World grain markets heading towards a record production in 2021/22 but only a marginal increase foreseen for stocks. In its last grain market report, International Grains Council (IGC) forecasts that world wheat production will reach 790 million tonnes in 2021/22 season. The Council also predicted that the world wheat trade will be 188 million tonnes in the forthcoming season with the increase in demand.
Current prospects for world grain production point to a third successive year of moderate growth, with FAO’s first forecast for the world grain output in 2021 now pegged at nearly 2 821 million tonnes (including rice in milled equivalent), a new record. Global wheat production is also expected to increase, up 1.4 percent year on year.
In its last grain market report, International Grains Council (IGC) forecasts that world wheat production will reach 790 million tonnes in 2021/22 season. The Council also predicted that the world wheat trade will be 188 million tonnes in the forthcoming season with the increase in demand. In recent days, the increase in prices of products such as soybeans, sunflower seeds, and particularly corn, causes more demand for wheat. 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.
It seems that even though there is no problem in production, the intense demands that will arise will determine the price policy and thus, price pressure will occur in the market. Due to the pandemic, many exporting companies are experiencing container shortages, high freight prices, and logistics problems on top of restrictions, quotas, and high taxation.
In the past decades, consumers worldwide have grown accustomed to getting a substantial cover by buying cheap ex-harvest Black Sea wheat. This year, however, trading in new crop Black Sea wheat is lacking both enthusiasm and direction. Recently introduced Russian floating tax on grain exports which enters into force in the first week of June has effectively made it impossible to calculate the tax on forward grain deals.
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- Maneuvering in the Dark
“Wheat markets will continue to be anything but boring. A seasoned wheat consumer should not be fooled by ample supplies, and should procure cover on the breaks and if and when long-awaited harvest pressure materializes ahead of projected record demand.”
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- Black Sea wheat: Napoleonic plan 2021/22
After April’s lack of rain, May brought more moisture and better prospects of world wheat harvest 2021/22. Apart from the abundant crop, May WASDE report showed that American analysts also foresee Russia to preserve its place of #1 world wheat exporter in 2021/22. We should note, that even in case Russian wheat crop 2021 would be closer to 81 MMT as per SovEcon vs. 85 MMT in May USDA report, this decrease should be compensated with higher by about 5 MMT y/y beginning stocks. Will Napoleonic export plan come true and what could be the main obstacles for its achievement?
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- Changing climates and wheat
Although climate change is effective on grain areas in different parts of the world, according to the latest report of the International Grain Council, it is estimated that there will be no problems in world wheat production. It is predicted that wheat production will increase from 774 million tonnes up to 790 million tonnes. The drought experienced in Turkey this year will adversely affect the wheat harvest. It will be seen more clearly during the season how the lack of precipitation in Brazil and the very dry and cold weather in the USA will affect the production.
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