Reduced Trade Forecasts Impact Wheat Prices

The latest USDA supply and demand report for February updated global wheat production and consumption figures, leading to lower ending stock forecasts for the 2024/25 marketing year. Despite this, a significant reduction in global wheat export and import expectations caused wheat prices to drop, even after experiencing a 5.6-8.7% increase last month due to US frost concerns and rising corn prices.

Compared to January 2024 estimates, the global wheat balance for 2024/25 has seen these key changes:

• Opening stock estimates stayed the same at 267.49 million tonnes, a bit lower than 274.27 million tonnes recorded in 2023/24.
• Global wheat production rose by 0.55 million tonnes, reaching 793.79 million tonnes, mainly due to higher output in Kazakhstan (+0.58 million tonnes) and Argentina (+0.2 million tonnes). However, Australia’s forecast remained unchanged at 32 million tonnes, despite local agencies estimating 33-35 million tonnes.
• Consumption figures went up by 1.83 million tonnes, fueled by higher feed demand in the EU, Kazakhstan, and Thailand. Ukraine’s consumption forecast increased by 0.2 million tonnes to 6.9 million tonnes.
• Global exports were reduced by 3 million tonnes, with cuts in the EU (-1 million tonnes to 28 million tonnes), Russia (-0.5 million tonnes to 45.5 million tonnes), and Ukraine (-0.5 million tonnes to 15.5 million tonnes).
• Global wheat imports dropped by 3.67 million tonnes, mainly because China cut back its purchases by 2.5 million tonnes to a five-year low of 8 million tonnes.
• Ending stock figures fell by 1.26 million tonnes to 257.56 million tonnes, with China’s stocks decreasing by 2.5 million tonnes, partly offset by higher reserves in Kazakhstan, Ukraine, and Russia.

Chicago Wheat Futures React to USDA Report

Following the report, March wheat futures saw slight declines:

• Soft Winter SRW Wheat (Chicago): USD 0,21 per kg (-0.4%) (+8.7% from post-January report).
• Hard Winter HRW Wheat (Kansas City): USD 0,22 per kg (-0.7%) (+7.5% from post-January report).
• Durum Spring HRS Wheat (Minneapolis): USD 0,23 per kg (-0.7%) (+5.8% from post-January report).
• Euronext Paris Wheat: USD 0,24 per kg (-0.3%) (+1.3% from post-January report).

Despite lower global stocks, reduced import demand, especially from China, continues to affect wheat prices.

China's Lower Demand and Global Economic Slowdown Add Pressure

China’s reduced wheat imports from Australia and Canada are likely to further influence global demand, adding downward pressure on prices. Also, weaker economic conditions in key importing countries are slowing wheat purchases, which might limit price recovery in the coming months.

Meanwhile, significant wheat reserves in the EU continue to affect the market. Over the first seven months of the 2024/25 marketing year, the EU's wheat exports fell by 57%, reaching only 13 million tonnes—just 46% of the annual export target.

Conclusion: Wheat Prices Likely to Face More Downward Pressure

With subdued global demand, high stock levels, and reduced Chinese imports, wheat prices may continue facing selling pressure in the near term. Additionally, economic uncertainty in key importing nations could further slow purchases. Looking ahead, market participants will keep an eye on trade policies, crop conditions, and global economic trends to gauge wheat price movements.





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