The US Department of Agriculture (USDA) on Friday revised downward its estimates for global production of wheat, soybeans and corn, a development largely attributable to unfavorable weather conditions. The USDA now forecasts a wheat harvest for the 2024/25 season (starting in July) 2.8 million tonnes lower than its previous projection, published in September, according to the monthly WASDE (World agricultural supply and demand estimates) report. . This contraction is mainly due to lower production of one million tonnes in both the European Union and Russia, and 710,000 tonnes in India.
The European Union experienced a year marked by significantly above-average precipitation, which affected yields, while southwest Russia, the main production region of the queen cereal, went through a phase of prolonged drought. The Russian corn production estimate was also reduced, as was that of Ukraine (one million tonnes). For soybeans, the revision is less marked and spread across several countries, including the United States. The reduction in wheat harvest estimates was more than offset by an increase in stocks at the start of the period and a lower consumption figure than previously anticipated (-2.4 million tonnes).
“What was removed in wheat consumption was added on the corn side, through a set of communicating vessels”commented Damien Vercambre, from Inter-Courtage. Consumption of yellow grain was thus re-evaluated by 3.5 million tonnes. “We are recording drops in production here and there and we are trying to flatten it” by adjusting consumption estimates. “It seems neutral”commented on the report, estimated Gautier Le Molgat, CEO of Argus Media France, for whom “it was expected that some figures would be further adjusted.” He nevertheless noted that “China (imported) less corn”a sign of weakening of a major customer in the global raw materials market, particularly for corn and soybeans.
Following the publication of the report, prices went into the red, in particular wheat, which lost 1.57% for the reference contract on the Chicago Stock Exchange. For Jon Scheve, of Superior Feed Ingredients, the sensitive reaction of wheat can be explained by the fact “that the courses had progressed a lot” in recent weeks. “However, as this report gives no reason to raise or lower prices, the market has lost its momentum” lack of catalyst, said the analyst.
