With the world consuming more wheat than it produces for the first year since 2012-13, prices are also on the rise. According to Global Trade Atlas data, the average global wheat price increased 4 percent year over year to $203 per metric ton in 2017-18 (June 1 to May 31). Most of that price increase occurred in the last five months of the marketing year as the market digested lower Northern Hemisphere wheat production estimates and strong demand for 2018-19.
Here is a by-country look at current production estimates and the average wheat prices (noting that prices vary by class and quality) from major exporting countries and regions.
United States. According to the U.S. Wheat Associates Price Report, the average price for U.S. wheat rose an average $47 per metric tons from one year ago. Hot, dry conditions in the U.S. hard red winter growing region decreased yield potential and pushed prices up for this largest U.S. wheat class. USDA forecasts U.S. 2018-19 wheat production at 49.7 million metric tons, up 5 percent year-over-year, but still 11 percent below the 5-year average. U.S. beginning stocks are estimated at 29.4 million metric tons, down 8 percent from 2017-18, but still 28 percent above the 5-year average. Increased U.S. wheat production is expected to offset the lower U.S. beginning stocks and total U.S. supply is expected to remain stable year over year at 79.1 Mmetric tons.
Canada. The International Grains Council reported the average price for Canada Western Red Spring at 13.5 percent protein (13.5 percent moisture basis) from Vancouver rose to $255 per metric tons in May. This is up $24 per metric tons from May 2017 and reflects the tighter global supply and demand picture. On June 21, Agriculture and Agri-Food Canada forecasted 2018/19 common wheat production (excluding durum) at 25.4 million metric tons, up slightly from 2017-18. A 15 percent bump in spring wheat planted area contrasts with an 11 percent drop in winter wheat planted area. Predicted 2018/19 durum production will increase 15 percent to 5.7 million metric tons due to an 11 percent year over year increase in planted area. The global supply and demand situation for durum wheat is also supporting prices. Canadian durum prices at $282 per metric tons are an average $7 per metric tons above 2017 levels.
European Union
IGC reported the average French wheat price reached $205 per metric tons in May, up from $187 per metric tons the year prior. French production is expected to increase to 37.8 million metric tons, up 4 percent due to higher expected yield and larger planted area. 2018/19 EU wheat production is expected to fall 1.80 million metric tons from 2017-18 to 140 million metric tons according to Stratégie Grains, which is providing continued price support for exportable French supplies.
Australia
The current average price for Australian wheat of $239 per metric tons is up 22 percent year over year according to IGC data, which point to lower carry-in stocks and hot, dry conditions. In June, the Australian Bureau of Agricultural and Resource Economics and Science forecasted 2018/19 Australian wheat production to rise 3 percent from 2017-18 to 21.9 million metric tons, despite a 3 percent decrease in planted area to 29.5 million acres (12.0 million hectares).
Argentina
In May, the average price for Argentine wheat reached $261 per metric tons according to IGC data. That is up 38 percent year over year. This month, the Buenos Aires Grain Exchange reported Argentine farmers see higher revenue potential and expects them to plant 7 percent more area to wheat in 2018-19, reaching 15.1 million acres (6.1 million hectares). USDA’s June estimate for 2018-19 Argentina’s wheat production was 19.5 million metric tons (716 million bushels), up 8 percent from 2017-18 and 35 percent greater than the 5-year average.
Black Sea (Russia, Ukraine and Kazakhstan)
The average price for Russian 4th grade milling wheat (8.8 to 10.5 percent protein on a 12 percent moisture basis) reached $213 per metric tons in May, up 14 percent from the year prior according to IGC. Expectations for lower 2018-19 production in the Black Sea region are supporting export prices. USDA projects combined 2018/19 output from Russia, Ukraine and Kazakhstan will drop 14 percent to 109 million metric tons (4.00 billion bushels) based on an expected return to trendline yields. If realized, the combined harvest would still be greater than the 5-year average.
At the end of May, the Russian Meteorological Service noted hot, dry conditions threatened winter wheat in Russia’s southern regions, which have not received rain since April. Conversely, cold wet weather is delaying spring wheat planting in other regions. To date, 23.3 million acres (9.43 million hectares) of spring wheat has been planted, compared to the 2017-18 total spring wheat area of 30.9 million acres (12.5 million hectares). Russian consultancy SovEcon forecasted Russian wheat production to decline to 77.0 million metric tons (2.83 billion bushels), down 10 percent from 2017-18.
UkrAgroConsult reported Ukrainian wheat planted area increased 2 percent year over year to 15.5 million acres (6.28 million hectares). The Ukrainian meteorological service expects wheat yields to fall 8 percent year over year to 56.5 bushels per acre (3.80 metric tons per hectare). 2018-19 Ukrainian wheat production is forecast at 23.9 million metric tons (878 million bushels), compared to 25.4 million metric tons (933 million bushels) in 2017-18.
IGC expects yield declines and smaller planted area will lower Kazakhstan wheat production to 13.7 million metric tons (503 million bushels), down 7 percent from 2017-18, if realized.
