World wheat harvest forecast falls, Russia hit

World wheat harvest forecast falls, Russia hit
World wheat harvest forecast falls, Russia hit

In its monthly report, the WASDE (World Agricultural Supply and Demand Estimates), the USDA anticipates global production of 790.75 million tonnes, or 7.4 million tonnes less than its first estimate last month.

In detail, the ministry reduced its harvest projection in Russia by 5 million tonnes, and by 1.5 million tonnes each for Ukraine and the European Union. The south-west of Russia, the main wheat producing region in this country, has been suffering from drought for several months.

This phenomenon was compounded by a cold snap in May, which hit the crops as the harvest approached. The specialist firm SovEcon lowered its estimate of Russian production from 94 to 80.7 million tonnes.

As for production in the European Union, it suffered from excessive rainfall, particularly in France. The sharp revision to the USDA harvest forecast was offset by an increase in the beginning inventory estimate and a decline in expected consumption.

Another element putting the deterioration into perspective in Russia, Ukraine and the European Union is that the harvest announced in the United States has been revised upwards by almost half a million tonnes. “Everyone said that production might drop» because the average state of crops had deteriorated in the United States in recent weeks, both for winter wheat and spring wheat, recalls Damien Vercambre, of the Inter-Courtages firm. Instead of that, “they increase it.”

Classes remain gloomy

The conjunction of all these factors means that the ending stocks, as calculated by the American department, “drop a little, but not as much as expected», noted Damien Vercambre. “This is what we expected», commented Gautier Le Molgat, CEO of Argus Media France, about the adjustments to the harvest expected for 2024/25, a campaign which begins in particular at the beginning of June in the United States.

One of the few surprises in the report came, according to the latter, from India’s import estimates, unchanged while the market expects the Indian government to remove a 40% tax on foreign wheat, in the aim of promoting the reconstitution of local stocks.

After the publication of the USDA report, the price of American wheat was in the red. The benchmark SRW (Soft Red Winter Wheat) contract, for delivery in July, fell 1.51% to $6.17 per bushel (around 27 kg).

Changes made by the USDA have been much more limited for corn and soybeans. The US Department of Agriculture slightly reduced its end-of-period stock estimate for yellow grain, due to lower beginning stocks and higher consumption.

These adjustments benefited American corn prices, which rose 1.05% for the reference contract. “There is a drop in wheat consumption and they imagine that we will take more corn», underlines Gautier Le Molgat, the postponement mainly being made for animal consumption. The improvement in beginning of period stocks and more sustained consumption more than offset a small increase in estimated production, particularly in Ukraine.

By Le360 (with AFP)

06/13/2024 at 9:00 a.m.

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