Wheat prices soared, after one of the ag sector’s most keenly-awaited reports forecast a further slide in world inventories in 2022-23, with coarse grain stocks seen falling too, as farmers focus on rebuilding global oilseed supplies.

The US Department of Agriculture, in its first full forecasts for next season’s global crop supply and demand, said that world output of coarse grains will decline by more than 25m tonnes, to 1.48bn tonnes, led by a 16.6m-tonne dip in corn production.

“World corn production is forecast to decline from last year’s record high, mostly reflecting restrictions for Ukraine, the US, the EU and China,” the USDA said in the May edition of its monthly Wasde report on world ag supply and demand.

The reduction will see world stocks of coarse grains, which also include the likes of barley, oats and sorghum, shrink by 4.0m tonnes to 330.4m tonnes.

‘Prices to remain sharply elevated’

The global wheat harvest will dip by 4.5m tonnes to just under 775,000 tonnes – fostering a third successive decline in world inventories of the grain, to a six-year low of 267.0m tonnes.

“The global wheat outlook for 2022-23 is for lower supplies and consumption, increased trade and lower ending stocks,” the USDA said, highlighting expectations for weaker harvests in Australia, Morocco and Ukraine.

The squeeze will be reflected in continued support for wheat prices which, in the US, will rise by $3.05 a bushel from this season to average a record $10.75 per bushel.

“Wheat cash and futures prices are expected to remain sharply elevated through the first part of the marketing year when the largest proportion of US wheat is marketed.”

US farmgate corn prices will rise by $0.85 per bushel to average $6.75 per bushel next season, the second highest on record, behind the $6.89 per bushel reached a decade before.

Crush margin squeeze?

The USDA forecast domestic farmgate soybean prices rising too, by $1.15 per bushel to set a record of $14.40 per bushel next season, despite expectations of US soybean stocks rebuilding by 2.0m tonnes to a three-year high of 8.4m tonnes, as record sowings lift production.

However, in an outlook which bodes ill for crushing margins, both soyoil and soymeal prices will ease, “as oilseed and product supplies rebound in foreign markets”.

Global oilseed output will jump to 647.2m tonnes in 2022-23, “rising 50.3m tonnes [from 2021-22]… when droughts impacted South American soybean production and the Canadian canola crop”.

World oilseed stocks will close 2022-23 at 119.1m tonnes, up by nearly 16m tonnes year on year.

Wheat prices soar

The report spurred a jump of 4.2% to $11.59 ½ a bushel in Chicago soft red winter wheat futures for July, hitting a two-month top for a nearest-but-one contract.

Kansas City hard red winter wheat for July gained 4.5% to $12.55 a bushel. A close at that level would be the highest in 14 years for a nearest-but-one contract.

Minneapolis spring wheat futures for July set a 14-year high by gaining 3.2% to $12.96 ¾ a bushel.

Paris’s best-traded September contract gained 2.6% to close at E413.75 a tonne.

Beans vs meal

Among other crops, Chicago corn futures for July gained 0.6% to $7.93 a bushel, while soybeans for July added 0.3% to $16.12 a bushel.

By contrast, soymeal for July eased by 0.6% to $395.60 a short ton, and July soyoil by 0.4% to 83.13 cents a pound.