USDA figures have immediate negative impact on market

Wheat prices have dropped $10/tonne after the latest United States Department of Agriculture figures were released. See what it means for Australian growers.

Wheat prices have fallen by $10/tonne overnight after the latest outlook from the United States Department of Agriculture was released.

The USDA World Agricultural Supply and Demand Estimates for June immediately affected the market, with wheat experiencing a further shakeup.

There had been expectations of larger reductions in Russian production due to difficult seasonal conditions; the report, however, quoted cuts of 5 million tonnes.

Market Check chief executive Nick Crundall said the report itself wasn’t bearish but the market fell as soon as the information was released.

“The market was expecting Russian production to get cut quite aggressively, but (the estimates) didn’t cut it as much as the market was expecting,” he said.

“The market didn’t respond very well to it being released.”

Overall, the market price dropped by $10/tonne. However, domestic wheat prices have fallen by $15 to $20/tonne in the past two weeks due to uncertainty around the northern hemisphere crop.

Mr Crundall said wheat delivered to port in Victoria was trending at $370 to $375/tonne compared to $390/tonne a fortnight ago.

Canola prices were also revised down with drops of around $20 to $30/tonne domestically. Canola is trending at $691/tonne in Victoria.

Mr Crundall said the market would now watch how yields played out in the US and Russia.

Wheat grower Jason Mellings, who farms at Carron between Donald and Warracknabeal, said farmers were more concerned about the lack of rainfall throughout the growing regions than the price drop.

He said the price fall would add to the woes of a dry season, but overall, he hoped values could remain fairly firm.

“There is always a worrying fact that it (price) could drop further,” he said.

Mr Mellings said farmers certainly didn’t want the price of wheat to go any lower, given the high input prices.

The World Agricultural Supply and Demand Estimates tips the outlook for 2024-25 US wheat in June is for larger supplies, increased exports, and lower stocks.

Supplies are raised as all wheat production is forecast at 1875 million bushels, up 17 million from last month’s figures.

Silos on farm. Picture: Zoe Phillips

The global wheat outlook for 2024-25 is for smaller supplies, consumption, trade, and ending stocks.

Supplies are projected to decrease 5.7 million tonnes to 1,050.3 million, as reductions in production for Russia, Ukraine, and the EU are only partially offset by larger global beginning stocks.

Production for Russia was lowered 5 million tonnes to 83.0 million, all for winter wheat. In Ukraine, production was lowered 1.5 million tonnes to 19.5 million based on hot and dry weather conditions.

Global consumption was lowered by 4.3 million tonnes to 798.0 million, mainly on lower feed and residual use in the EU, Russia, and Ukraine. As global supplies tightened and prices increased, wheat for feed was becoming less competitive in some countries.

World trade was lowered as well, down 3.2 million tonnes to 212.8 million, as lower exports from Russia and Ukraine are only partly offset by increases for the EU and the United States. Projected 2024-25 global ending stocks were lowered 1.3 million tonnes to 252.3 million tonnes.