Experts say that a tighter market for wheat in the next season may help to boost wheat prices.
The global wheat market will tighten in 2024-25, with the ending stocks falling 3.3% year-on-year to 258 millions tons.
According to ING Group estimates, if this figure is achieved, it will be the lowest stock ending since the 2015-16 campaign.
Despite the fact that US ending wheat stocks will increase, ING expects global stocks to continue to fall due to decreases in other parts.
Reduced output
The European wheat price has risen as a result of a drop in production, which is at its lowest level since 2007-2008.
In Europe, the production is estimated to be down by 9% year-on-year to less than 125 millions tons.
In a recent report, Warren Patterson, the head of commodities at ING said:
The weather conditions of winter 2023 will have a major impact on EU plantings. Yields are also low, and this has impacted output.
France, the EU’s biggest producer, has played a major role in this.
Likewise, the production in Russia is also declining.
The current wheat harvest is estimated to be down 11% from the previous season, to 81.5 million tonnes.
Patterson explained that the combination of dry and frosty weather led to some changes in this year’s Russian crop.
Increases elsewhere partly offset declines in Russia and Europe
The US and Australia have increased production, partly offsetting the lower production in Russia and Europe.
The US wheat crop is expected to have increased by 9% in the current year due to higher yields.
Australia’s production has also risen 23% in comparison to the previous season, reaching 32 million tons.
Better yields helped increase Australian wheat production after last year’s low figures.
Patterson stated that “the global aggregate wheat production will continue to trend upwards in 2024/25, and despite a marginal increase in consumption, the stocks are expected to be slightly lower.”
Market may yet tighten in 2025-26
Even though consumption is expected to grow marginally and production will increase overall, the ending stock levels are projected to drop sharply.
Patterson said, “The winter wheat plantings for the next season in the northern hemisphere are complete. We’re now left with a mixed bag.”
The US wheat market is unlikely to change much in the coming season.
The yields could fall to the average of five years, which would lead to a 10% drop in production.
Experts say that this, combined with a marginal change in domestic and export demand, would result in a slight decrease in the US ending stock in 2025-2026.
Both the EU and Ukraine will likely see an increase in production from the current harvest.
Russia presents a different image
The dry weather in the fall delayed planting, and the area as a whole has shrunk.
The Russian wheat crop could fall by around 1.5% on a year-over-year basis, to about 80 million tons.
The Russian government has cut the export quota from 15 February to 30 June next year to 11 millions tons due to concerns over a smaller harvest. The Russian government has reduced the export quota to 11 million tons from February 15th until June 30th of next year.
SovEcon estimates that Russian wheat exports will be between 3.3-3.5 million tons by December 2024, down from the 4.1 million tones in November.
SovEcon attributed the 17% drop in Russian wheat exports month-over-month to a reduced profit margin.
In a recent note, Andrey Siodov, managing director of SovEcon said that the increase in export tax had led to a decrease in profitability for wheat exporters.
Exporters are currently losing money, as opposed to about $10 per month ago. Export tax is now 4,872 Rubles per metric tonne ($47/mt), compared to 2,569.2 Rubles per ton ($26/mt), a month ago.
SovEcon projects Russian wheat exports to be 44.1 million tonnes for 2024-25, while the US Department of Agriculture predicts 48.0 million.
Sizov is added as:
We think the market is overestimating Russia’s current export volume and we expect a significant slowdown in Russian exports that will boost global prices.
According to ING’s projections, the global ending stock of wheat will fall to its lowest level in a decade by next season.
We expect the CBOT wheat price to rise through 2025, and we currently predict that prices will average $6/bushel (bushel) for the entire year. Patterson said that trade tensions, like other grains, are a downside threat.
The US Wheat Futures traded at around 5.6 cents a pound on the CBOT.
The post Tighter Wheat Market to Boost Prices in 2025-26 can be updated as new information becomes available.
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