By: Jim Peterson
Posted: Jun 28 2024
The 2024 world wheat crop is pegged to be record large, at 29.1 billion bushels, according to the latest USDA estimate, but down from earlier estimates this year, primarily due to declines in EU and Russian wheat crop conditions. The declines in crops in these two major export regions could become the more important variable in future price trends, not the overall size of the world wheat crop.
Combined production in Russia, the Ukraine and Kazakhstan is estimated at 4.3 billion bushels, down from 4.8 and 4.65 billion in 2022 and 2023, respectively. Russian production is currently pegged at 3.05 billion bushels, down 10% from the average of 3.37 billion the past two years. Some private analysts have the crop sub 3 billion bushels. Ukraine is estimated to have a crop near 700 million bushels, which would be more than 100 million bushels less than the average of the past two years. A frost in May did notable damage to key winter wheat production regions in both countries, and this was followed by hot, dry conditions. Less hostile weather returned in mid to late June, leading some analysts to question some of the lowest production estimates, but there is no question production will fall well short of early season expectations.
In the EU/UK, production is estimated at 5.2 billion bushels, down from 5.5 billion on average the past two seasons. Prolonged wet conditions in many parts of Europe, starting last fall impacted both planted area and yields. Impacts to the French crop seem the most pronounced, but even in the UK and parts of northern Europe production may fall by more than 20% from last year.
Production estimates in the other four major export countries, the U.S., Canada, Australia and Argentina are currently higher than a year ago, offsetting declines in Europe and the Black Sea region. Planted area has trended steady to lower in both the U.S. and Canada, but production gains are driven by improved yields in winter wheat, and improved yield potential in spring and durum wheat crops. In Australia and Argentina, harvest will not take place until late November into January, so a lot of uncertainty remains, but favorable early season yield outlooks, is boosting production prospects early.
World wheat prices trended higher in May and early June, based on the declining production prospects in the EU and Russia, but have since retreated lower on improving production potential across the U.S. and Canada. Overall world demand has also stalled a bit, due to continued inflationary pressures in many large consumption countries, and declining feed use of wheat due to lower maize prices. The smaller crops in Russia, Ukraine and parts of the EU should take some price pressure off world markets, relative to a year ago, and open up greater export opportunities for other origins, especially on medium protein wheat classes.
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