In W25 in the wheat landscape, the European Commission (EC) indicates that, in the first 50 weeks of the 2022/23 season, EU wheat exports amounted to 31.3 million mt, up 11% compared to the same period in 2021/22, which include 30 million mt of soft wheat (+13%), 0.713 million mt of durum wheat (-27%), and 0.443 million mt of soft wheat flour (-14%). EU wheat shipments in the period were primarily sourced from France (10.2 million mt), Romania (4.2 million mt), and Germany (3.7 million mt). Meanwhile, EU soft wheat shipments were mainly destined for Morocco (4.7 million mt), Algeria (4.1 million mt), Nigeria (2.8 million mt), and Saudi Arabia (1.5 million mt), while EU durum wheat exports were mainly headed to Tunisia (0.2 million mt), the UAE, Tanzania, Israel, and Algeria. Strategie Grains, in its June forecast, adjusted downwards EU 2023/24 soft wheat production estimates to 128.7 million mt, down 1.3 million mt compared to the May projection. However, this projected soft wheat production still represents an increase of 3.6 million mt compared to the 2022/23 season. The downward adjustment is primarily attributed to anticipated decreases in EU spring wheat production, influenced by dry and hot weather conditions in the northern regions of Europe, including the Baltic countries and the northern part of Poland.
In Argentina, 2022/23 wheat production is expected to reach 16.2 million mt, valued at USD 2.375 billion, a significant increase of USD 1 billion compared to 2021/22. Despite being the second-lowest production in eight years, the Rosario Stock Exchange (BCR) predicts a 40% recovery between the 2021/22 and the 2022/23 harvests. Meanwhile, planting projections stand at 5.6 million ha, the lowest wheat production since the 2015/16 harvest, excluding 2021/22. BCR also expects Argentine wheat exports to reach 9.5 million mt, a 120% increase, with potential revenue of USD 160 million in export duties. BCR suggests that Australia's poor wheat production prospects may allow Argentina to gain market share in countries traditionally served by Australia. However, the full impact of currency liquidation is not expected to be seen, as the volume declared for foreign sales already exceeds the expected export volume. This situation affects public accounts, as exporters have already paid 90% of export duties, resulting in an estimated contribution of around USD 160 million from the wheat export sector throughout the campaign.
In W25, the Brazilian wheat market witnessed limited trading activity as buyers and sellers remained unaligned. According to SAFRAS & Mercado, wheat transactions were driven by the specific needs of market participants. While mills were adequately supplied and insisted on high grain quality, wheat producers were hesitant to negotiate at current price levels, anticipating more favorable conditions in the future. Meanwhile, planting of the new Brazilian wheat crop continues without significant disruptions, and the recent cold weather, particularly in Rio Grande do Sul, has actually benefited the newly planted crops. As of W25, approximately 46.9% of the total planting area in Brazil had been sown, with Paraná reaching 82% completion, and Rio Grande do Sul progressing above 30%.
SovEcon expects Russian wheat exports in June-2023 to reach 2.8-3.2 million mt, a significant YoY increase due to Russia's robust export activity and ample stocks. Despite the expected seasonal slowdown, recent data from Russian ports indicates a rise in wheat exports, with W24's volume reaching 770 thousand mt, up compared to 650 thousand mt in W23. According to Rosstat, the abundance of wheat stocks in the major agricultural regions, which currently stand at 12 million mt, twice the long-term average, continues to support export efforts. SovEcon projects active wheat exports for the upcoming season, estimating a supply volume of 45.7 million mt, an increase of 1.3 million mt YoY. However, one challenge facing wheat exports is the minimum price requirement of USD 240 FOB for Russian wheat.
The Minister of Commerce of Iraq, Ater Al-Ghurairi, indicated that Iraq has achieved self-sufficiency in wheat for MY 2022/23 due to higher-than-expected grain supply volumes. The Iraqi wheat harvest is estimated to reach around 4-4.5 million mt, surpassing the annual requirement of 4.2 million mt. This increase in wheat production was due to reclamation of desert lands measuring 4,000 km² and other areas measuring 2,500 km² into agricultural use. Despite reaching self-sufficiency, Iraq still imports an additional 1 million mt of wheat to blend with its domestic grain due to the required gluten content. It’s worth noting that Iraq had previously achieved self-sufficiency in wheat from 2019 to 2021, with grain production reaching 4.7 million mt in 2019, 6.2 million mt in 2020, and 4.2 million mt in 2021. However, in 2022, due to water shortages and land desertification, Iraqi domestic wheat production declined to approximately 3 million mt, leading to high demand for grain imports.
China has been consistently importing over 1 million mt of wheat every month since Oct-2022. In Apr-2023, there was a notable surge in their purchases, reaching 1.68 million mt. Throughout the eleven months of the 2022/23 season, China mainly imported wheat from Australia (7.9 million mt), Canada (2.6 million mt), the US (1.1 million mt), France (1 million mt), and other countries (200 thousand mt). The USDA expects China's wheat imports in the 2023/2024 season to reach 12 million mt. This is attributed to increased demand due to heavy rainfall damaging wheat crops in Henan province, prompting China to seek large quantities of wheat from the international global market.
Lastly, according to Egypt's Minister of Supply, Ali Mozeli, Egypt's strategic wheat stocks are expected to last for six months. Egypt has purchased 3.6 million mt of wheat grain so far, primarily from domestic producers. However, if these stocks deplete, Egypt may need to import wheat from other countries, with Russia being among the priority exporters. Russia is already supplying wheat and other grains to the Egyptian market, and there are plans to expand the volume and variety of imported products. Deliveries are conducted both commercially and on a humanitarian basis. Despite restrictions on Russian ships imposed by the West, Russia has shipped 63 thousand mt of wheat to Egypt's port of Safaga on the Red Sea. Egypt has expressed a strong interest in Russian grain and has frequently purchased it through tenders conducted by the state-owned company GASC.
