1. Weekly News

Australia

Australia's 2024/25 Wheat Production Forecast Raised to Over 31 MMT

Australia is forecasted to produce over 31 million metric tons (mmt) of wheat in the 2024/25 season, which is about 2 mmt more than previously forecast and significantly higher than the 2023/24 output. This increase comes after rain in key crop regions improved yields. As the world's third-largest wheat exporter, Australia's bumper production will likely pressure global wheat prices, already trading near four-year lows. While crop conditions on the East Coast have been excellent throughout the year, Western Australia, the largest wheat-producing region, experienced extreme dryness until rain began in Jun-24.

Brazil

Brazil's 2024 Wheat Production Forecast Downgraded to 8.1 MMT

Brazil's 2024 wheat production is projected to reach 8.13 mmt, marking a decrease from the earlier forecast of 8.85 mmt and a 4.3% year-on-year (YoY) drop from the 2023 harvest of 8.5 mmt. The main factor behind this reduction is the crop failure in Paraná, where production is now estimated at 2.69 mmt, significantly lower than the initial projection of 3.6 mmt and the 3.65 mmt harvested in 2023. Productivity in Paraná is expected to decline by 10.4% YoY, reaching 2,34 metric tons (mt) per hectare (ha) across 1.15 million ha. Conversely, Rio Grande do Sul is projected to be the largest wheat producer for the current season, with a forecasted harvest of 4 mmt from 1.28 million ha. Productivity in Rio Grande do Sul is expected to increase by 43.8% YoY to 3.13 mt/ha, rebounding from a significant decline in the previous year.

France

French Soft Wheat Exports Outside EU Forecasted to Plummet 60%

French soft wheat exports outside the European Union (EU) will drop by 60% YoY in the 2024/25 season, marking their lowest level in 23 years. Heavy rains severely damaged wheat crops in France, the EU's largest producer, leading to this sharp decline. France will export only 4.1 mmt of wheat outside the EU, a significant drop from the five-year average of 10 mmt. Key markets such as Morocco, Algeria, and Tunisia, which are anticipated to import around 1 mmt, will see steep supply declines, despite rising demand following poor harvests. French wheat sales to China are also expected to be impacted, with no exports reported this season. Additionally, exports within the EU are predicted to fall below last year’s total of 6.3 mmt.

Russia

Russia's 2024 Wheat Harvest Forecast Reduced to 82.5 MMT Amid Lower Yields in Key Regions

Russia's wheat harvest forecast was reduced to 82.5 mmt in W36, slightly lower from the previous estimate of 83.3 mmt made ten days earlier. This marks a further decline from the early Aug-24 projection of 82.9 mmt, which had already been lowered from 84.7 mmt. The decrease is mainly due to lower-than-expected spring wheat yields in central Russia and the Volga region, prompting SovEcon to cut the harvest outlook by 0.4 mmt for the central area and 0.3 mmt for the Volga region.

Russian Railways Report 15.78% Increase in Wheat Transportation in Aug-24

From August 1 to August 31, 2024, Russian railways saw a significant 15.78% rise in wheat transportation, reaching 1.86 mmt. Domestic wheat traffic accounted for 269 thousand mt, representing 14.4% of the country's total rail wheat traffic, while 85.4% was for exports, 0.2% for imports, and 0.0% for transit. The Volga Federal District was the largest domestic producer, transporting 120.26 thousand mt, whereas the Southern Federal District led in exports with 699.97 thousand mt. The Far Abroad served as the primary hub for both exports and imports.

2. Weekly Pricing

Weekly Wheat Pricing Important Exporters (USD/kg)

Yearly Change in Wheat Pricing Important Exporters (W36 2023 to W36 2024)

United States

In W36, United States (US) wheat prices rose by 4% week-on-week (WoW), reaching USD 0.26 per kilogram (kg) from USD 0.25/kg. The United States Department of Agriculture (USDA) reported that winter wheat planting has progressed by 2%, with concerns about soil moisture and drought. Despite this week’s price increase, wheat prices remain 13.33% lower YoY as the US is expected to have a larger crop and robust stocks, contributing to current price fluctuations and better position US wheat to compete globally and regain market share.

France

In W36, French wheat prices rose by 4.55% WoW to USD 0.23/kg. This increase aligns with the International Grains Council's (IGC) decision to lower its global wheat production forecast for 2024/25 due to poor harvests in France. Despite the recent rise, prices remain 4.17% lower YoY due to weak export demand, particularly from Egypt, and heightened competition from Black Sea suppliers like Russia. Additionally, French soft wheat exports outside the EU are projected to plummet by 60% YoY to 4.1 mmt, the lowest levels in 23 seasons. This sharp decline is due to heavy rainfall that damaged crops and reduced exports to crucial markets such as Morocco, Algeria, and Tunisia.

Ukraine

In W36, Ukrainian FOB wheat prices increased by 4.55% WoW and 9.52% YoY, reaching USD 0.23/kg. The price rise for the 2024/25 wheat season is due to a reduced exportable surplus resulting from declines in harvest and carryover stocks. The decrease in stocks and production could lead to a 2 to 3 mmt reduction in export potential, driving up wheat prices in the new season. According to the agriculture ministry's crop forecast, Ukraine's 2024 wheat harvest is projected at 19 mmt, down from 22.2 mmt in 2023. The ministry also anticipates a decline in wheat exports to 14 mmt for the 2024/25 season, compared to 18 mmt in 2023/24. Additionally, the area sown with winter wheat decreased to approximately 4.2 million ha from around 4.4 million ha the previous year due to poor weather conditions.

3. Actionable Recommendations

Enhance Export Capacity and Address Production Constraints

Given the reduced wheat harvest and export potential, Ukraine should focus on enhancing export capacity and addressing production constraints, including investing in better storage facilities and logistics to manage reduced stocks efficiently. Strengthening relationships with key markets such as China and North Africa will help maintain export volumes despite reduced supply. Research and development will also support long-term production stability by addressing factors contributing to lower harvests, such as adverse weather conditions.

Leverage Price Trends and Adjust Export Strategies

With recent increases in US wheat prices, leveraging this trend is crucial for optimizing export strategies. The US should target high-demand markets and explore opportunities in regions experiencing production shortfalls. Expanding promotional efforts and forming strategic alliances with critical importers will enhance market presence. Regularly reviewing market conditions and adjusting export volumes to align with global demand will help manage price fluctuations and optimize revenue. Meanwhile, France should refine its export marketing strategies to address declining export volumes and competition. Developing targeted campaigns to highlight the quality and origin of French wheat can help capture market share in emerging and high-demand regions. Improving logistics and supply chain efficiency will ensure timely delivery and support better pricing outcomes. Engaging with international buyers to tailor offerings to their needs will also be beneficial.

Optimize Production Efficiency and Address Regional Challenges

With a forecasted increase in wheat production, Australian producers should focus on optimizing yields through advanced agronomic practices and precision agriculture, including utilizing weather data to make informed decisions about planting and harvesting. Enhancing storage and handling infrastructure will be crucial to managing the large volumes of wheat and reducing post-harvest losses. Given the impact of past dryness, maintaining flexibility in water and input management will also help address future climate challenges. For Brazil, addressing the production decline in Paraná and boosting yields in Rio Grande do Sul are essential. Improving productivity in Paraná involves investing in better seed varieties, advanced irrigation systems, and precision farming techniques to counteract the impact of crop failures. In Rio Grande do Sul, increasing focus on effective crop management practices and disease control can help capitalize on the potential for higher productivity and offset the reduction in total wheat production.

Sources: Milk News, Zol, UkrAgroConsult, AgroForum, Portal Do Agronegócio, Hellenic Shipping News, Food Mate