W9 Wheat Update: India Sets Wheat Procurement Target Amidst Declining Production, Brazil Increases Imports Due to Domestic Shortage

Published 2024년 3월 7일

In W9 in the wheat landscape, India's wheat production for 2023/24 is expected to decline by 1.8% YoY due to below-average rainfall, leading to the government setting a procurement target of 30 to 32 mmt for the 2024/25 crop season to address buffer stock concerns and rising prices. In the US, a potential decrease in wheat plantings for 2024 has already impacted markets, with wheat prices declining compared to soybeans, although US wheat futures faced downward pressure in Mar-24, possibly due to currency fluctuations or reduced overseas demand. Additionally, in Brazil, the scarcity of quality wheat has led to increased imports, while São Paulo expects a reduction in wheat cultivation in 2024 as farmers opt for other grains like corn, reflecting broader shifts in agricultural priorities.

India's Wheat Production to Drop 1.8% YoY in 2023/24

India's wheat production is projected to decline by 1.8% year-on-year (YoY) in 2023/24 due to below-average rainfall, according to the Ministry of Agriculture and Farmers' Welfare.

India Sets Wheat Procurement Target Amid Weather Challenges

The Indian government has set a wheat procurement target of 30 to 32 million metric tons (mmt) for the June-24 to Jul-25 crop season, aiming to address the impact of unfavorable weather conditions on the country's buffer stocks and rising prices. Despite expectations of record wheat production at 114 to 115 mmt, the procurement target is set to ensure sufficient reserves. Moreover, Indian authorities are considering importing 1 mmt of wheat from Russia to stabilize domestic prices before the 2024 general elections.

USDA Forecasted Reduction in Wheat Plantings for 2024

The United States Department of Agriculture's (USDA) preliminary acreage forecast for 2024 suggests a potential decrease in US wheat plantings compared to the previous year. This has already impacted the market, with wheat prices experiencing continuous declines, surpassing those of soybeans. Despite the projected reduction in planted acreage, Mar-24 US wheat futures faced downward pressure on the Chicago Stock Exchange, possibly due to currency fluctuations or decreased overseas demand. Analysts express concerns about the implications of these projections on farmers and the agricultural sector, especially considering the potential for increased market volatility and lower average grain prices in 2024 due to reduced fuel and fertilizer costs.

Russia's Wheat Exports to Brazil Reach 840 Thousand MT in 2023

At the 12th meeting of the Russian-Brazilian Intergovernmental Commission on Trade, Economic, and Scientific Affairs in Moscow, participants reported that Russia supplied Brazil with significant quantities of various commodities in 2023. Specifically, Russia provided Brazil with 840 thousand metric tons (mt) of wheat during the year.

Brazil's Wheat Imports Surge Amid Domestic Quality Shortage

In Brazil, the scarcity of quality wheat in the domestic market has led to increased cereal imports, with national purchases reaching 383.95 thousand mt by the third week of Feb-24, surpassing the previous year's February total of 291.63 thousand mt. Despite supplying many mills, active buyers in the spot market are seeking higher quality wheat due to adverse weather conditions affecting the Brazilian harvest, and increasing reliance on imports, particularly from Mercosur countries. Meanwhile, producers are focusing on planning for the next season, with recent productivity losses and low domestic prices since 2020 potentially discouraging wheat sowing efforts, as highlighted by Cepea researchers.

São Paulo Anticipates Decline in Wheat Cultivation for 2024 Harvest

Due to a decrease in wheat production and farmers opting to allocate more land for other grains, São Paulo, Brazil is expected to witness a reduction in wheat cultivation in 2024. Reports from cooperatives presented during a meeting of the Wheat Sector Chamber indicate a projected decrease of at least 20% in planted areas for the upcoming harvest. The primary factor driving this shift is the uncertainty among producers regarding which cereal to cultivate. Corn is offering a more favorable outlook.

South Korea Unveils Plan to Boost Domestic Wheat Industry in 2024

The Ministry of Agriculture, Food and Rural Affairs (MAFRA) in South Korea unveiled its '2024 Domestic Wheat Industry Promotion Implementation Plan' on February 28, aiming to boost domestic wheat production and support companies utilizing domestic wheat. As part of the plan, the number of wheat production complexes will increase from 73 to 100, with incentives for companies processing and developing wheat products. The initiative aligns with the government's goal of achieving 5% wheat self-sufficiency by 2025, with a budget allocation of USD 37.47 million (KRW 50 billion) to support various action plans.