This is the outlook for wheat in 2022

The wheat market has had an exceptional year, with a record price set on the Matif in Paris. In October 2020, the wheat price exceeded €200 per ton for the first time that season and this bottom was not broken. Looking at the price formation over several years, this is far above average.

Record price
The high of €306,25 was reached on November 25. An absolute record for the price of wheat. The reason for this was reports that the Australian wheat harvest was suffering from excessive rainfall, causing yield and quality to drop sharply. Ultimately, the scale of this problem was not too bad. Growers in the east in particular had to contend with rain.

Since the end of November, Australia has often made the headlines in the grain market. As the only superpower in wheat production, the country down under can pull out all the stops because the harvest is good. The US Department of Agriculture (USDA) estimates the harvest at 34 million tons and exports at 26 million tons. Last season that was 23,9 million tons. This makes it the third largest exporter in the world, after Russia and the EU.

Drought in US
A lower protein percentage is especially noticeable after precipitation in the country. This type of wheat is in great demand for making bread and pasta. The US and Canada are traditional suppliers of durum wheat with a lot of protein, but this product is particularly scarce due to extreme drought. This drought also causes problems in the wheat states of the US and Canada during the winter months. 53% of all winter wheat in the US is currently experiencing drought. This is even 70% of the areas for growing spring wheat.

In the US, wheat acreage fell 5% last year to 46,7 million acres (18,89 million hectares). An increase of 2022% is expected for 5, which will bring the market back to square one. Since 2014, the area of ​​wheat in the US has been declining almost continuously. For comparison: in 2008 there were still 26,3 million hectares of wheat in the country. The USDA expects this decline to continue anytime soon. In 2030, an average area of ​​18 million hectares is expected.

Looking at cost price
Because the prices of other products – corn, soy, rapeseed and other oilseeds – are also good, arable farmers in the US and Canada see little reason to switch strategies. However, we mainly look at the nitrogen requirement and which crop requires little input. For this reason, little extra wheat has been sown in Europe and arable farmers are more often choosing rapeseed. Grain maize is also popular – despite its nitrogen requirement. Especially at companies in Central Europe.

Drought in South America, and partly also in North America, is due to the La Niña weather phenomenon. New weather data now indicates that this current is weakening in the southern hemisphere and that countries such as Argentina and Brazil are experiencing more precipitation. This can improve yields, especially for soybeans.

frost damage
Winter grains are doing well in the European Union. King Winter appeared in several countries at the end of last year, but a prolonged winter period is not expected before the beginning of 2022. Sufficient snow also fell, protecting the grains. This is not the case everywhere in the Black Sea region. This gives rise to fears that frost damage may occur. After a dry autumn, winter grains have not always been able to develop properly. This makes them more likely to fall prey to frost. It will take at least until the end of March before it becomes clear how the grains will survive the winter and what the prospects are for this year's harvest.

Little spectacular is expected for the first quarter of this year given the current circumstances. Looking at the longer term, the prospects remain good. Wheat consumption once again exceeds production in the current season. Baking and milling wheat in particular is in demand. The current market situation may therefore be a run-up to a new price increase.

wildcard
We have not yet treated the coronavirus. It's a bit of the wild card of the market. With the advancement of the omikron variant, uncertainty was clearly noticeable in the sector. Yet consumption remains at the same level, as does the demand for products. If the measures can be relaxed, this will certainly contribute positively to the market.