1. Weekly News

Argentina

BAGE Reports Delayed Wheat Growth Due to Low Temperature

The Buenos Aires Grains Exchange's (BAGE) latest Weekly Agricultural Outlook highlights the impact of low temperatures on Argentina's wheat crop. The cold weather has delayed crop development and limited growth, resulting in 83.5% of the estimated 6.3 million hectares (ha) of wheat classified as "normal/excellent" condition. The crop is currently in a dormant state, awaiting forecasted rains. If these rains occur, they could significantly improve crop conditions, facilitating growth as the plants prepare to enter their reproductive stages. In regions that experienced rain in previous weeks, there have been observable improvements in the general condition of the plants, particularly in areas where fertilizers were effectively incorporated into the soil. These developments are crucial as the crop transitions to its next growth phase.

Canada

Canada's Wheat Production to Grow by 4% in 2024 but Falls Short of Expectations

According to Statistics Canada, Canada's wheat production is expected to grow by over 4% year-on-year (YoY) in 2024, reaching 34.4 million metric tons (mmt). Based on satellite and agro-climate data, this figure falls short of analysts' expectations of 35.125 mmt. Canada's spring wheat crop, a significant part of the total, is estimated at 25.4 mmt, slightly below last year's 25.5 mmt and well below the forecasted 26.6 mmt. Globally, wheat-ending stocks have been decreasing for five consecutive years and are anticipated to hit a nine-year low in the 2024/25 season, mainly due to adverse weather conditions affecting critical producers like Russia. Despite these global supply concerns, wheat futures on the Chicago Mercantile Exchange are still near four-year lows. This is because United States (US) wheat ending stocks are projected to reach a four-year high in 2024/25, and the market is also under pressure from abundant supplies of corn and soybeans. The United States Department of Agriculture (USDA) has a slightly more optimistic outlook for Canada's wheat production, forecasting a harvest of 35 mmt.

Germany

Germany's 2024 Wheat Harvest Expected to Decline by 12.7% Amid Persistent Rains

Germany's 2024 wheat harvest is projected to decrease by 12.7% YoY to 18.8 mmt due to unfavorable weather conditions, mainly persistent rains during harvesting. According to Germany’s Federal Ministry of Food and Agriculture (BMEL), this decline is part of a broader trend, with the total gross grain harvest expected to drop by 7.2% YoY to around 39.41 mmt. The German agriculture minister highlighted that crop development was severely impacted by poor weather throughout the season, emphasizing that climate change-related challenges have arrived sooner than anticipated in the agricultural sector. Despite these difficulties, German farmers were able to complete the harvest. However, concerns remain about the quality of the grain, with expectations of lower quality and reduced protein content due to the wet summer, as noted by the agricultural authorities.

United Kingdom

UK Wheat Harvest Projected to Decline in 2024, Falling Well Below Five-Year Average

The Agricultural and Horticultural Development Board (AHDB) projects the 2024 United Kingdom (UK) wheat harvest to reach 11.7 mmt, based on an average yield of 7.5 metric tons per ha and a planted area of 1.56 million ha. This yield is currently 7% below the UK's five-year average, reflecting the results from the ongoing harvest. However, the final yield and planted area could change as more crops are harvested, with the actual planted area to be confirmed by the Department of Agriculture, Environment, Food and Rural Affairs (DAERA) soon. If the planted area is lower than AHDB's current estimate, wheat output could decrease to 10.82 mmt, assuming a planted area of 1.44 million ha. This would place wheat production between 10.8 and 11.7 mmt, significantly below the five-year average of 13.9 mmt and last season's 14 mmt crop. Despite some early-season concerns, the 2024 crop is expected to be smaller than the 9.7 mmt harvested in 2020. The UK wheat supply and demand balance will rely on heavy year-ending stocks to offset the smaller crop.

2. Weekly Pricing

Weekly Wheat Pricing Important Exporters (USD/kg)

Yearly Change in Wheat Pricing Important Exporters (W35 2023 to W35 2024)

United States

In W35, US wheat prices rose by 13.64% week-on-week (WoW) to USD 0.25 per kilogram (kg) from USD 0.22/kg, although they are still 13.79% lower YoY. A rebound in US wheat exports drives this increase forecasted to exceed 1 mmt in the 2024/25 marketing year (MY) following a historical low in 2023/24. The improved price competitiveness of US wheat, particularly Hard Red Winter, is a crucial factor, as it is now trading at a smaller premium or even a discount compared to other major exporters. Additionally, the US is expected to have a larger crop and robust stocks, contributing to the current price fluctuations. As a result, US wheat prices are better positioned to compete globally and regain market share.

France

In W35, French wheat prices fell 4.35% WoW and month-on-month (MoM) to USD 0.22/kg, marking an 8.33% decrease YoY. This decline is mainly due to weak export demand, particularly from Egypt, and increased competition from Black Sea suppliers such as Russia. Moreover, the 2024 French soft wheat exports outside the European Union (EU) are projected to drop by 60% YoY to their lowest levels in 23 seasons, at 4.1 mmt. This significant decrease is due to heavy rainfall damage to crops, which has reduced exports to crucial markets, including Morocco, Algeria, and Tunisia.

Ukraine

In W35, Ukrainian FOB wheat prices decreased by 4.35% WoW and MoM but increased by 4.76% YoY. The price drop is due to slower trade and purchasing activity, primarily driven by a surplus of Black Sea wheat. This led to reduced demand prices for food and fodder wheat in the ports of Greater Odessa.

3. Actionable Recommendations

Optimize Production Efficiency and Supply Chain Flexibility

Optimizing production efficiency and supply chain flexibility is essential for the UK, which is experiencing a potential decrease in wheat production. UK wheat producers should maximize yields through improved agronomic practices and precision farming technologies. Additionally, enhancing storage and handling infrastructure will reduce post-harvest losses and ensure better supply chain management. Establishing flexible supply chain arrangements and diversifying input sources will help manage production fluctuations. Regularly assessing and adjusting production strategies based on market conditions and yield forecasts will stabilize the UK wheat supply and maintain competitive pricing.

Leverage Price Trends and Adjust Export Strategies

The recent increase in US wheat prices presents an opportunity to adjust export strategies and leverage price trends. The US should capitalize on its competitive pricing and increased export potential by targeting high-demand markets where US wheat can capture market share. Expanding promotional efforts and establishing strategic partnerships with crucial importers will help boost exports. Additionally, maintaining and enhancing quality standards will support price stability and competitiveness. Monitoring global market trends and adjusting export volumes will help manage price fluctuations and optimize revenue from wheat exports.

Enhance Export Marketing and Address Supply Chain Disruptions

In France, declining wheat prices due to weak export demand and competition from Black Sea suppliers require enhanced export marketing and addressing supply chain disruptions. France should develop targeted marketing campaigns to promote French wheat in under-served markets and differentiate its products based on quality and origin. Strengthening logistical support and supply chain efficiency will ensure timely and reliable delivery to international markets. Engaging with buyers to understand their needs and adjusting supply chain strategies to mitigate disruptions will help stabilize exports and support better pricing outcomes.

Sources: Oil World, UkrAgroConsult, Noticias Agropecuarias