KANSAS CITY, MISSOURI, US – 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. A larger crop than last year is forecast, but with prices in a long-term downtrend, wheat consumption is forecast to outstrip growth.

US Wheat Associates (USW) reported in its May 14 Wheat Letter Blog that “across the Northern Hemisphere, wheat price and crop development are dominating market discussion.”

“Soon, the first harvests of the 2024-25 crop year will provide more concrete information on supply availability and quality,” USW said. “Until then, weather conditions will play a crucial role in global grain markets as winter wheat enters late growth stages and spring wheat planting progresses.”

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. USW highlighted that “in the past month, varied weather conditions have raised concerns about the Russian wheat production outlook,” with low moisture in the south of the country from mid-March to mid-April, and central and southern crop growing areas suffering from severe frosts in early May.

Helen Plant, senior analyst, Cereals & Oilseeds, at the United Kingdom’s Agricultural and Horticultural Development Board (AHDB), in mid-May discussed the first forecasts for 2024-25 in the World Agricultural Supply and Demand Estimates report.

“The initial projections from the USDA show global wheat demand exceeding production by over 4 million tonnes,” she said. “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.”

Explaining that the 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, Plant stressed that “with global demand rising, it’s important to look at stocks relative to demand. 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 and would be the lowest since 2007-08 (13.1%).”

In its “Grain: World Markets and Trade” report, published May 10, the USDA’s Foreign Agricultural Service (FAS) said “global exporter quotes rose over the past month as global exportable supplies become more constrained prior to the upcoming harvest.”

“Stocks have continued their downward trend, currently at the lowest levels since 2015-16,” the FAS said. “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 were only partially moderated by ample domestic stocks.”

The FAS continued, “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.”

Chris Lyddon is World Grain’s European correspondent. He may be contacted at: cajlyddon@gmail.com.