In W24 in the wheat landscape, the USDA, in its June report, adjusted upwards global wheat production in the 2023/24 season to a record 800.19 million mt, an increase of 10.43 million mt compared to the May estimate. Specifically, wheat production is expected to increase in India by 3.5 million mt, reaching a record 113.5 million mt, in the EU by 1.5 million mt to 140.5 million mt, in Russia by 3.5 million mt to 85 million mt, and in Ukraine by 1 million mt to 17.5 million mt. For the world's main wheat exporting countries, harvest estimates did not decrease, but their total production will decrease compared to the previous season from 332.6 to 328.5 million tons. Therefore, wheat on the global market is estimated not to become more affordable, and the 2023 export forecast is expected to be lower than in 2022. Fortunately, in the EU, Ukraine, and Russia, good spring rainfall created favorable conditions for wheat sowing. 2023/24 global wheat consumption was also raised by 4.44 million mt to 796.14 million mt compared to the May projection, primarily driven by higher demand from China, India, and Russia. Furthermore, the USDA increased the 2023/24 global wheat export forecast by 2.9 million mt to 212.6 million mt. The increase in wheat export volume is expected from the EU by 3.5 million mt to 38.5 million mt, India by 0.5 million mt to 1 million mt, Russia by 1 million mt to 46.5 million mt, and Ukraine by 0.5 million mt to 10 million mt. Meanwhile, the global wheat import projection was increased by 2 million mt to 209.54 million mt, with China accounting for a significant portion of the increase of 1.5 million mt to 12 million mt.
The USDA reports that as of the week ending June 9th, US wheat export inspections totaled 246.56 thousand mt, down 57.84 thousand mt WoW and 165.36 thousand mt YoY, with shipments mainly destined for the Philippines and Yemen. Early in the 2023/24 season, US wheat export inspections reached 317.05 thousand mt, down compared to 638.63 thousand mt in 2022/23. The decrease is attributed to the current strong export competition for most key commodities due to several factors, including seasonal supply and demand trends and the strength of the US Dollar compared to other major currencies. The USDA also revised upwards its projections for 2023/24 US domestic wheat supplies by 6 million bushels to 1.66 billion bushels, in line with the average market expectation of 1.67 billion bushels. The increase is driven by higher Hard Red winter wheat production, offsetting the output reductions in other varieties of wheat. Meanwhile, US wheat ending stock projections were revised higher to 562 million bushels considering the higher production estimates. However, it remained lower compared to the market expectations of 566 million bushels. Furthermore, the USDA reports that as of June 11th, 38% of US winter wheat was rated good to excellent, up 2% WoW, with 89% headed and 8% harvested, both close to average. Meanwhile, 60% of US spring wheat was rated as good to excellent, a drop of 4%. The planting progress for US spring wheat was at 97%, matching the usual pace, and 90% of the crop had emerged, surpassing the 5-year average of 87%.
In Apr-2023, Australian wheat and durum exports amounted to 3.008 million mt, down 20% MoM but up 14% YoY. Australian containerized wheat shipments were mainly destined for China (62.11 thousand mt), Malaysia (28.23 thousand mt), Taiwan (26.99 thousand mt), and Vietnam (24 thousand mt). Australian bulk wheat and durum exports were mainly destined for China (2.799 thousand mt), Thailand (310.75 thousand mt), and Indonesia (281.32 thousand mt). In Russia, wheat prices for exporters at Black Sea ports and Azov experienced a significant increase in W24 due to fluctuations in key pricing factors such as the US Dollar exchange rate and duties. The actual prices at the end of W24 surpassed forecasted levels due to a more pronounced devaluation of the Russian Ruble. Currently, the cost of wheat at the ports can be considered reasonable, which is expected to stimulate agricultural producers to actively sell their stocks. As a result, this trend not only anticipates a potential increase in export shipments in June but also ensures the planned volume of deliveries in July and August.
Lastly, according to Indian food secretary Sanjeev Chopra, India has imposed a limit on the amount of wheat stocks traders can hold in an effort to bring down prices. As the world's second-largest wheat producer, India will additionally supply 1.5 million mt of wheat to bulk consumers like flour millers in an effort to lower prices, which have increased by 8% MoM. The procurement of wheat in India for 2023 is expected to decrease by 20% from the initial estimate due to a slowdown in government purchases following the rise in domestic prices. However, despite the lower-than-expected procurement, India currently possesses sufficient wheat stocks, eliminating the need for imports. In May-2022, India, which is also the world's second-largest wheat consumer, imposed a ban on wheat exports after a sudden temperature increase resulted in a decline in wheat output, while global demand for exports rose to compensate for the shortfall caused by the Russia-Ukraine war.
