In the 2023/24 marketing year (MY), Russia has been an aggressive exporter of wheat to the world market. It increased its share in 2023/24 MY in world wheat export to 24% vs 16% in pre-war 2021/22 MY. We call it ‘pre-war’ because major export traditionally is done in the first half of the season and Russia started war against Ukraine on 22 February 2022. Especially it was hard to compete with Russian wheat in the Middle East and African markets. Russia secured nearly 90% of the Turkish market while losing its share in Saudi Arabia in favor of the EU. Compared to the pre-war period, Ukraine lost a big share in the Egypt market due to Russia. This was the reason why the Ukrainian export plan 2023/24 was secured mainly by demand from Spain. 

EU demand saved Ukrainian wheat export plan

This season, Ukraine’s main wheat shipments were focused on the EU. This was due to the fact that Russia pushed Ukraine out of its former main markets. Especially, as some important buyers still prefer to limit their risks in view of the constant threat of shelling of Ukrainian logistics by Russia.

According to the official statistics, in July-March Ukraine exported 6.7 MMT of wheat to the EU, up 8% y/y (6.3 MMT same time last season), which takes almost 50% of the total wheat export from Ukraine.

Owing to a weak harvest in 2023/24 MY, Spain has become the main buyer of Ukrainian wheat among the EU countries in July-March, purchasing roughly 4 MMT (+1.4 times), followed by Romania (1 MMT), Italy (555 KMT) and Greece (268 KMT). 

It is interesting to note, that Russia sharply increased wheat export to the EU. In July-March it shipped 2.1 MMT to the EU compared to 0.9 MMT same time last season. However, next year the shipments may get smaller, if the EU Commission eventually decides on banning Russian grain imports, implementing a 95-euro duty.

Russian share in Turkish wheat market is coming closer to 90%

As for the other markets, Ukraine has declined wheat export to the Middle East, by nearly a half – to 1.8 MMT compared to 3.5 MMT in 2022/23 MY in July-March. Such a drastic decline was caused by lower shipments to Turkey – by 62% y/y to 971 KMT, while last season Ukraine managed to export 2.5 MMT same time last year. This was caused by the higher presence of Russia in this market. Turkish millers historically prefer Russian wheat due to its high quality. Meanwhile, in 2023/24 MY, Ukrainian wheat quality suffered much because of the weather, and we could see more feed grade available.

In July-March of 2023/24 MY, Russian export of wheat to Turkey accounted to 5.5 MMT against 6.2 MMT in the previous season. 

Besides, Russia actively exports its grain to Saudi Arabia this season, and for 9 months shipped 1.4 MMT, although this is 33% lower same time last year. Ukraine has nearly no export to this country, which is also connected with wheat quality, so this market is quite difficult to attract. 

Another prominent exporter, the EU kept its wheat shipment to Saudi Arabia fairly stable – at 1.05 MMT in July-February compared to 1.1 MMT same time last season. 

In addition, the EU traditionally exports wheat to Jordan, remaining the key supplier, although this season EU reduced the shipment to 373 KMT vs 850 KMT in the previous MY. At the same time, Russia accelerated its deliveries to Jordan – to 126 (34) KMT, however, this market cannot be considered as primary for Russia. 

Also, we can see that this season Russia boosted wheat export to Israel – to 986 KMT, becoming the largest supplier, among the three. Ukraine follows with 346 KMT, and the EU with only 40 KMT.

EGYPT SECURES WHEAT VIA DIVERSIFYING SUPPLIERS 

Looking at the African market, as one of the key buyers of wheat, it continued the diversification of suppliers. Ukraine here played again minor role this season. However, total shipments increased from 1.5 MMT in 2022/23 MY to 1.9 MMT in July-March. Such Ukrainian volume is nothing compared to Russia and the EU, who shipped 15.8 and 15.5 MMT respectively to this region.

Egypt remains the most focal point. The country heavily depends on wheat imports and after the full-scale invasion of Ukraine by Russia, which pushed global prices up, Egypt decided on diversification of suppliers. This ensures the stable inflow of grain to the country. Egypt started to shift towards direct wheat purchases to negotiate prices in addition to international tenders. The government gave the GASC the right to contract directly with any government or company.

In July-December 2023/24 MY, Ukraine increased its share on the Egyptian market to 15% vs 3% during the first war season 2022/23. However, Ukraine is far from 26% of the export share during the pre-war period. In 2023/24 MY (July-March), according to the official statistics, Ukraine boosted its wheat export to Egypt to 1.2 MMT compared to only 457 KMT a year earlier.

However, we must note that GASC started buying Ukrainian wheat in the tenders from December 2023. Until then, there were single bookings in March 2023. At this point, Russian wheat flooded the Egyptian market. Thanks to this, Russia kept its leading position here with 5.9 MMT of export in July-March 2023/24 MY (6.3 MMT LY), followed by the EU – 1.4 (1.6) MMT in July-February. Thus, Russia in July-December 2023/24 MY increased its share in the Egyptian wheat market to 63% vs 55% in 2022/23 MY. 

Another important market in this region is Algeria. Although it is one of the traditional markets, the European Union this season reduced its wheat export to Algeria by 17% y/y to 2.5 MMT (July-February). At the same time, Russia increased the shipments to 1.7 MMT (+7% y/y), as well as Ukraine – by 49% to 270 KMT (in July-March).

We should say, Tunisia was an active buyer of wheat this season, due to severe harvest losses (down 3 times). This helped Ukraine to elevate wheat export to Tunisia – to 300 KMT this season (+28% y/y), even though Tunisia keeps on importing mainly European wheat. According to the EU Commission, in July-February EU shipped 402 KMT in this direction. As for Russia, it has also increased wheat export to Tunisia by 1.1 times to 358 KMT in July-March. 

African region in terms of wheat trade should not be viewed without Morocco and Nigeria. However, there is no place for competition, because the EU here is the absolute winner. According to the EU Commission in 2023/24 MY, the EU countries, represented mainly by France, Germany and Romania, exported 3.7 MMT to Morocco (3.2 MMT last year). Shipments to Nigeria (mainly from Poland, Lithuania, and Latvia) rose to 2.1 MMT vs 1.9 MMT last year.

We can mention that Russia exported some wheat to Morocco this season as well, increasing it to 259 KMT vs only 8 KMT last year, and to Nigeria – to 196 (54) KMT respectively.

FAR EAST ASIAN COUNTRIES STOCK UP WHEAT IN 2023/24 MY

This region in 2023/24 MY is characterized by an increase in wheat imports, in particular from the EU and the Black Sea countries. One of the largest market players here is Indonesia, which is increasing wheat imports in 2023/24 MY. According to the European Commission, the EU exported 1.05 MMT of wheat in July-February vs only 227 KMT same time last year. However, Russia confidently took the lead in supplies, significantly increasing them at the same time. For 9 months of the 2023/24 MY, 1.4 MMT of Russian wheat was delivered to Indonesia, while last year’s export was virtually absent. Such an active demand is attracted by the fact that Russia is lobbying for its grain in this market. As a reminder, in October 2023 Russia brought a delegation to Indonesia to promote its grain to millers, who found Russian wheat quality to be high and attractive for them.

It is worth noting that Ukraine also increased wheat exports to Indonesia – in July-March 2023/24 844 KMT were delivered against only 353 KMT a year earlier, which generally shows the interest of importers in Ukrainian grain.

In 2023/24 MY, Russia took the lead in supplies to Pakistan, exporting 2.13 MMT against 1.7 MMT a year earlier (in July-March). However, Pakistan also increased grain imports from the EU and Ukraine. In particular, Ukraine delivered 814 KMT to the Pakistani market in July-March, while it is interesting that there were no deliveries in this direction last year. According to the European Commission, EU wheat export to Pakistan increased to 607 KMT (+9%).

In the current MY, Bangladesh also increased grain imports, but the largest amount was purchased from Russia – 2.9 MMT, which is 1.5 times higher than last year. The EU also increased supplies to 236 KMT in July-February against 190 KMT a year earlier. However, Bangladesh declined purchases of wheat from Ukraine – according to official statistics, 508 KMT were shipped in this direction in July-March (vs 733 KMT y/y). 

High demand for Ukrainian wheat was demonstrated by Vietnam – it purchased 407 KMT, while last year no purchases were made at all. Also, Vietnamese importers bought 229 KMT of wheat from the EU and 144 KMT from Russia.

As for China’s demand, the EU countries, namely France, delivered 1.7 MMT of wheat in the 2023/24 MR (July-February), Russia exported 136 KMT to China, but there were no deliveries from Ukraine. Therefore, the European Union occupies a confident leading position.

It can be clearly seen that the competition between the EU, Ukraine and Russia for global markets for the supply of their wheat is quite intense in the current season.

For Ukraine, this season seemed quite successful, thanks to the Ukrainian Grain Corridor. This way, Ukraine managed to re-enter its previously large markets, namely Egypt, Indonesia, Pakistan, and Vietnam. At the same time, Ukraine significantly lost its position in the Turkish market. Although it is worth noting that for Ukraine in 2023/24 MY, the European Union remains the main wheat export market, and it is expected that this order of things will be preserved in the coming season.

Wheat trade in the upcoming season may be even more tense. Taking into account the latest forecast for 2024/25 MY, the EU is expected to decline wheat production to 120.8 MMT (-4% y/y, as per EU Commission), as well as Ukraine – to 20 MMT (-9%, as per UGA). At the same time, Russia is expected to harvest a bigger wheat crop in 2024 – 93 MMT (SovEcon), as well as Australia – 28.4 MMT (vs 26 MMT LY, as per ABARES), Canada – 34.6 MMT (vs 32 MMT LY, AAFC), USA – 51.7 MMT (vs 49.3 MMT LY, FAS USDA). However, we should remember that in April-May all analysts provide quite optimistic forecasts. Normally, these forecasts are cut during the spring-summer period depending on the weather factor, and we need to keep an eye on this.

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