For the Quarter Ending September 2024
North America:
In Q3 2024, the North American Wheat market witnessed a significant uptrend in prices driven by a combination of factors. Excessive wet conditions in various parts of the United States continued to reduced overall wheat availability, causing demand to outstrip supply and putting upward pressure on prices.
While, on the other side, the International demand for U.S. wheat surged, particularly from countries experiencing domestic shortages or geopolitical tensions, which further drove up prices. Higher input costs, including rising prices of fertilizers, energy, and transportation, increased the production cost for U.S. wheat farmers, and these costs were reflected in the export prices. Additionally, the U.S. dollar weakened against major currencies during this period, making U.S. wheat more competitive in global markets. This spurred increased demand, allowing U.S. exporters to raise prices. Trade policies and tariff shifts in other wheat-exporting countries may have also made U.S. wheat more attractive to global buyers, further fueling demand.
Overall, the USA, experiencing the most substantial price changes, navigated a challenging quarter marked by supply constraints and higher demand from end-user industries. Despite a slight decrease from the previous quarter, the overall trend in Q3 was positive and concluded with Wheat priced at USD 250/MT FOB Chicago, reflecting a consistently rising pricing environment. Disruptions like [Black Sea shipping infrastructure damage] added complexity to the market dynamics.
Asia Pacific
In Q3 2024, the APAC Region witnessed a notable surge in Wheat prices, driven by a confluence of factors. The market experienced heightened volatility due to supply constraints stemming from adverse weather conditions impacting key wheat-producing regions. This led to reduced harvest yields, exacerbating the already tight supply situation. Furthermore, robust demand from various downstream sectors, such as food processing and animal feed industries, sustained upward price momentum. In India, the pricing environment for Wheat saw the most significant fluctuations. The market exhibited a consistent upward trend, reflecting the delicate balance between constrained supply and escalating demand. As a result, traders and buyers have been compelled to accept goods at elevated costs, further cementing the price trend. Looking ahead, price rise in other nations ahead of weather issues also impacts the overall wheat availability across the global market, further supporting the higher prices. Overall, this situation underscores the vulnerability of agricultural markets to climate variability and the cascading effects of policy decisions. While, the overall quarter culminated with a price of USD 300.69/MT Ex Bareilly, signalling a persistent bullish sentiment in the pricing landscape.
Europe
In the third quarter of 2024, the European wheat market experienced a consistent upward price trend, driven by supply constraints and strong demand. Wheat prices surged due to a combination of reduced harvests, adverse climatic conditions, and logistical disruptions, which collectively tightened market availability. Ukraine played a pivotal role, witnessing significant price fluctuations as it emerged as a key wheat exporter, catering to heightened global demand amidst limited supply from alternative regions. The quarter saw active export activity from Ukraine, with increased volumes pushing up domestic prices. Ukrainian wheat, valued for its quality and competitive pricing, became a sought-after commodity, particularly in regions where local production had declined. The supply-side was further strained by weather challenges and geopolitical tensions, making it difficult for farmers to meet delivery schedules, thus tightening supply and raising prices. On the demand side, both domestic and international buyers intensified their procurement efforts due to shortages or elevated wheat prices in other markets. This competition drove prices higher throughout the quarter, despite a notable drop at the start. The quarter ultimately closed with a 4% increase in wheat prices compared to Q2, reaching USD 228/MT FOB Odessa. This price rise reflects the market's sensitivity to supply disruptions and robust demand, marking a strong pricing environment for wheat in Q3 2024.
For the Quarter Ending June 2024
North America
In Q2 2024, the North American wheat market experienced a volatile journey, ultimately trending upward despite fluctuations. The quarter began with a downturn driven by substantial offers from major producers like the USA and Russia, alongside robust global exports. This initial decline was fueled by predictions of surplus wheat from large harvests, reduced consumption in flour mills, and a strong dollar making wheat more expensive for foreign buyers.
Mid-quarter saw a price resurgence due to global production volatility, adverse weather in key regions, and geopolitical tensions. A potential North American rail strike raised supply chain concerns, while increased freight charges and logistical delays, particularly in major shipping routes, added complexity. The transition from winter to spring sowing also contributed to price volatility through speculative trading.
However, as June began, prices dropped again, reflecting seasonal pressure from northern hemisphere harvests. The FAO Cereal Price Index decreased, with global export prices falling across all major cereals. The U.S. market faced high supply due to substantial inventories and reduced end-user quotations. Competition from producers like Canada, along with improved weather conditions, weakened U.S. market dominance.
Throughout the quarter, the market remained in flux, resulting in a supply-demand imbalance. The situation led to narrower profit margins and decreased profitability for wheat and other row crops as output prices declined faster than input costs. This volatility underscored the complex interplay of factors influencing the North American wheat market in Q2 2024.
Asia Pacific
In Q2 2024, the APAC region experienced a notable drop in wheat prices due to several key factors. The quarter began witnessing a downward trajectory with a steady upward in the middle and the end of the quarter. Starting with April 2024, Wheat prices witnessed a pessimistic market outlook, with Indian domestic markets experiencing notable weakness and prices dropping by more than 5 percent as April 2024 commenced. This drop in the purchases so far was largely due to late harvesting in some major growing states and also because of the ongoing elections in north India as traders already possessed more than sufficient stocks. Supporting this further, various market players and farmers were additionally resistant to destocking their stocks, resulting in weakened procurements within the market. This drop in procurement could also be on account of farmers holding on to their produce in anticipation of higher rates later during the year or increased buying by private players who are looking to replenish their inventories by selling them at a higher price. Concerning the supply side, there was sufficient availability of Wheat to meet the demands of end-user industries. Moreover, with the arrival of recent harvesting, the inventories concerning Wheat continued to remain on the upper side concerning the overall demand arriving from the region. Spot market transactions involving Wheat were on a moderate level with market demand majorly based on previous stockpiles held by the traders, driven primarily by immediate necessities. Moving further in May and June the prices rebound yet steadily supporting a modest rise in regional and overseas demand. However, despite of steady upward trend, the overall market sentiments remained subdued marking a pessimistic trend. Factors supporting this modest resurgence in the prices were influenced by improved market transactions, a steady rise in procurements among end-users, and farmers holding onto their wheat instead of selling it to the government which further resulted in a decreasing the overall supply available in the market. Another contributing factor is the continuous depreciation of the INR against the dollar, which has made wheat imports costlier for downstream sectors, leading traders and buyers to grapple with higher prices. Conclusively, the pricing environment in India for Q2 2024 has been on the downward side with the supply side still outspacing the demand side of the market.
Europe
In Q2 2024, the European wheat market, particularly in Ukraine, experienced a significant upward trend in prices, driven by a complex interplay of factors that reshaped market dynamics. The quarter was characterized by adverse weather conditions across Europe, including severe droughts and unseasonable frosts, which had a detrimental impact on crop yields and depleted existing stockpiles. These climatic challenges were particularly acute in Ukraine, where unpredictable weather patterns disrupted critical growth phases, leading to diminished harvest prospects and heightened market uncertainty. Supply chain disruptions further exacerbated the situation. The shutdown of key agricultural processing plants and damage to export infrastructure constricted wheat availability, creating bottlenecks in the distribution network. This logistical strain coincided with an increase in global demand, as import-dependent nations rushed to secure their supplies amidst growing concerns of prolonged shortages. Ukraine emerged as the epicenter of price volatility within the region. The country witnessed the most dramatic price changes, driven by a combination of weather-related yield reductions and escalating production costs. Rising input expenses, particularly for fertilizers and fuel, contributed to the upward pressure on prices. Additionally, heightened export demand further strained the already tight supply, pushing prices higher. Seasonality played a crucial role in price dynamics. The planting and flowering stages of wheat crops were especially vulnerable to the extreme weather events experienced during the quarter, amplifying concerns about future harvests and driving speculative activity in the market. Analyzing the quarter's price trends reveals a notable pattern. The Q2 saw a substantial price increase compared to the first quarter. This upward trajectory is further evidenced by a 6% increase from the previous quarter, underscoring the persistent bullish sentiment in the market. The quarter concluded on an optimistic note, reflecting a positive pricing environment despite the numerous challenges faced. This price point indicates that supply constraints were the primary driver of market dynamics, overshadowing demand fluctuations and consistently pushing prices higher.
For the Quarter Ending March 2024
North America
The Wheat market in North America encountered significant challenges during Q1 2024, marked by substantial price fluctuations driven by various factors. Overall, the pricing trend for Wheat in the region has been adverse, witnessing a decline of over 5% compared to the previous year's last quarter. Canada, experiencing the most notable price changes, faced heightened volatility.
Concerns surrounding China's economic slowdown and weaknesses in local livestock sectors, significant importers of wheat from the APAC region, influenced Wheat prices. Additionally, persistently low prices from other exporting markets like Russia, supported by record exports from the Black Sea, continued to exert downward pressure on global wheat prices, impacting North America as well. A key contributing factor to this trend was further supported by the cancellation of major shipments by Chinese buyers, aimed at securing better prices of products from other countries and enhancing food security.
Moreover, the strengthening of the Canadian dollar against other currencies, particularly the US dollar, along with rising shipping costs, further elevated the relative cost of Canadian Wheat for international buyers, contributing to a pessimistic market trajectory. Overall, despite an ample supply within the Canadian market, subdued trade activities led to an bearish outlook for Wheat prices in the country. In conclusion, the pricing environment for Wheat in North America during Q1 2024 remained predominantly negative, influenced by reduced demand, increased shipping costs, and shifting consumer preferences toward other nations. The quarter-ending prices for Wheat FOB Vancouver in Canada were recorded at USD 237/MT.
Asia Pacific
Within the Apac region in the first quarter of 2024 particularly In India, wheat prices declined throughout the quarter, albeit with a modest rise at the outset driven by increased demand from the downstream food industry. However, this uptick was counterbalanced by ample stock availability among market participants. Concurrently, India's manufacturing sector showed substantial improvement, with factory activity expanding at its fastest pace in four months in January, fueled by robust demand and positive outlooks. However, the momentum shifted as February began, and the market witnessed an opposing trajectory. The decline was driven by merchants accumulating higher wheat inventories ahead of new crop arrivals, prompting them to offer existing stocks at discounted prices. This was further influenced by the INR's appreciation against the dollar during the month. Despite this, overall trader momentum remained subdued due to lower-than-expected regional demand. The market situation in India remained uncertain, with demand remaining low. The supply-demand imbalance pressured prices, prompting traders with higher stockpiles to focus on destocking activities, supported by quarter-end practices which also impacted the market, resulting in weakened downstream demand and abundant inventories, further pressuring pricing. Traders and suppliers encountered these challenges, contending with risks to profitability due to declining wheat prices and subdued consumption in both regional and neighboring markets. Additionally, to prevent the risk of material deterioration and mitigate additional storage expenses. Overall, the wheat pricing environment in the APAC region, particularly in India, remained negative, with March prices recorded at USD 292/MT Ex Bareilly.
Europe
The pricing dynamics of Wheat in the European region during Q1 2024 particularly in Russia demonstrated a negative trend with values falling by an average of 5 percent. Overall the market trading sentiments remained muted with the supply side outspacing the global demand side however with a modest rise witnessed in the beginning. This rise in prices was somewhere supported by a gradual increase in trade activity witnessed from Russia ahead of overseas quotations, particularly from South Africa and the Apac region. However, factors such as severe frosts in central Russia and neighboring regions along with logistical challenges from stormy weather in the Black Sea ports were the cause of this market dynamics, leading to uncertainty in future pricing. Conversely, as February commenced, the market witnessed a sudden downward trend in the exporting prices of Wheat. This decline stemmed from interconnected factors that significantly impacted the market. Subdued demand from key regions like North Africa and Southeast Asia played a pivotal role. Despite expectations of strong demand, these regions showed little interest in wheat imports, disrupting the supply-demand balance. Additionally, the devaluation of the Russian ruble and euro against the dollar, along with a consistent rise in freight cost ahead of the trader disruption, kept the overall purchasing sentiments among the regional market and other nations muted, further intensifying the overall price drop. This trend continued until the final month with competitive pricing trajectories sustained by Russian authorities ahead of the global decline in wheat prices, which further contributed to this weakened market sentiment and reshaped the global wheat market's competitive dynamics. In conclusion, Russia indicated an overall pessimistic trajectory throughout the first quarter supported by lulled demand and muted newer quotations, with heighten stockpiles the latest prices ending the quarter1 in March for Wheat in Russia was recorded at USD 205/MT FOB Novorossiysk,
For the Quarter Ending December 2023
North America
The final quarter of 2023 posed challenges for the North American wheat market, with various factors exerting influence on prices and contributing to a mixed trend. Commencing in October 2023, the cost of wheat experienced a notable increase, diverging from the consistent decline observed in the preceding months. This surge in prices was closely linked to Canada, a significant wheat exporter, grappling with a substantial reduction in its Durum wheat harvest. The impact of this reduction reverberated across all forms of wheat varieties, contributing to an overall rise in prices. Adverse weather conditions, particularly dry spells in critical farming regions, were identified as the primary culprits, resulting in an overall reduction in yield. This decline in wheat production led to a depletion of stocks for major exporters, reaching some of the lowest levels in recent memory.
Moving into November, the supply side witnessed an abundance of local goods sources, accompanied by a slowdown in trade orders as downstream consumption considerably declined, reflected in the 3.0 percent decline in the FAO Cereal Price Index from October. On the supply front, merchants were actively focused on destocking their previous stockpiles at reduced rates. Additionally, competition from other wheat exporters, such as Russia, Ukraine, and other nations, impacted the competitiveness of US and Canadian wheat in the global market.
As December 2023 unfolded, yet again wheat prices experienced a moderate increase, primarily attributed to a surge in global demand. The agricultural landscape witnessed a significant rise in the prices of essential inputs like feed, fuel, and fertilizer, further fortifying the upward trajectory of wheat prices. Beyond these factors, the conclusion of the harvesting season and the concurrent escalation in shipping costs on the global market also played a role in propelling the international price of wheat higher.
Asia Pacific
Throughout the entire fourth quarter of 2023 in the Asia-Pacific (APAC) region, wheat prices experienced an upward trajectory, albeit with a modest drop in the last month. The surge in domestic wheat prices was primarily linked to a deficiency in imports and lower-than-expected procurement within the merchant community. Additionally, the heightened demand during the festive season significantly contributed to the escalation of wheat prices in India, particularly during October and November. India's festive season, characterized by numerous major holidays and celebrations, traditionally witnesses an upswing in the consumption of wheat and wheat-based products. This surge in demand, coupled with a constrained wheat supply, inevitably exerted upward pressure on prices. This trend continued into November, with India's Manufacturing Purchasing Managers' Index (PMI) rising to 56.0, rebounding from October's 8-month low of 55.5, aligning with market consensus. New order growth improved from October's one-year low, surpassing the series average, while foreign sales continued to rise for the 20th consecutive month, albeit at a slower rate since June. Furthermore, buying activity and input stocks increased, often driven by buoyant demand conditions. November witnessed a notable uptick in food inflation, reaching 8.18 percent, up from October's 2.53 percent. On the supply side, despite continuous regional inquiries, inventory levels among market participants remained relatively low in November 2023. Merchants focused on ramping up their manufacturing activities to meet the persistently growing demand and maintain sufficient order quantities. However, in comparison to this scenario, the market trend for wheat experienced a modest decrease as of December 2023. The domestic market is currently enjoying a favorable surplus of wheat, attributed to substantial inventories combined with reduced trade activity. This surplus in supply has not only expanded consumer choices but has also resulted in advantageous pricing, fostering a positive purchasing environment for December. The market dynamics suggest a shift towards a more balanced and surplus-driven scenario, providing stakeholders with both ample options and favorable pricing in the wheat market during the concluding month of 2023.
Europe
Examining the wheat market in the European region, particularly in Russia during the fourth quarter of 2023, reveals a fluctuating trend. Prices experienced a decline until November, followed by a notable rebound in December. In October, a substantial drop in wheat prices was driven by record-high crop production, resulting in surplus goods in warehouses. Market players responded by gradually lowering purchase prices, contributing to a consistent decline in wheat market prices. Intense export competition with other nations including Ukraine, one of the leading global wheat exporters, played a significant role in the price decline in October 2023. Despite challenges such as the war in Ukraine and a Black Sea blockade, supplies from Ukraine and Russia continued to exert downward pressure on world wheat prices. As per the market experts, this downward trend persisted in November, with the FAO Cereal Price Index averaging 121.0 points, down 3.7 points from October and significantly lower than the previous year. Russia's wheat exports hit a low in November due to disruptions caused by stormy weather in the Black Sea, impacting loading activities at key ports like Novorossiysk. Moreover, on the demand side, downstream demand for wheat declined in the current month due to weakening purchasing sentiments. In contrast to this, FOB prices of wheat from Russia saw a notable increase in December. The downstream food sector remained stable, with a rise in overseas orders. Factors such as rising freight charges, fuel costs, delayed consignments, and rerouting activity contributed to the upward trend in exporting prices. The competition for grain between processing and export-oriented regions intensified, leading to higher prices. Importing regions requiring wheat for operations may face challenges as export companies, aiming to fulfill international contracts willing to pay higher prices to secure supplies. This competitive dynamic has driven prices to a level where processing companies may find it challenging to remain competitive.