Global wheat production is forecast to decline this year for the first time in five years as extreme weather threatens supplies in key wheat-growing areas, according to Gro’s Commodities Tracker application.
The Commodities Tracker, which predicts supply risks for crops in major producing regions, shows the US is at a “High” Supply Risk Level for common wheat after drought drove production of hard red winter wheat to one of the lowest levels in 17 years. By contrast, Russia, the world’s No. 1 wheat exporter, is ranked as “Low” Supply Risk on the back of a bumper winter crop.
In aggregate, global supplies of common wheat over the next six months are projected by the Commodities Tracker to be at a “Low” Supply Risk Level — meaning the commodity is expected to be well supplied and price isn’t expected to increase significantly. (See display below.)
However, for high protein wheat, used mainly for breads and other yeasted doughs, the global supply outlook is projected to be “Medium” Supply Risk, meaning supply is expected to fall short of historical levels and the commodity could see upward price pressure. Forecasts for reduced production by top producers Canada and Australia underlie the elevated supply risk for high protein wheat, according to the Commodities Tracker.
The Gro Commodities Tracker provides an easy to understand, high-level picture of potential supply risk for the next six months for a given commodity, country and time horizon, based on Gro’s machine-learning forecasting models — with Supply Risk Levels of Low, Medium, or High. The Tracker also provides current and historical crop prices and crop-weighted growing conditions, based on Gro’s climate and weather data.
For wheat, the Commodities Tracker indicates Supply Risk Levels for countries that combined produce nearly 80% of global exportable supplies.
Growing conditions data contained in the Commodities Tracker provide insight into future crop supplies. For example, the 2023/24 US hard red winter wheat currently being planted could benefit from a substantial decline in Gro Drought Index readings. In addition, while soil moisture levels are currently low, these could be replenished due to El Niño, which typically brings higher precipitation and lower temperatures to the Great Plains.
The crop’s progress can be monitored using Gro’s US Hard Red Winter Wheat Yield Model, which goes live later this month once the new crop becomes established.
Meanwhile, low rainfall and rising temperatures in Russia’s wheat regions could bode poorly for the new winter crop, which accounts for some 75% of the country’s total wheat output. Last year, winter wheat yields rose more than 8% year over year, as shown by Gro’s Russia Winter Wheat Yield Model, resulting in a bumper crop and strong exports. Russia’s competitive export pricing has kept a lid on global wheat prices and contributed to a 40% drop in futures prices year over year.
To learn more about Gro’s Commodities Tracker application and how it can further your organization’s goals, contact Gro here.
A forecasted ‘High’ Supply Risk Level for US common wheat is offset by ‘Low’ supply risks in Russia and the EU. Overall, the global Supply Risk Level over the next six months is ‘Low,’ according to the Gro Commodities Tracker.