The July report from the United States Department of Agriculture (USDA) brought only minor adjustments compared to the previous release, reinforcing a scenario of relative stability for the global wheat market. Although the agency reduced global ending stocks and confirmed a historically small U.S. crop, the increase in export availability from Black Sea countries continues to limit a more consistent upward movement in international prices.

On the global front, production remained virtually unchanged at 820 million metric tons, while consumption increased to 820 million metric tons, mainly reflecting higher food demand in Asian and Middle Eastern countries. As a result, global ending stocks declined from 275 million to 273 million metric tons, reducing the stock-to-use ratio from 33.6% to 33.2%. This movement makes the global balance sheet slightly tighter, although still comfortable from a historical perspective.

The main highlight of the report remains the United States. Production was revised to 41.8 million metric tons, down by approximately 12 million metric tons from the previous season and marking the lowest production level since 1970/71. This also represents the smallest exportable surplus in the series that began in 1960. The reduction stems from a smaller harvested area, particularly in winter wheat varieties, partially offset by productivity gains.

With lower supply, U.S. ending stocks were reduced to 19.7 million metric tons, around 22% below the previous cycle, reinforcing a more restrictive domestic scenario. Even so, the USDA kept its estimate for the average farm price unchanged at US$6.00 per bushel of wheat (equivalent to approximately US$220 per metric ton), indicating that lower U.S. production continues to be offset by favorable supply conditions among its main competitors.

On the international supply side, the report brought positive revisions for the main Black Sea exporters. The USDA increased production and export estimates for Russia and Ukraine, reflecting favorable weather conditions during crop development. Russia's export forecast was raised to 47.5 million metric tons, while Ukraine's was increased to 14.5 million metric tons, further strengthening the region's competitiveness in the international market. In contrast, Canada recorded a reduction in its production estimate, though insufficient to significantly alter the global balance.

Another relevant point was the increase in projected exports for Argentina, an important factor for the Brazilian market. Greater Argentine availability is expected to preserve the competitiveness of wheat supplied to Brazil during the commercialization of the new crop, limiting upward pressure on domestic prices, especially in consumption regions that are more dependent on imports.

In summary, the report presents a slightly bullish tone for the international market. Lower global stocks and the smaller U.S. crop provide support for prices, but this effect continues to be mitigated by the high competitiveness of wheat originating from Russia, Ukraine, and Argentina. As a result, the market remains balanced, with Southern Hemisphere crop weather conditions and the pace of exports from Black Sea countries expected to remain the main drivers of price movements in the coming weeks.

ELCIO BENTO
Market Intelligence Specialist - Wheat Safras & Mercado

This article was originally written in Portuguese and translated into English by the editorial team of Agrolatam.com, preserving the original content and analysis provided by the author.