near the mouth of the Danube in Romania's exclusive economic zone.

Attack on Grain Carrier Escalates Geopolitical Risks

A bulk carrier flying the flag of St Kitts and Nevis was hit by a missile fired by Russia as it left the Ukrainian port of Chornomorsk, according to British maritime security company Ambrey. The ship was reportedly damaged on the port side, including a cargo hold and a crane, adding to tensions in the region.

EU Wheat Crop Estimate Revised Downwards

A new EU soft wheat crop estimate from Strategie Grains also supported the European market. Analysts revised the volume down by 2.1 million tonnes to 114.4 million tonnes compared to the August report. The French crop is now expected to be 25 million tonnes, the smallest since 1983.

WASDE Report Dampens Market Sentiment

The release of the WASDE report just before the close of trading in Paris slightly dampened market sentiment. The USDA raised world ending stocks for 2023/24 by nearly 3 million tonnes to 265.25 million tonnes, mainly due to higher stocks in Canada. However, EU ending stocks fell to 14.66 million tonnes, while Australia's wheat stocks were also revised downwards.

Global Wheat Production and Consumption Outlook

The increase in ending stocks for 2023/24 leads to a less favorable balance for the current season. Ending stocks for 2024/25 are also higher than expected, despite increased consumption and reduced production in the current marketing year. Global wheat ending stocks for 2024/25 increased by 600,000 tonnes to 257.22 million tonnes, although they remain down by 8 million tonnes from a year ago.

USDA Revises Global Wheat Production Forecast

The USDA had to revise global wheat production figures for 2024/25. The EU saw a significant reduction of 4 million tonnes, while increases were noted for Australia and Ukraine. Overall, the global crop is down 1.4 million tonnes from the August estimate. However, world wheat consumption has been raised by 880,000 tonnes, which will tighten the balance further.

Stabilizing Factors Amid Bearish WASDE Report

Although the WASDE report appears bearish, its market impact should be limited. Global production is expected to fall short of consumption for the second consecutive year, tightening global ending stocks further in 2024/25. The small harvest in the EU, problems with summer wheat in Siberia, and dry conditions in Russia are stabilizing factors.

Regional Weather Conditions Vary for Winter Wheat Sowing

Recent rainfall has improved conditions for sowing winter wheat in Romania, Bulgaria, and parts of Ukraine. In contrast, north-eastern Europe remains too dry, while southern Europe has a mixed picture of drought, excessive rainfall, and good sowing conditions. France and Germany are progressing largely without issues, though some regions are experiencing wet or dry extremes.

Egypt Purchases Russian Wheat in Private Deal

In a notable development, Egypt's state grain buyer GASC purchased 430,000 tonnes of Russian wheat in a private transaction, outside the usual tender process, according to a Reuters report.

Click here to reach our trading platfrom CMBroker