China remains the world’s leading consumer country with 149 million tons, followed by the European Union with 108 million. These countries would account for a third of the world’s consumption, followed by India, Russia and the United States.
The most recent estimates from the United States Department of Agriculture (USDA) report that world wheat production during the 2021/22 business cycle would reach an all-time high of 776 million tons.
This harvest would slightly exceed the 775 million tons obtained in the previous business cycle. The new production record would be driven by the 1.1% annual increase in the harvested area, which would offset a slight drop in the average yield.
The main wheat producers are the European Union, India and China, with shares of 18, 17.6 and 14.1%, respectively. In the European Union, it is estimated that production will grow 10.6% annually, showing a significant recovery compared to 2020/21, a cycle in which production is affected by drought conditions.
In China, production would grow 2%, in India an increase of 1.5 percent is expected. The 15% drop in production expected in Russia stands out, which remains the fourth largest producer worldwide.
World grain consumption would also be record (785 million tons), surpassing the previous historical maximum by 1.5%. The main use of the grain will be human and industrial consumption, demanding 81% of total consumption. The remaining 19% would be used for fodder consumption, with an expected annual growth of 1.2 percent.
China remains the world’s leading consumer country with 149 million tons, followed by the European Union with 108 million. These countries account for a third of world consumption, followed by India, Russia and the United States.
Regarding international trade, the growth dynamics observed in the recent decade are expected to continue. The main importers worldwide are Egypt, Indonesia and China.
The 5.8% drop in expected imports in China stands out, which would stand at 10 million tons due to higher domestic production and lower demand for grain for fodder consumption.
For its part, the European Union would return to the first place in exports, with shipments close to 36 million tons and annual growth of 19.4 percent.
In second place, would be Russia (35 million tons and fall of 9.1%), followed by the United States and Australia. The expected drop of 43% in Canadian exports stands out, due to lower availability due to adverse weather.
Ending inventory, one of the main determinants of price internationally, is estimated at 277 million tons, this is 3.9% below the expected registered inventory for 2020/21. For the second consecutive business cycle, ending inventory would decline, reflecting the greater dynamism of demand relative to supply.
In the face of announcements of cuts in the global ending inventory projections, the international reference price of wheat has been pushed up since mid-2020.
The increase in the international price also reflects the increase in the main agricultural products, due to the Covid-19 pandemic. In May 2021, the price of soft red winter wheat (SRW) reached $ 293 per tonne, the highest value since the beginning of 2013.
Similarly, the price of hard red winter wheat (HRW) is currently at $ 311 per tonne, the highest record in the last seven years. In the futures market, the prices of both varieties for the coming months are around 275 dollars per ton, a figure that could be increased due to greater international demand.
* Ricardo Bustos Guajardo is a specialist in the Economic Research subdirectorate at FIRA. “The opinion expressed here is that of the author and does not necessarily coincide with FIRA’s official point of view.”
Reference-www.eleconomista.com.mx