W12 Wheat Update: Global Wheat Production Forecast Revised Downward by IGC in Mar-24 Report, Indian Wheat Purchases Raise Market Concerns

Global Wheat Production Forecast Revised Downwards for 2023/24 MY

In its Mar-24 report, the International Grains Council (IGC) revised its forecast for global grain production in the 2023/24 marketing year (MY) downward by 6 million metric tons (mmt) to 2.3 billion metric tons (mt). Despite the reduction, this figure exceeds the previous estimate in Feb-24 by 2%, primarily due to deteriorating prospects for the corn harvest in the Southern Hemisphere. Additionally, the IGC released its initial forecasts for 2024/25 MY, predicting record cereal production of 2.33 billion mt, driven by increased yields of wheat and feed grains. Specifically, the forecast for wheat production in 2023/24 MY increased by 1 mmt to 789 mmt compared to Feb-24 estimates, with a projected production of 799 mmt for 2024/25 MY.

Indian Wheat Procurement Raised Market Concerns

The Indian government's plan to increase wheat purchases for the state fund has raised concerns among traders about potential shortages in the domestic market. The Food Corporation of India aims to procure approximately 33.5 mmt of wheat in 2024, marking a 28% year-on-year (YoY) increase. Challenges include delayed harvests due to recent rains. Although India's wheat production is forecasted to reach 112 mmt in the 2023/24 MY, analysts predict a slightly lower harvest. Expectations for India to open its wheat import market are diminishing, particularly after the upcoming elections in May-24.

Pakistan's Wheat Stocks Exceeded 4.5 MMT as of Mar-24

As of Mar-24, Pakistan's wheat stocks totaled over 4.535 mmt, deemed adequate to meet local dietary needs. These reserves help to maintain strategic stocks, balance supply and demand in domestic markets, and stabilize wheat prices until the arrival of new crops. According to the Ministry of National Food Security and Research, out of this total, 1.610 mmt were carried forward from previous stocks, with the government procuring approximately 5.998 mmt from last year's wheat procurement drive. Punjab Province held over 2.405 mmt of wheat, followed by Sindh with 520,799 mt, Khyber Pakhtunkhwa with 133,065 mt, and Balochistan with 89,354 mt.

Azerbaijan's Wheat Import Volume Declined 50.8% YoY in Jan-24

According to the State Statistics Committee of the Azerbaijan Republic, Azerbaijan's wheat imports decreased by 50.8% YoY in Jan-24, totaling 70.145 thousand mt. The total value of wheat imports amounted to USD 16.29 million, marking a 62.5% decrease YoY. This is due to an average price per mt of USD 232.14, lower than the average price recorded in 2023, which was USD 258.63/mt.

Chinese Wheat Import Cancellations Impact Market, Affecting Australian Exports

Chinese wheat importers recently canceled the order of approximately 1 mmt of Australian wheat, which has led to a bearish trend in local wheat values. This cancellation follows similar actions regarding American wheat, totaling 500 thousand mt. While rumors suggest potential cancellations of French wheat orders, nothing has been confirmed yet. The decision to cancel orders aligns with the global market's decrease to three-and-a-half-year lows, attributed to increased stocks, promising yield potential for the upcoming northern hemisphere crop, and more certainty regarding exports from the Black Sea region. Analysts consider these cancellations a significant setback for Australia's export program.

Ukraine's Wheat Exports Reached 12.9 MMT in 2023/24 MY

Since the start of the 2023/24 MY, Ukraine has exported 32.44 mmt of grain and leguminous crops, including 2.769 mmt shipped in the first 20 days of Mar-24. By comparison, at the same time last year, total shipments reached 35.81 mmt, with 3.513 mmt exported in Mar-24 alone. Breaking down the exports by crop, wheat exports amounted to 12.9 mmt, including 1.128 mmt in Mar-24.