① Chicago wheat futures surged 3.8% on Friday, and corn futures also rose 2.6%; ② The US Department of Agriculture predicts that while economies are still dealing with stubborn inflation, global food supply will tighten in the next fiscal year, which may lead to a rise in food prices.
Financial Services Association, May 11 (Editor Xia Junxiong) According to the US Department of Agriculture's forecast, while economies are still dealing with stubborn inflation, global food supply will tighten in the next fiscal year, which may lead to a rise in food prices.
The US Department of Agriculture said in its report that the 2024-25 global wheat inventory is estimated at 253.6 million tons, which is lower than the average estimate, the lowest level in eight years; the global corn supply is estimated at 312.3 million tons, which is about 2.1% lower than the average forecast.
Chicago wheat futures surged 3.8% on Friday, and corn futures also rose 2.6%.
The reason for this forecast is that the current supply of grain is small, and that bad weather may affect upcoming food harvests. For example, Russia, the world's largest wheat exporter, is at risk of reduced production.
The southern regions of Russia continue to be arid, while the central region, the Volga region, and some southern regions experienced frosts this month. The US Department of Agriculture predicts that Russia will remain the number one exporter of wheat, but exports in 2024-25 (beginning July 1) are expected to be lower than the previous fiscal year.
The European wheat crop is also a cause for concern, traders said. According to the French Agency for Agriculture (FranceAgrimer), as of May 6, only about 64% of soft wheat in France was rated as being in good or excellent condition, far lower than 94% in the same period last year. France is one of the EU's largest wheat exporters.
The US Department of Agriculture also lowered its estimate for Brazil's soybean harvest for the current fiscal year to 154 million tons, a decrease of 1 million tons from last month's forecast. The reason for the reduction was that Rio Grande do Sul in southern Brazil was flooded. Brazil is the world's largest producer of soybeans.
Commerzbank warned that the overall weather conditions for wheat, corn, and soybeans remain severe.
Despite this, according to the US Department of Agriculture, Brazil's soybean production is expected to reach a record 169 million tons in the next fiscal year. Furthermore, the US soybean supply is expected to be higher than traders expected.
Terry Reilly, an analyst at commodity broker Marex, said that the USDA report is beneficial to wheat and corn (referring to commodity prices), but not to soybeans.