US wheat markets fell to a 3-week low at close yesterday and imposed pressure on global and UK wheat markets to follow. Global wheat season-end stocks and US wheat production estimates were raised in the USDA’s world supply and demand estimates (WASDE) released yesterday.

Cuts to usage meant global ending wheat stocks for the 2019/20 season were raised 0.7Mt to 295.8Mt. The global ending wheat stocks figure for 2020/21 was revised 6.0Mt up from the May estimate to 316.1Mt following better outlooks for India and Australia, amongst others.

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Australian wheat production estimates were increased following continued rainfall across many key producing regions. Revisions added 2.0Mt to the 2020/21 harvest prediction, with a 26.0Mt wheat crop now expected. If realised, this would be a 71% increase on the 15.2Mt crop seen in the 2019/20 season.

Pre-report industry estimates also expected cuts to 2020/21 US wheat production figures. However, the report included an increase of 0.3Mt to 51.1Mt, now a 2.2% decrease from 2019/20.

These increases more than offset further cuts to 2020/21 wheat production in the EU (-2.0Mt) and Ukraine (-1.5Mt).

Since Monday, Chicago wheat futures (Dec-20) have fallen $4.40/t to close yesterday at $189.41/t, with the contract declining further this morning. This has pressured UK wheat futures (Nov-20), which saw a lesser decline of £2.00/t ($2.52/t) to close at £167.00/t yesterday.

Since the start of April to close yesterday, Chicago wheat futures (Dec-20) have fallen 7.9% but over that period, UK wheat futures (Nov-20) gained 1.5%. This is largely due to UK weather uncertainty and a weaker sterling preventing declines in UK futures. This spread could narrow over the short-term, depending on the impact of rainfall events across parts of the UK on crops and how sterling moves.

Market Commentary