25.12.2024, 17:35
Reduction in Russian Wheat Exports Will Drive Global Prices Up
A rise in wheat prices is inevitable as other countries will not be able to compensate for the reduction in Russian supplies
Russia continues to reduce its wheat production and export levels, which could significantly impact the global market. Andrey Sizov, head of the SovEcon analytical center, noted that the issues will affect not only the current season but also the coming years, according to the Agrosearch.kz analytical center.
In 2024, Russia’s wheat harvest amounted to 81.8 million tons, almost 10 million tons less than in 2023. The primary cause was unfavorable climatic conditions, particularly in autumn, which negatively impacted winter wheat crops. The next year's harvest is expected to be even lower, further reducing Russia's presence in the global market.
The wheat export forecasts are also bleak. In the 2025/26 marketing year, Russia is projected to export only 36.4 million tons of wheat. This is 7.3 million tons less than expected in the current season and 19.2 million tons less than the record export level of 55.6 million tons in the 2023/24 season. Over two seasons, the export volume is expected to shrink by more than 50%.
The reduction in Russian wheat supplies poses significant risks to the global market. Other countries, such as Argentina and the United States, are unlikely to compensate for the shortfall. This could lead to a rise in wheat prices in the coming months. According to Andrey Sizov, current global wheat prices are undervalued, and the situation could worsen if the USDA lowers its forecast for Russian wheat exports in the 2024/25 marketing year. While U.S. analysts currently estimate Russia’s exports at 47 million tons, SovEcon maintains a more conservative forecast of 43.7 million tons.
Meanwhile, wheat prices on global exchanges have been declining since December 11. For example, March wheat futures in the U.S. fell from $5.656 to $5.385 per bushel, equivalent to a price drop from $208 to $198 per ton.
📊 Key Points:
1️⃣ Russia's wheat harvest in 2024 decreased by nearly 10 million tons compared to the previous year and is expected to decline further next season.
2️⃣ Russian wheat exports could fall by more than 50% over two seasons, creating a deficit in the global market.
3️⃣ A rise in wheat prices is inevitable as other countries will not be able to compensate for the reduction in Russian supplies.