Now that it is impossible for the short term – and perhaps longer – to ship wheat from the Black Sea region, the alternatives are being looked at on a global level. Australia and India both have a very good wheat harvest and therefore export potential. However, that does come at a high price point.
In Europe, France, Romania, Germany and Poland are the ones wheat market can serve when Ukraine and Russia can no longer export wheat. For Romania, this means that the Black Sea must be accessible to shipping traffic. Elsewhere in the world, Australia and India are being closely watched. Those two countries actually have a good wheat harvest and therefore export potential.
More and more wheat
The latest forecast from the official Australian agricultural agency Abares is 58,4 million tonnes of grains, including 34,4 million tonnes of wheat. A positive correction to those figures is expected to appear soon. The harvest turned out to be even higher than previously thought. For example, the Australian market agency Ikon now speaks of 39 million tons of wheat. It was previously assumed that the grain harvest would be disappointing due to heavy rainfall, mainly in New South Wales. New figures indicate that it is not too bad in terms of tons.
Western Australia and Queensland both show a significant increase in yield. In the latter state, almost 50% more wheat was harvested than the previous season. In Western Australia that is over 30%. The growth in yield is smaller in the states of Victoria and South Australia.
Higher prices ahead
According to Rabobank analysts, Australia is in a good position when it comes to wheat exports. The main thing is to get the product to the ports and exported. That is not so easy because there are not enough transport, storage and ships available. The bank expects the price to rise to $425 per tonne in the short term. Converted to €380. Prices are currently below €330 per tonne.
The shortcoming is not only with the selling party, but also with the buyers. Can countries in Africa, for example, buy the increasingly expensive wheat? If this is passed on, inflation will only continue to rise and food will become unaffordable for more and more people. Subsidized programs for bread, for example, cost governments in Africa a huge amount of money.
Indian exports
Another country that expects to export more wheat is India. The country has already harvested a record amount of grains five times in a row, but it is hardly exported. India is particularly big in rice exports, but not in wheat. Analysts and traders in the country believe they can respond to the demand for wheat in the short term. Last year the country exported 6,12 million tons of wheat. For the first half of this year, traders expect to export 4 million tons.
Bangladesh, the Philippines, South Korea and Sri Lanka are the biggest stakeholders for Indian wheat, but buyers expect and are already seeing more interest from the Middle East.