Wheat futures extended gains, after the USDA, in its first global grain supply and demand estimates for 2024/25, forecast wheat inventories shrinking to a nine-year low.
Indeed, 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 USDA’s monthly Wasde briefing, on worries for damage to Russia’s winter crop from dryness and cold, edged higher still 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.
Chicago corn futures also extended headway, advancing by 2.4% for July-24 delivery. The USDA, unexpectedly, forecast a small decline in world corn stocks over 2024/25.
However, reaction in the soybean market proved more muted, after the USDA forecast world stocks of the oilseed ending next season even larger than had been expected. The July-24 contract gained 0.7%.
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 report’s headline findings are as below.
Corn
The USDA made a larger-than-expected downgrade, of 2.5Mt, to its estimate for US corn stocks at the close of this season, in August, reflecting increased expectations for ethanol use and exports.
Coupled with a slightly smaller-than-expected forecast for US harvest-24, seen down by 12.2Mt year on year to 377.5Mt, the estimate for inventories at the close of 2024/25 came in at 53.4Mt, 2.7Mt below investor expectations.
With estimates for 2023/24 Argentina and Brazilian corn output trimmed too, and Ukraine’s 2024/25 crop foreseen shrinking by 4.0Mt to 27.0Mt, the estimate for world stocks came in even further short of trade expectations.
The USDA forecast global corn inventories ending 2024/25 at 312.3Mt, 5.1Mt below the number investors had pencilled in.
Soybeans
The USDA’s forecast for US stocks at the close of 2024/25, at 12.1Mt, was marginally ahead of the level expected by traders, reflecting a slightly more generous harvest estimate.
However, the forecast for world inventories, at 128.5Mt, was significantly above the 119.4Mt level that the market had expected, as shown by a poll of analysts.
Brazil is expected to lead the supply growth, with a harvest of a record 169.0Mt, up by 15.0Mt year on year, on USDA forecasts.
On the demand side, China’s soybean imports are expected to swell by 4.0Mt year on year in 2024/25 to a record 109.0Mt.
Wheat
The USDA forecast US wheat stocks expanding less significantly than the market had anticipated in 2024/25, to 20.9Mt, on a modestly lower-than-expected harvest estimate of 50.6Mt, up by only 1.3Mt 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 3.5Mt year on year to 88.0Mt. Separately, SovEcon also cut its Russia wheat production estimate for 2024/25, to 89.6Mt, a dip of 3.2Mt year on year on its estimates.
EU all-wheat production was seen declining by 2.2Mt to 132.0Mt.
The estimates fed through into a forecast for world wheat stocks of 253.6Mt at the close of next season, shrinking by 4.2Mt year on year to the lowest since 2015/16. The figure was 2.8Mt 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 11.2Mt, down by 2.8Mt from last year, and fostering growth in 2024/25 imports to an expected 3.0Mt, from the 2.6Mt factored in for this season.
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