Invasion of Ukraine by Russia has telling impacts on wheat production. Global production drop will be about 1%. Down by about 7.4 MT (million tonnes), total global wheat production will be about 771.64 million metric tonnes (MMT) in 2022-23 marketing year, as per the projection of USDA. Lower harvests compared to last marketing year in Australia, Ukraine and Argentina will even out higher harvests in Brazil, Canada and Russia.
A new development warrants a mention here. Finally after months of blockage of Ukrainian grains by Russia in light of Ukraine-Russia war, a Ukrainian grain laden cargo ship left black sea port of Ukraine, Odesa. This is a milestone of sorts as no one; absolutely no one was expecting freeing of Ukrainian grains this soon in the aftermath of Ukraine-Russia war. This departure has been under new safe passage deal signed by Russia, Ukraine and Turkey in tutelage of UN. Under the safe deal provision is for export of some Russian grain and most importantly Russian fertilizer also. Restoration of supply of Russian fertilizer to the outside world can allay the drought situation developing in different parts of the world.
War Impacts on Global Wheat Market
Every war impacts agriculture sector. Wars have been known to impact sowing to harvest. So how could global wheat market escape bad impact of war between two biggest producers of wheat? If two countries collectively contributing 30% to global wheat trade one year wage war against each other very next year then what will be the impact is anybody’s guess. Ukraine is expected to see a drastic decline of 41% in Wheat Production in 2022-23 marketing year while Russian production will go up 8%. Canada wheat outlook has changed for the good after Ukraine-Russia war broke out. Scenting the opportunity of increasing its share in global wheat production in light of Ukraine-Russia war, Canada increased wheat acreage by 8% and its exports share has gone up to 12% of world wheat exports.
Wheat Acreage Decline in Argentina
Wheat acreage has fallen by at least 10% in Argentina. Argentina has a big share in global wheat production and it was expected that Argentina along with Brazil will compensate for loss of supply from Ukraine and Russia in light of Ukraine-Russia war. But fall in Argentinean wheat acreage has shattered this hope, although wheat acreage in Brazil has gone up. Reasons for fall in wheat acreage is La Nina third year in a row, increase in barley acreage and preference by some farmers to first season soybeans plantation over double crop (wheat/soybean).
Highest Wheat Acreage in Brazil in Last 30 years
Brazil’s wheat acreage has gone up by 7% as per the national supply company but Cogo intelligence and Safras & Marcado, two agro business Pvt. Consultancies are forecasting far more considerable 21% and 17% rise in wheat acreage respectively (largest acreage since 1990). If weather allows then Brazilian wheat production will be 18% more than last year and record-breaking 10 million tonnes production will happen.
