In W21 in the wheat landscape, the global wheat market in the 2023/24 season is expected to be bullish due to the effects of El Niño, which is likely to present weather anomalies from June 2023. Wheat producers from the Northern Hemisphere with spring crops and from the Southern Hemisphere will be the most affected. Canada's spring wheat output should be hardest hit in the Northern Hemisphere, while in Russia, good winter crop prospects and high carryover stocks may reduce El Niño's influence on total supply. Argentina and the US can benefit from the effects of El Niño, but Australia tends to see reduced rainfall and lower crop yields, causing a negative impact. The European Commission (EC) reports that, in April 2023, EU wheat exports increased by 4% MoM and 12% YoY, with shipments mainly destined for Morocco (4MMT), Algeria (3.83MMT), Nigeria (2.32MMT), Egypt (1.67MMT), and Saudi Arabia (1.44MMT). The top exporting countries were France (9.59MMT), Romania (3.86MMT), Germany (3.29MMT), Poland (2.68MMT), and Lithuania (2.5MMT).
The USDA indicates that in the week ending May 18th, US wheat export inspections totaled 407.68K MT, up from 263.44K MT in the previous week and ahead of the 275.54K MT registered in the same period in 2022. As of May 21st, US spring wheat sowing reached 64% of the planned area, up compared to 48% achieved in the same period in 2022 but down compared to 73% on a 5-year year average. The condition of US winter wheat crops has slightly improved compared to the previous week. The share of crops in poor and very poor conditions decreased from 41% to 40%, while the proportion of crops in good and excellent condition increased from 29% to 31%. Despite a significant expansion of planted areas (+5%), the US wheat crop is expected to increase by less than 1% to 45.2MMT due to a prolonged drought. APK-Inform adjusted downwards the US wheat harvest forecast in the 2023/24 season by 1.5MMT compared to the previous estimate of 46.3MMT. The lowering of the forecast is due to the slow pace of US spring sowing and poor conditions for the development of wheat sown in autumn. The US autumn wheat harvest is expected to reach 32.6MMT, a downward adjustment of 1.3MMT, while the spring wheat harvest is anticipated to amount to 13.7MMT, down by 200K MT.
SovEcon adjusted upwards the 2023 Russian wheat harvest by 1.2MMT to 88MMT due to further improvement in the condition of crops in the south. The positive adjustment is attributed to the revaluation of the Russian winter wheat harvest to 63.9MMT since the spring wheat crop was unchanged at 24.2MMT. In W20, Russian wheat export prices fell again as the global market eased due to good supply and an extension of the Black Sea grain deal, as well as local expectations of a cut in export duty. The deal to allow Ukraine to export its grain safely across the Black Sea was extended in W20 for two months. Therefore, the price of Russian wheat with 12.5% protein content, delivered FOB from the Black Sea in June, was USD 242/MT, down USD 6 from the previous week.
The 2023 Indian wheat harvest is likely to reach 112.7MMT, a record harvest, reiterating India’s farm ministry estimate of 112.2MMT, despite lower crop yields due to unseasonal rains in February and March. Earlier in 2023, torrential rains and hailstorms hit India’s fertile northern, central, and western plains, damaging ripening winter-planted crops including wheat, and exposing farmers to losses. Indian wheat procurement in 2023 could fall by a fifth from the initial estimate, as Indian government purchases have slowed down in the last few days after local prices jumped. Turkish authorities estimate the wheat production for the 2023 season to increase by 3.75 % from 20MMT in 2022 to 20.75MMT in 2023 due to increasing rainfall. The harvest is expected to start in June and continue until the end of August across the country. Lastly, PBS reports that, from July 2022 to April 2023 in the 2022/23 season, Pakistani wheat imports amounted to 2.68MMT, valued at USD 1.05B, up 21.27% in volume and 32.08% in value compared to the same period in 2021/22. The increase in wheat imports in Pakistan was driven by a shortage of domestically produced wheat, primarily caused by flash floods that ravaged large areas of the country. The devastation resulted in substantial damage to standing crops, exacerbating the existing wheat shortfall for domestic consumption.
