In his insightful interview with Miller Magazine, Tim Worledge, Editorial Director at Fastmarkets, discusses the key factors shaping the global grain markets as they transition between the 2023/24 and 2024/25 marketing years.

Interview by: Svitlana Synkovska

Tim Worledge

As the grain industry transitions between the 2023/24 and 2024/25 marketing years, significant changes are shaping the landscape of global wheat markets. In an exclusive interview, Tim Worledge, Editorial Director at Fastmarkets, leverages his extensive experience and knowledge of the grain markets to provide an in-depth analysis of the pivotal factors influencing this shift. From the ongoing disruptions in the Black Sea region due to the Russian invasion of Ukraine to the fluctuating dynamics of major importing and exporting countries, Tim offers a comprehensive overview of the market trends and challenges. He sheds light on the broader implications of market movements, including the potential effects of India's wheat policies and the anticipated shifts in the US and Australian markets. He also provides a preview of the upcoming Global Grain Geneva Conference-2024, which promises to be a key event for industry stakeholders, expanding its focus to include pulses alongside grains and oilseeds.

Tim, it's great to speak with you at the transition between two grain seasons – 2023/24 and 2024/25. Let's start by summarizing the key points from the previous marketing year. What were the main highlights for the global grain wheat markets from your point of view?

I think whether they're highlights or not is debatable, but all eyes are generally on the Black Sea still and what's been happening there since the Russian invasion of Ukraine. Obviously, the sense of interruption to the flow from such a key export region has been very acute. We've been monitoring that for the last couple of years and I think we're now at a stage where you can see that over the last two years any fears that some of that huge Russian wheat harvest wasn't going to get to the marketplace or was going to be held up or face other interruptions have gone out of the window. We can see we're in a fairly well-supplied market, and that's been reflected in prices, which have really come down since the highs of February and March 2022. It has not been the most fun situation for anyone active in this space, although we’re starting to see the signs that maybe we’ve at least reached a bottom.

STABILITY IN GRAIN EXPORTS AMIDST MARKET UNCERTAINTY

Any surprises from the importing or exporting countries' point of view this season?

I think we've got a better sense of clarity on the supply side. Demand has probably benefited from the fact that prices have been quite low, and we've certainly seen countries like Egypt, which have been linked with all sorts of internal issues because of funding and currency situations - the exchange rate has not been particularly favorable to Egypt - but we've certainly seen appetite continue there, and demand from those North African, Middle East and Asian countries has been fairly hefty. 

As for exporters, we've got more clarity over Ukraine. There were big question marks over how much Ukraine could credibly export because of the grain deal situation, which collapsed earlier in 2023. But Ukraine seems to have powered through that and has continued delivering on a bulk scale as well as through smaller outlets like the Danube. This has done a lot to stabilize wheat prices and reassure people that Ukraine is still a major exporter. We've seen Ukraine competing very well with Russian and other wheat suppliers, particularly in recent tenders.

MARKET TIGHTENS AS GLOBAL GRAIN RESERVES HIT HISTORIC LOW

We've seen the lowest grain stocks for the last decade. Can you comment on this and how this factor will contribute to future market developments?

Yes, we have, and it's been a bit unusual. So much focus has been on how big Russia's wheat crop has been that you kind of forget there have been shortages in other parts of the world. Argentina has not been firing on all cylinders because of severe drought problems. Australia has seen a recovery in its production but still has some limitations on how much it can get to market because of port capacity. It's no surprise that stocks have been slowly running down in the background. With relatively competitive and attractive wheat prices, you can expect demand to keep kicking in. We've seen those stocks declining, and I think you can see that now. It's set a baseline from where wheat prices have begun to bounce back again, partly because people are looking ahead to the Ukrainian and Russian wheat harvest. Late frosts and late snow in May have raised question marks over how big that crop could be, and we've seen prices bouncing back amid expectations of smaller production. This is partly a reflection of the fact that we don't have the same level of cushion in place as we had in the recent past. We're now looking at maybe a sub-80 million tonne Russian wheat harvest as we go ahead. So, prices have ticked a little higher, which has consequences for some importers, but it's a reflection that the market is now a bit tighter than it has been for a while.

PIVOTAL FACTORS IN GLOBAL WHEAT PRICE OUTLOOK

Talking about wheat prices development for the next half of the season, should we watch the harvest in Russia precisely? Do you think it could be a defining factor for the whole trajectory of wheat prices in the next 3-4, five months?

I think that's fair to say. Yes, there are question marks over some of the expectations because there isn't a huge amount of visibility into what's happening in Russia. There are question marks over whether the damage has been as bad as declared. But certainly, it's going to be one of the defining factors. India still has a huge wheat crop, and it will be interesting to see what happens with the new Modi government. There were expectations that India might slash some of its wheat import duties and allow a bit more activity, but so far, nothing. The Indian government is giving off reassuring noises at the moment, saying they don't need to import, but they've done that before and then imported straight after. So, there's a question mark over what India is doing. It remains to be seen what Australia and Argentina do. The switch from La Niña back into El Niño, which should benefit Argentina, seems to have been fairly short-lived. We're now running back into a La Niña situation with potentially drier conditions coming into Argentina. In Australia, it looks like we're on course for another fairly good harvest, not record-breaking levels, but still plenty of options there. The US has also come back impressively. The US export rate is notable. Vietnam was also highlighted in US wheat export date recently and at nearly 90,000 tonnes it was the biggest volume since September 2020. The US has been at the forefront of trade into Asia recently, with South Korea, Thailand, the Philippines, and Vietnam all involved.

To summarize, what are the main risk factors and risk regions in global grain trading we should monitor more precisely?

There's a lot. “May you live in interesting times,” as they say. Monitoring Russia is always critical because of the role it plays in these environments. So that's probably the one to keep an eye on, particularly regarding weather and harvest size. Additionally, the developing situation in the Middle East is still very difficult for some major importers in the region, with the risk of escalation or spillover from current conflicts still present. There's plenty to think about and worry about in those areas, so we should certainly keep an eye on how these situations are unfolding.

GLOBAL GRAIN GENEVA BROADENS ITS SCOPE

Please tell us a little bit about the Global Grain Geneva Conference-2024.

For Global Grain Geneva, we're looking forward to heading back to Switzerland at the end of the year for what is a fixture in the agriculture trade calendar. Our Global Grain Geneva conference will be held at the Intercontinental Hotel Geneva on November 12-14, 2024. It remains a key event for the industry, and we hope to see many of you there – as ever, there's plenty to talk about. For the first time, we're broadening our agenda to look not just at grains and oilseeds, but also at pulses. These are becoming key parts of the market due to changes in international diets. It really is the must-attend event of the year and I know many of you will have it in your diaries already, so we look forward to seeing you in Geneva in November.