1. Weekly News

Argentina

Improved Wheat Crop Conditions Amid Favorable Weather

According to the Buenos Aires Grains Exchange (BAGE), approximately 85.5% of the 6.3 million hectares (ha) estimated for wheat are in average/good condition, showing substantial improvement from the previous report. Recent rains in the central-eastern and southern agricultural areas have improved the water condition between adequate and optimal by 3%, particularly in Buenos Aires and La Pampa provinces. Over 90% of these provinces' areas maintain normal to good crop conditions despite development delays caused by low temperatures.

Brazil

Wheat Challenges in Paraná Due to Weather Issues

In Paraná, Brazil, wheat crops in the northern regions are facing severe challenges. In the Maringá region, nearly all wheat fields are reported to be in poor condition, with the remaining areas only in average condition. The situation is slightly better but still concerning in Londrina, Apucarana, Ivaiporã, Campo Mourão, and Jacarezinho, where only a tiny portion of the wheat is developing well.

Europe

EU Wheat Production Estimates Reduced Amid Adverse Weather Conditions

Estimates for European wheat production further declined as lower-than-expected yields in France and Germany, the European Union's (EU) leading agricultural producers, were impacted by persistent rains that negatively affected grain crops. The EU forecasted common wheat production at just 116.5 million metric tons (mmt), 5.8 mmt less than the previous forecast and the smallest since the 2018 harvest of 114.8 mmt . In particular, the French government recently lowered its soft wheat harvest estimate by 3.3 mmt to 26.3 mmt, marking a 25% year-on-year (YoY) decrease from last year and the smallest harvest since 1987. Additionally, concerns are emerging about the quality of the harvested grain.

Indonesia

Indonesia's Wheat Milling Industry Anticipates Growth Amid Rising Demand

Indonesia's milling industry is poised for growth, driven by a growing population, evolving flour production trends, and food diversification. With four new milling plants expected to start operations in 2024/25, the industry, currently consisting of 30 mills with a 14.4 mmt installed capacity, dominates 99.9% of the domestic market. Despite the country's favorable tropical climate for multiple cropping, wheat is not cultivated locally, making Indonesia entirely dependent on imports. According to the United States Department of Agriculture's (USDA) Foreign Agricultural Service (FAS), rising demand for wheat products is anticipated to boost wheat imports by 22% to 11.5 mmt in 2023/24, with a slight decline to 11.4 mmt expected in 2024/25.

Russia

Russia's 2024 Wheat Harvest Could Fall Short of 86 MMT Projection Amid Challenging Weather Conditions

Russia's Agriculture Minister has indicated that the country's 2024 wheat harvest might fall short of the initially projected 86 mmt. Despite challenging weather conditions, the Ministry of Agriculture is holding its overall grain harvest forecast at 132 mmt, with 86 mmt earmarked for wheat and 28 mmt for oilseeds. However, the final wheat export forecast for the current agricultural year (July 1, 2024, to June 30, 2025) still needs to be decided. The minister noted that the wheat harvest figures could decline, and export quotas for 2025 could be adjusted once the harvest is determined.

Ukraine

Ukraine Proposes 15.2 MMT Wheat Export Limit for 2024/25 Season

In the 2024/25 grain season, a draft appendix to the Memorandum of Understanding between Ukraine's Ministry of Agrarian Policy and grain market organizations proposed capping the maximum export volume of Ukrainian wheat at 15.2 mmt. This export limit specifically targets wheat and wheat-rye mixtures (meslin) of all classes, while the draft does not outline export limits for other grain crops. The Ukrainian Grain Association (UZA) president mentioned that this maximum wheat export volume has yet to be officially approved.

2. Weekly Pricing

Weekly Wheat Pricing Important Exporters (USD/kg)

Yearly Change in Wheat Pricing Important Exporters (W34 2023 to W34 2024)

United States

In W34, US wheat prices decreased by 8.33% week-on-week (WoW) to USD 0.22/kg from USD 0.24 per kilogram (kg). YoY, prices significantly declined 26.67% from USD 0.30/kg in W34 2023. This price drop is mainly due to a positive outlook for US wheat production, with dry conditions expediting the harvest. US wheat exports have notably increased since the start of the agricultural season, with contracts totaling 8.5 mmt established between June 1 and August 1, reflecting a 33% YoY rise. Out of this, 3.4 mmt have already been shipped, primarily to Mexico and countries in Asia and Oceania. The USDA projects total wheat exports for the season to reach 22.5 mmt, representing a 17% increase from the previous season, though still slightly below the five-year average. The US wheat crop is also seeing substantial improvement, with 74% rated as good or excellent, the highest rating since 2018.

France

In W34, French wheat prices held steady at USD 0.23/kg over the past month but fell by 4.17% YoY. The decline is due to weak export demand, particularly from Egypt, and increased competition from Black Sea suppliers like Russia. This drop follows an initial price increase triggered by a Russian missile attack on a Ukrainian grain port, which raised concerns about potential disruptions to Ukrainian grain exports.

Ukraine

In W34, Ukrainian FOB wheat prices remained stable week-on-week (WoW) but increased by 4.55% month-on-month (MoM) and 9.52% YoY. This rise is due to limited grain offers and strong demand. The market was bolstered by farmers' reluctance to sell, which restricted supply, while robust buyer demand further drove up prices.

3. Actionable Recommendations

Expand Russian Wheat Export Markets

Russia should work on expanding its wheat export markets to mitigate the impact of potential harvest shortfalls. This can be achieved by forging new trade agreements with emerging markets in Asia and Africa, where demand for wheat is growing. By enhancing marketing efforts and leveraging the strategic importance of Russian wheat, the country can strengthen its position in global markets. Additionally, investing in logistical improvements and optimizing supply chain management will ensure timely and efficient delivery to international buyers. This approach will help stabilize Russian wheat prices and maintain revenue despite potential production challenges.

Enhance Indonesia’s Wheat Import Strategy

Indonesia should improve its wheat import strategy to meet the growing demand driven by an expanding milling industry. Given the country's reliance on wheat imports and the anticipated rise in import volumes, establishing long-term contracts with major wheat-exporting countries and diversifying sources of supply will be essential. Additionally, investing in infrastructure to streamline the import process and reduce costs can further enhance the efficiency of the supply chain. By exploring new supplier markets and negotiating favorable trade terms, Indonesia can better manage import costs and ensure a steady wheat supply to support its milling sector.

Address French Wheat Production Decline

France should enhance its wheat production resilience by investing in weather-resistant crop varieties and advanced agricultural technologies. Given the significant decline in yield and quality due to persistent rains, support should be increased for farmers to adopt modern drainage and irrigation systems. Collaborating with research institutions to develop and promote wheat varieties that are better suited to variable weather conditions will be crucial. Additionally, improving crop monitoring and forecasting tools can help mitigate the impact of adverse weather on future harvests. This approach will help stabilize domestic production and improve quality, supporting the local market and export opportunities.

Sources: Zol, Elevatorist, Agroconf