Russian wheat crop drops to three-year low after frosts, USDA says

CHICAGO, June 12 (Reuters) - The U.S. Department of Agriculture cut its forecasts for Russia's wheat production and exports on Wednesday, after Moscow declared federal emergencies over crop losses due to unfavorable weather.

Concerns about damage from drought and frosts in Russia, the world's biggest wheat supplier, drove Chicago Board of Trade wheat futures to 10-month highs in May while EU wheat topped one-year highs. CBOT wheat pared losses after the USDA reduced its estimates in a monthly report.

Cuts to the Russian crop are contributing to tightening global supplies. World wheat stocks are projected to drop to a nine-year low in 2024-25, while soybean stocks are expected to increase and corn supplies look more comfortable following recent tightness.

The USDA pegged Russia's 2024-25 wheat harvest at a three-year low of 83 million metric tons, down from 88 million tons last month, and its exports at 48 million tons, down from 52 million in May.

"USDA's likely going to continue to revise lower not only Russia but also Ukraine next month when they get a clearer picture of the frost damage," said Terry Reilly, senior agricultural strategist for Marex.

The department projected global wheat ending stocks for 2024-25 at a nine-year low of 252.27 million tons, down from 253.61 million in May. Analysts expected 251.18 million, according to a Reuters survey.

May frosts in Russia's breadbasket regions already caused agricultural consultancies IKAR and Sovecon to downgrade their crop forecasts.

Russia's Ministry of Agriculture has estimated crop losses from frosts at about 1.2% of the total sown area and said most dead crops were reseeded. But frosts affected between 15% and 30% of winter grains, varying by region, the head of Russia's grain union said on Tuesday.

For the U.S., the USDA projected all-wheat production at a five-year high of 1.875 billion bushels, compared to 1.858 billion in May and analysts' estimates for 1.88 billion. U.S. wheat ending stocks are expected at a four-year high in 2024-25 and U.S. corn stocks are projected to reach a six-year high. (Reporting by Tom Polansek. Additional reporting by Karl Plume in Chicago. Editing by Mark Potter)