USDA Report Diverges from Analyst Estimates
The latest USDA quarterly reports on planted area and old crop stocks have once again diverged from analysts’ expectations. Despite large stocks and low corn prices, US farmers increased the area under corn, which led to a reduction in the area under wheat, surprising traders.
Reduced Wheat Planting Area
- NASS USDA experts have revised the US wheat planting area estimate down by 0.258 million acres to 47.24 million acres.
- This compares to 49.6 million acres in 2023 and 45.8 million acres in 2022.
- Analysts had expected an increase to 47.67 million acres.
- The breakdown includes 33.8 million acres for winter wheat, 11.27 million acres for spring wheat, and 2.165 million acres for durum wheat.
Increased Wheat Stocks
As of June 1, US wheat stocks stood at 19.1 million tons, which is higher than analysts’ estimates of 18.6 million tons and 23% more than last year’s 15.5 million tons.
Falling Wheat Futures
Despite the reduction in the wheat planting area, wheat futures fell on Monday:
- Soft winter SRW wheat in Chicago: down 1% to $203.6/t (-1% for the week)
- Hard winter HRW wheat in Kansas City: down 0.6% to $217.5/t (+1.3% for the week)
- HRS hard wheat in Minneapolis: up 0.3% to $225.3/t (0% for the week)
European Market Trends
September wheat futures on the Paris Euronext fell 1.1% to €224.75/t or $241.7/t on Friday.
EU Wheat Harvest Forecast
The European Commission has increased its forecast for the wheat harvest in the EU for the 2024/25 fiscal year to 121.9 million tons, down from 125.6 million tons in the 2023/24 fiscal year. The export forecast for the 2023/24 fiscal year has been raised to 33 million tons.
Conditions in France and Argentina
In France, the percentage of wheat crops rated as good or excellent has decreased by 2% to 60%, according to FranceAgriMer. Meanwhile, the Buenos Aires Grain Exchange reports that as of June 26, 81% of the planned 6.3 million hectares for the 2024/25 season have been sown with wheat in Argentina.
Russian Wheat Export Forecast
SovEkon experts have reduced their forecast for wheat exports from the Russian Federation for the 2024/25 marketing year by 1.7 million tons to 46.1 million tons. This is due to a predicted decrease in harvest to 80.7 million tons. Strong heat in Siberia and the Volga region, key spring wheat growing areas, could significantly impact the potential harvest.
The discrepancy between USDA forecasts and analyst expectations highlights the complex factors influencing wheat markets. Despite a decrease in planting areas, ample stocks and favorable weather conditions in other regions are exerting downward pressure on prices. Stakeholders should closely monitor these dynamics to make informed decisions in the coming months.