In the United States (US), wheat acreage is larger than previously estimated. Also, the yield is high. These are the most important changes in the USDA’s new crop assessment report. The results caused prices to fall in the Chicago futures market.
The United States Department of Agriculture (USDA) cut producer prices for American farmers this season by more than 10 percent, to the equivalent of 192 euros per ton. Wheat sales for the September contract on the Chicago futures market are still subdued for now, with prices falling to around 185 euros a tonne on July 12.
Wheat forward sales based on December delivery have fluctuated around the price level USDA has in mind as the average farmer price for this season. As the May contract fell to 208 euros a tonne on Friday, there is no upside for now.
In the July issue of the monthly Wasde report, the USDA raised its global wheat crop estimate by 5.44 million tons to 796 million tons. With this, the harvest will be 1 percent more than last year, the US ministry said. According to USDA figures, wheat production has risen to a new record.
The most significant change compared to a month ago concerned wheat production in the United States. Additionally, according to the new valuation, startup stocks are also slightly higher. This increases the total availability of wheat this season in the United States to nearly 74 million tons. Although U.S. exports and local wheat consumption in that country are increasing, it is mainly the ending stocks that have adjusted upwards.
Conditions in America are not better than expected. Canada’s growth is also progressing more favorably than previously estimated. USDA raised its expectations for the country by 1 million tons to 35 million tons of available wheat. Some of this will contribute to increased exports, but Canadian shares will also increase slightly.
Wheat consumption rises to 800 million tonnes
Global wheat consumption is increasing slightly, reaching 800 million tons for the first time, according to the USDA. In about ten years, global wheat consumption increased by 100 million tons. China is the largest consumer with total volume estimated at 151 million tonnes in 2024-2025. India is second with 113 million tonnes, followed closely by the European Union with a consumption of 110 million tonnes.
The largest sales of animal feed are in the European Union, totaling nearly 45 million tons. With 33 million tonnes, China is the second largest consumer of wheat for animal feed. Russia puts 16 million tons of wheat into animal feed.
Russians are the largest exporter of wheat in the world. Next season, the USDA estimates Russian wheat exports at 48 million tons. This is 7.5 million tonnes less than last year’s record export. This has to do with the significantly smaller harvest that the Russians are expecting this year.
Drought and frost have caused significant damage to Russian wheat. Some of that damage can still be repaired by planting summer crops where wheat freezes. Yet Russia’s wheat harvest estimate drops to around 83 million tonnes. Various market firms initially thought production would fall further, but they have been gradually revising their expectations upwards. It appears that the Russians may be able to repair some of the damage by planting spring wheat.
North Africa’s largest importer
North Africa is the largest importer of wheat. The USDA estimates that these countries will import about 31.4 million tons of wheat this season. This is nearly 1 million tonnes more than last year. This is mainly due to stakes, which are smaller at the start of this season than they were a year ago. Also, production is expected to be slightly lower than in 2023.
Southeast Asia and the Middle East are also major importers of wheat. With imports of 27.4 million tonnes, Southeast Asia bought slightly less wheat from the world market than last year. The same applies to the Middle East, where imports are currently estimated to drop to 19.3 million tonnes. Although local production is low, European imports are estimated to drop to 10 million tonnes.
The U.S. Department of Agriculture expects wheat inventories to decline for the fifth year in a row, despite wheat production rising to a new record. At the end of June 2020, world wheat stocks rose to nearly 300 million tonnes. By the end of this season (June 30, 2025), stocks have shrunk to 257 million tonnes. Hence the ratio between inventory and consumption falls to 32 percent. In 2020, the peak was nearly 40 percent.
More than half of the wheat supply is in China. According to USDA, the ratio between share and wheat consumption is almost 90 percent. This means that as far as wheat is concerned, there are enough reserves for almost a year. In the rest of the world, the share-of-use ratio is less than 19 percent. In the EU, this figure drops to 10 percent due to lower production and lower stocks.