Recent reports indicate that Russia’s wheat export revenue is likely to decline due to falling global food prices and production setbacks. According to the Food and Agriculture Organization (FAO), world food prices fell by 24.7% from their peak in March 2022 as of August 2024, with grain prices dropping nearly 12% year-over-year. This trend is expected to impact both production and trade volumes for wheat, exacerbated by recent adverse weather conditions in Russia.
Global wheat prices have decreased due to sluggish demand and intensified competition among exporters, with higher-than-expected wheat production in Argentina and the U.S. also contributing to the price drop. In contrast, corn prices have risen slightly due to concerns about heatwaves affecting yields in the EU and parts of the U.S., alongside reduced corn supplies in Ukraine.
The FAO has revised its global grain production forecast for 2024 down by 2.8 million tons, projecting a total of 2.8 billion tons, roughly equivalent to last year’s levels. The report highlights a decrease in feed grain production to 1.5 billion tons, a reduction of 9.4 million tons from 2023, largely due to adverse weather conditions in the EU, Mexico, and Ukraine. Conversely, global wheat production is expected to reach 791.4 million tons, surpassing earlier projections and last year’s figures, driven by better-than-expected yields in the U.S., China, and Argentina.
However, the FAO anticipates a decline in global grain consumption for the 2024–2025 season, with total consumption forecasted at 2.8 billion tons, a decrease of 4.7 million tons from previous estimates. Wheat consumption is expected to fall to 793.3 million tons, 0.6% lower than the 2023–2024 season. Trade volumes are also projected to decrease, with global grain trade estimated at 485.6 million tons, down 3.3% from the previous season, and wheat trade expected to be below 200 million tons, a 3.7% drop.
In Russia, experts have adjusted their forecasts for the 2024 grain harvest downward. The company ProZerno has reduced its estimate by 2 million tons to 126 million tons due to a 3.7% decrease in sown areas and a 9.7% drop in grain yield compared to last year. The revised forecast for corn is particularly concerning, with production expected to fall to 12.4 million tons, a significant drop from earlier estimates.
Similarly, SovEkon has lowered its wheat production forecast to 82.5 million tons from a previous estimate of 83.3 million tons, citing lower-than-expected yields in certain regions. Despite this, the Ministry of Agriculture of Russia maintains its projection of 132 million tons of total grain production for 2024, including 84 million tons of wheat.
The decline in global food prices and production challenges are putting pressure on Russia’s wheat export revenues. With lower production forecasts and reduced export volumes, the Russian wheat sector faces significant hurdles. As global market dynamics shift, Russian producers may need to adapt to maintain their competitive edge and profitability.
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