W6 Wheat Update: USDA Forecasts Slight Rise in Global Wheat Production and Exports for 2023/24, Australia's Wheat Exports Surge in Dec-23, Brazil's Reduced 2023/24 Wheat Production Forecast and Russia-Ukraine Conflict Disrupts Africa's Wheat and Fertilizer Supply

Wheat

Indonesia

Vietnam

Published Feb 22, 2024

In W6 in the wheat landscape, the USDA predicts a slight increase in global wheat production and exports for 2023/24, with decreasing ending stocks. Climate change and the spread of plant diseases pose significant threats to global crop yields and food security. A study by the Technical University of Munich found that a fungal disease in grains could reduce global wheat production by 13% by 2050. Australia's wheat and durum wheat exports surged by 24% in Dec-23 but fell short of previous levels. Argentina's wheat production is estimated at 15.4 million tons, with corn production at 57 million tons and sorghum production at 900 thousand tons. Brazil's wheat production is expected to be 8.09 million tons due to heavy rainfall in Rio Grande do Sul. Brazil's wheat trade surplus results from limited interest in internal wheat transactions, but wheat exports have surged, leading to a trade surplus. Lastly, the Russia-Ukraine conflict disrupts Africa's wheat and fertilizer supply, causing significant financial implications.

USDA Forecasts Slight Rise in Global Wheat Production and Exports for 2023/24

The United States Department of Agriculture (USDA) February 2023/24 report predicts a slight increase in global wheat production to 785.74 million metric tons (mmt) and a rise in exports to 210.69 mmt, with ending stocks slightly decreasing to 259.44 mmt. Wheat harvest forecasts for Ukraine, the United States (US), and China remain steady.

Global Wheat Production Threatened by Climate Change and Spread of Plant Diseases

Climate change significantly threatens global crop yields and food security, with plant diseases being a significant risk. An international team led by a Technical University of Munich (TUM) professor has found that the spread of a fungal disease in grain could reduce global wheat production by 13% by 2050. The global area of wheat crops is 222 million hectares (ha), and the volume of the global harvest is 779 million tons. Climate change has led to the faster spread of diseases like piriculariosis caused by the fungus Magnaporthe oryzae, seriously threatening wheat production. Researchers from Germany, Mexico, Bangladesh, the US, and Brazil have modeled how wheat blight will spread in the future.

Australian Wheat Exports Rebound in Dec-23, Yet Fall Short of Previous Year's Levels

In Dec-23, Australia's wheat and durum wheat exports surged by 24% to 1.4 mmt, as reported by the Australian Bureau of Statistics (ABS), compared to the previous month. However, this figure marks a notable decline from the 2.66 mmt exported in Dec-22. Most soft wheat was shipped to Thailand, Vietnam, and China. Additionally, bulk grain exports experienced a 26% increase month-on-month (MoM) to 1.26 mmt, with China, the Philippines, and Indonesia being the primary recipients.

Argentina's 2023/24 Wheat Production Forecast Exceeds USDA Estimate

Due to higher final-stage yields, Argentina's wheat production for 2023/24 is estimated at 15.4 million tons, which is 400 thousand tons higher than the official USDA estimate. Due to larger planted areas, corn production is projected at 57 million tons, which is 2 million tons above the official USDA figure. Sorghum production remains unchanged, but exports are forecasted at 900 thousand tons, 400 thousand tons below the official USDA figure. Rice production is projected at 1.1 million tons, significantly lower than the official USDA figure due to smaller planted areas and lower yields. El Niño weather has resulted in the loss of 5 thousand ha of rice in Corrientes, with yields expected to be below the official USDA estimate.

StoneX Reduces Brazil's 2023/24 Wheat Production Forecast Amid Weather Challenges

StoneX has lowered Brazil's wheat production for the 2023/24 forecast to 8.09 million tons due to heavy rainfall in Rio Grande do Sul. Imports are expected to remain steady to meet local demand. The primary adjustment was an increase in feed consumption to 910 thousand tons. The ending stock is projected to see the most significant annual decrease, with an expected 104.5 thousand tons compared to last year's 555.3 thousand tons.

Brazil's Wheat Trade Surplus Amidst Focus on Soybean and Corn

Internal wheat transactions in Brazil are currently experiencing limited interest as the focus shifts to soybean and corn crops. Despite this, wheat exports have surged, leading to a trade surplus at the beginning of the year. By W4, wheat exports had reached 812.18 thousand tons, a significant increase from 561.52 thousand tons in the same period the previous year. Wheat imports also rose to 520.64 thousand tons, up from 439.98 thousand tons in Jan-23. The average import price of wheat dropped 30% to USD 249.2/ton Free on Board (FOB) origin, compared to the previous year's USD 356.2/ton.

Addressing Africa's Wheat and Fertilizer Supply Amidst Russia-Ukraine Conflict

The conflict between Russia and Ukraine has disrupted Africa's wheat and fertilizer supply, causing significant financial implications. The head of the Technologies for African Agricultural Transformation (TAAT) Clearinghouse suggests that Africa can achieve food security through unity and collaboration. High-yielding wheat varieties in Africa are also highlighted, with the African Development Bank partnering with Nigeria to expand wheat production.