Based on expectations for gains in both harvested area and yields, the scene is set for another huge world wheat harvest in 2021/22. However, with much of the global crop still in the field, much will depend on weather between now and the harvests. Based on conditions as of late-May, the International Grains Council (IGC) forecasts all-wheat (including durum) production at 790m t, up by 2% year-on-year (y/y) and potentially a new all-time peak.
International Grains Council (IGC)
At the time of writing, 2021/22 harvest operations were mainly limited to Asia and parts of North Africa, where mostly good results are expected. Just ahead of the start of the winter wheat combining season in Russia, Ukraine, the US and Europe, northern hemisphere crop prospects look broadly favourable. Recent weather has been mixed, but with some useful rains providing a timely boost for developing crops. However, some question marks remain about overly dry weather for spring varieties. Winter planting is also progressing quickly south of the equator, where exporters look set to expand acreage.
For the major wheat exporters, 2021/22 production gains are expected in Argentina, Ukraine, the EU-27 and the US, but with harvests in Australia, Russia, Canada and Kazakhstan seen smaller y/y. Cumulative output in these eight growers is placed at around 385m t, equal to the previous season, but 2% more than the prior five-year average.
The EU-27 wheat crop is forecast 8% higher y/y, at 134.8m t, including 127.0m t of common wheat and 7.8m t of durum wheat. With area rebounding sharply after very difficult seeding condition in the season before, most of the upswing is linked to an increased acreage, particularly in France, the bloc’s largest producer. Conditions have been mixed so far, but with recent rainfall stabilising the outlook somewhat. Cooler than average temperatures have contributed to developmental delays, which could potentially lead to a later than normal harvest.
It is shaping up to be another successful year for Russian wheat producers, albeit with forecast output of 79.3m t placed 7% below the prior season’s record. Although good rains have almost fully replenished soil moisture reserves in southern areas, some uncertainty remains about levels of winterkill. Losses were expected to be most severe in central regions, where temperature fluctuations were particularly wide. Spring planting made good progress, with farmers seemingly not dissuaded by recent changes to wheat export taxes. However, there are concerns about a lingering dry spell in eastern producing zones.
Despite some very dry soils during planting, conditions have improved steadily in Ukraine over the winter and early spring. As soil moisture reserves are plentiful in most regions, production is predicted to increase by 10% y/y, to 27.8m tonnes.
US all wheat production is pegged 3% higher than last year, at 51.1m t, including 1.8m t of durum (-7% y/y), with cumulative output down by 3% compared to the recent average. Given increased plantings and recent wet weather, winter production is on course to exceed last year’s total, with HRW yield prospects in Kansas looking especially promising. However, spring wheat and durum outlooks in the northern Plains is currently worrisome, with recent showers providing only limited relief from drought. As well as concerns about productivity, the dry conditions have sparked significant doubts about whether planting intentions will be fulfilled.
The dry weather also stretched across the border into Canada, with the worst of the drought seen in the south and eastern parts of the Prairie Provinces. Although this was beneficial for spring sowings, regular rains are now required if yields are to come anywhere close to their full potential. With plantings of spring wheat expected to shrink amid stiff competition from alternative crops, mainly canola, all wheat production is projected to drop by 8% y/y, to 32.3m t. This includes an estimated 6.2m t of durum, potentially 6% less compared to the season before.
While it is still very early on in the season, outlooks for the main southern hemisphere exporters are currently quite good. Sowings in Australia have progressed well, with farmers in western regions incentivised by high market prices and beneficial rains. Factoring in a rise in area, but with yields seen below the prior year’s excellent result, output is tentatively seen about one-fifth lower y/y, at 26.3m t.
In Argentina, farmers could reap potentially strong profits this year, especially in areas double-cropped with soyabeans. With acreage forecast to stay high, production could rebound by 15%, to 20.3m t.
Among key importing regions, cumulative production in North Africa is seen 17% higher y/y, at 29.9m t, potentially a new record. Larger than average harvests are predicted in all of the main growers, including in Egypt, where use of irrigation is more widespread compared to its neighbours. The sharpest regional increase is expected in Morocco, where wheat production is on track to reach 6.7m t, compared to just 2.6m t in the year before and including 2.2m t of durum (0.8m t in 2020/21). After a dry start to the season, conditions have been nearly ideal since the turn of the year, including regular and widespread showers. Owing to the much heavier domestic supply outlook, the government recently moved to re-establish punitive import tariffs, with common wheat duties hiked from 0% to 135%, and durum duties from 0% to 170%. Weather in Algeria has not been quite as beneficial, seen too dry in central and western parts. With somewhat better conditions in the main western growing regions, output is seen little changed y/y, at 3.8m t, of which durum is expected to account for around 80%.
The 2021 IGC Grains Conference, which takes place on 8-9 June 2021 (https://www.igc.int/en/conference/programme.aspx), provides an ideal forum for deeper analysis of the key supply (and demand) drivers in world grain, oilseed and rice markets. Expected to attract more than 400 participants from around the world, the programme includes 12 panel discussions, 10 side events, virtual table debates and exhibition rooms. A dedicated session on 9 June will focus on the prospects for the production of 2021/22 wheat (as well as maize and soyabeans) in the key suppliers. Discussions will also include the latest developments in yield monitoring, including through remote sensing technology, which may add further clarity to global supply chains.