Gürsel Erbap
Chairman and CEO
Doruk Un

The wheat outlook for 2024 suggests a year marked by significant uncertainties, particularly concerning weather patterns, the global economic landscape, and geopolitical conflicts. Projections indicate a modest 1% increase in global wheat yield compared to the previous year. Furthermore, carryover stocks are anticipated to reach their lowest level in eight seasons. Additionally, ongoing regional tensions and conflicts have the potential to disrupt logistics conditions, posing challenges to the wheat supply chain and food transportation networks on a global scale.

Production 

Although some regions in Europe and North Africa face certain challenges, expectations regarding wheat planting in the Northern Hemisphere are generally positive. Global wheat production is expected to result in around 798 million metric tons.

In major producers of the Northern Hemisphere, it is anticipated that all wheat production in the EU will be 1.8 million tons lower than last year, estimated at 128.7 million metric tons.

Updated field survey data has confirmed that winter wheat plantings in the United Kingdom are at their lowest level in the past four years due to excessive rainy weather obstructing field access. Production is expected to decrease by 2.0 million tons compared to the previous month, totaling 11.8 million tons.

Despite the widespread expectation of warmer and drier weather in Russia’s southern and central winter wheat regions, the estimated production assumption still exceeds an average of 90.4 million tons, mainly due to the generally sufficient soil moisture reserves.

Winter wheat conditions in the United States have generally improved in recent months, with 55% rated as good/excellent as of April 14th (compared to 27% last year, averaging 45%). According to field data, farmers plan to expand spring wheat plantings, including a sharp increase in the situation wheat, although the USDA’s winter planting area estimate has been revised downward. Consequently, reflecting the outlook for increased winter crops, the International Grains Council’s forecast for total US wheat production has been raised by 1.2 million tons per month to 52.8 million tons.

It is expected that wheat acreage in China, driven by local price satisfaction among producers, will be slightly higher than the previous year. Expectations generally indicate favorable development following abundant rainfall, with early yield expectations also positive, forecasting production at 138.5 million metric tons (+1%).

With a broader area and generally favorable crop conditions, production in India is expected to reach a record level of 110 million metric tons (+2%).

Pakistan’s crop estimate has increased by 1.3 million tons to a record level of 28.5 million tons. In Morocco, drought is expected to reduce both plantings and yields, with production forecasted to decrease by 38% compared to the previous year, to 2.5 million tons. Although early 2024 rains have stabilized the outlook in Algeria, production is still expected to be slightly below average at 2.9 million tons (+7%).

Consumption 

Projected wheat consumption for 2024/25 is estimated at 803 million tons, slightly below the previous year’s estimate by 3 million tons. Despite expectations of increased food consumption, the potential decrease in global supply of low-quality wheat and strong competition from non-wheat alternatives could lead to a decrease in feed wheat demand/consumption. The estimate of global feed usage, at 148 million tons (155 million), could be 1 million tons lower monthly, considering the decreases in supply expectations in the EU, Russia, Ukraine, and the United Kingdom.

A slight increase in world food demand, led by low- and middle-income countries in Asia and Africa, is expected to reach a new peak of 559 million tons, a slight increase compared to the previous month. Although it includes an upward revision for India, sustaining the country’s food purchases at a record level from the previous year seems unlikely if high tariffs continue to control imports.

LOWEST WHEAT STOCKS IN 8 YEARS

Global wheat carryover stocks for 2024/2025 are forecasted to be approximately 259 million tons, the lowest level in eight years; particularly, stocks in India, Turkey, and North Africa are expected to be at their lowest levels in 16 years.

Decreases in carryovers in major exporting countries are expected to decline to the lowest level in four seasons, to 59.3 million tons; however, positively, it is anticipated that stocks in the EU and Russia will reach previous high levels, while stocks in the US are expected to reach their highest level in four years.

 GLOBAL WHEAT TRADE TRENDS

World wheat trade is expected to decrease by 6.0 million tons annually to 196.5 million tons this season. While increased local production meets the needs of many major importers, such as China, Brazil, and the EU, significant imports from Russia to China in certain qualities will enable the country to export its wheat, responding to local demand. China, being the world’s largest wheat producer and consumer, is expected to shape markets in terms of price, supply, quality, etc., with an import demand of approximately 12 MMT. Additionally, due to expected increases in local production in Turkey and Pakistan, a decrease in wheat imports is expected for the 2024/2025 season.

Imports from North Africa may peak due to shrinking stocks and increased demand. With expected purchases for the United Kingdom and Indonesia, along with revisions expected in Pakistan and Nigeria, it is likely that Black Sea suppliers will meet the majority of the demand at the beginning of the 2024/25 season. Total annual exports from Kazakhstan, Ukraine, and Russia are estimated to be limited to approximately 69 million tons. With EU shipments fixed at 30.5 million tons annually, other suppliers are also preparing to increase their sales, with shipments from Australia and the US expected to increase this month. Conversely, forecasts for the United Kingdom have decreased due to a reduced crop estimate.

RECENT MARKET DEVELOPMENTS 

Global export offers showed fluctuating trends over the past month due to conflicting effects of generally positive supply news in some major Northern Hemisphere producers and adverse weather conditions affecting product quality. While the Council’s GOI wheat sub-index is currently approximately 1% lower than levels recorded in September 2020, increases are expected in Argentina, the EU, and Russia, in addition to supply declines in the US, Canada, and Australia.

The ongoing war in the Black Sea region occasionally elevates prices due to the closure of open positions; however, fluctuations in prices in the US futures market continue due to weak demand for US supplies and movements in currency markets. Price movements in the EU also fluctuate similarly; although generally unfavorable conditions and reluctant limited sales by farmers prevail, uninterrupted competition from the Black Sea will be decisive for sellers in the 2024/2025 season.

Despite recent certification issues reported for some cargoes, prices in Russia have risen while still being considered competitive. Prices in Ukraine have also risen; however, disruptions in shipments have occurred due to damage to some railway routes following recent attacks, affecting port operations.

Summary 

In conclusion, based on the information provided above, the year 2024 is expected to be a year filled with uncertainties in terms of weather conditions, the global economy, and conflicts:

 A 1% increase in global wheat yield is expected compared to the previous year, driven by better yields.

 Lower feed demand may lead to a slight decrease in consumption compared to the previous year.

 Carryover stocks may decline to the lowest level in eight seasons.

 Improvements in some importing markets may result in a 3% contraction in trade. Additionally, regional tensions and conflicts at the center of world trade could continue to disrupt logistics conditions, potentially affecting the entire wheat supply chain and food transportation.