Wheat Closes with Mixed Action

Wheat futures exhibited mixed performance Thursday, with Chicago SRW and Kansas City HRW contracts declining while Minneapolis spring wheat saw gains. The USDA reported 4,053 MT of wheat sold for 2024/25, with new crop business at 388,919 MT, and the Crop Production report showed steady wheat data at 1.921 billion bushels, while the WASDE indicated a decrease in new crop US wheat stocks by 25 mbu to 898 mbu due to increased export figures; Taiwan purchased 95,450 MT of US wheat, and EU and UK production estimates increased by 5.9 MMT to 143.1 MMT according to Coceral.

Analysis

The wheat market presented a mixed performance, with Chicago SRW futures declining 7 to 8 cents (e.g., Jul 25 SRW closed at $5.26 1/2, down 7 3/4 cents) and Kansas City HRW contracts falling 2 to 4 cents, while Minneapolis spring wheat futures gained 2 to 5 cents (e.g., Jul 25 MGEX at $6.20 3/4, up 3 1/2 cents), indicating divergent pressures across wheat classes. USDA export sales data for the week of June 5th showed 4,053 MT sold for the 2024/25 marketing year, supplemented by robust new crop business for 2025/26 totaling 388,919 MT, including significant sales to Mexico, Indonesia, and Japan. The USDA's Crop Production report maintained a steady outlook for total 2024 US wheat production at 1.921 billion bushels, with minor adjustments including a 2 million bushel decrease in HRW production to 782 million bushels. According to the WASDE report, US old crop (2023/24) wheat stocks remained unchanged at 891 million bushels, while new crop (2024/25) stocks are projected to decrease by 25 million bushels to 898 million bushels, primarily due to an increased export forecast. Globally, WASDE indicated a tightening supply, with old crop (2023/24) world stocks reduced by 1.23 MMT to 263.98 MMT, and a further projected decrease in 2025/26 world stocks by 2.97 MMT to 262.76 MMT. Supporting export demand, Taiwan purchased 95,450 MT of US wheat. However, these bullish inventory signals are tempered by increased European production forecasts; Coceral raised its EU and UK combined production estimate by 5.9 MMT to 143.1 MMT, and Strategie Grains lifted its EU crop forecast by 0.9 MMT to 130.7 MMT, potentially increasing export competition.

Key Decisions for Investors

• Investors should note the divergence in price action, with winter wheat (SRW, HRW) declining and spring wheat (Minneapolis) advancing, suggesting potential spread trading opportunities or a need to differentiate strategies based on wheat class.
• The USDA's projection of tighter US new crop (2024/25) ending stocks and reduced global stocks further out (2025/26) is supportive for prices, but this must be weighed against significantly increased EU and UK production estimates which could cap upside by intensifying export competition.
• Monitor upcoming USDA export sales reports closely to gauge if actual demand meets the raised export forecasts, and track weather developments in key global wheat-producing regions, as these factors will be critical in resolving the current mixed market signals.