Wheat prices have fallen from peaks earlier this year, but global wheat prices have remained high.
Exporters’ inventories are often measured as a measure of available supply on the world market and are closely correlated with export prices. Export stocks in 2022/23 are forecast to fall to their lowest level since 2012/13.
The United States is the remaining supplier as it has relatively more storage capacity compared to other export-oriented countries. The US is projected to hold the largest inventory of any major exporter, but its stocks are projected to fall to her lowest level since 2007/08. U.S. stocks reported in the Grain Stocks Report for September 2022 were in line with industry expectations, but the small grain summary suggests that this year’s U.S. wheat harvest will be lower than previously expected. It showed that it was basically at the same level as the previous year.
The dry climate of the Southern Plains has sharply reduced hard red winter wheat production, but spring wheat yields have improved significantly from the previous year’s severe drought. The tight US supply situation is reflected in higher US prices compared to other major suppliers. US seasonal average farm prices are projected to hit a record $9.20 per bushel, compared to the current record of $7.77 established in 2012/13.
European Union and UK combined wheat stocks1 are projected to decline. While the region has overall low yields, consumption is projected to increase. Wheat feed and residue demand, in particular, remains strong amid a declining corn crop.
Meanwhile, EU exports are set to increase to offset the decline in available supplies from Ukraine. The naval blockade at the time sent Ukrainian stocks soaring in 2021/22. The grain corridor has enabled wheat exports via seaports, with about 2 million tonnes exported in September. Ukrainian stocks are projected to drop due to lower production, but are still above historical levels.
Among the major exporting countries, only two countries are projected to have higher inventories. Canada is projected to recover given this year’s improved crop compared to last year’s drought-hit crop. But the situation remains very tight. A modest increase in inventories further reduces the stock-to-use ratio as exports are projected to increase in 2022/23.
Russia is another major exporter whose inventories are projected to rise. The country started the marketing year with very high inventories due to export restrictions including export taxes and export quotas from mid-February to the end of her June. The export tax will continue to be updated weekly, but at a much lower rate than the previous year.
With large initial stocks and a large harvest, Russia will continue to be the world’s largest exporter of wheat. Although the initial pace of Russian exports was relatively weak, monthly volumes are expected to increase as prices remain competitive. Still, Russia’s final stock is expected to be the largest in his 30 years.
Argentina’s Wheat Exports Decline with Smallest Yield in 7 Years
Argentina MY 2022/23 wheat production fell to 17.5 million tonnes this month as dry conditions continue to impact yield potential. After his year of record production, Argentina’s wheat harvest is now projected to be at its lowest level since 2015/16. Due to limited exportable supplies, Argentina’s MY (Dec/Nov) wheat exports fell by 1 million tonnes to his 12 million.
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In MY 2021/22, Argentina’s record harvest is projected to enable record exports of 16.3 million tonnes. Global wheat markets have been reeling from the supply shock caused by Russia’s invasion of Ukraine, but Argentina has absorbed some of the world’s import demand with abundant supplies and relatively competitive prices.
Importers, especially in the Middle East, Africa and Southeast Asia, struggled to find affordable wheat as Black Sea supplies were restricted and global prices soared. Expanded in Nigeria and other large import markets compared to Ukraine and Russia.
Argentina posted record monthly shipments of the 2021/22 crop in December, February, March, April and May. In doing so, Argentina quickly ran out of supplies, with export estimates jumping from $297/tonne in January to $492/tonne in June. Looking ahead, Argentina’s export prices typically fall in November, when the wheat harvest takes place.
Nevertheless, a poor production outlook in 2022/23 and increased competition from the Black Sea and Canada should ensure a loss of market share and lower exports in 2022/23.