Two years with war in Ukraine - What's the status in the wheat market?


Russia is the world's fourth largest wheat producer and produces over 90 million tons of wheat annually. Ukraine, on the other hand, is the ninth largest with a production of more than 25 million tons. Combined is the two countries accountable for 15% of the world's wheat production. (IGC, 2024).


Russia had what we call a bumper wheat crop in the marketing year of 2022/2023 and in 2023/2024. A bumper wheat crop is an unusually good wheat harvest. Ukraine is affected by the war, but they are actually doing very well production wise. Some areas are not possible to grow, but the yield was 4,6 tons per hectare in 2023/2024 which is 1,4 tons more than Russia is able to in their area. (USDA, 2024).


Ukraine´s production and exports has not been influenced as much as first believed and the combination above has led to a surplus coming out of the Black Sea Region which presses the future prices down to a low that we haven't seen in a long time. The ending stocks are also quite high in EU and Russia minimizing the chance for a short term spike in wheat prices. 


A report from PRETB (posted on CME) highlights the same point and underscoring the importance of weather as we enters a new growing season: “The availability of Russian and EU wheat will continue to prevent large price rallies, Northern Hemisphere growing weather as a key determinant of market direction in the upcoming season”. (CME, 2024).


Sources: 


International Grains Council. (2024, March 4). Supply & Demand as at: GMR 551 - 15/02/2024. Retrieved from https://www.igc.int/en/markets/marketinfo-sd.aspx


CME Group. (2024, March 4). pretb-weekly-market-report-2024-03-04.pdf. Retrieved from https://www.cmegroup.com/newsletters/agricultural-market-report-by-pretb/files/pretb-weekly-market-report-2024-03-04.pdf


United States Department of Agriculture. (2024). Wheat Country Summary: Ukraine. Retrieved from https://ipad.fas.usda.gov/countrysummary/Default.aspx?id=UP&crop=Wheat


United States Department of Agriculture. (2024). Wheat Country Summary: Russia. Retrieved from https://ipad.fas.usda.gov/countrysummary/Default.aspx?id=RS&crop=Wheat


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