Wheat prices have been firm around the world with strong demand, notably because of the feed needs of the EU and China, coming up against concerns over unfavorable weather for production. The resurgence of the coronavirus (COVID-19) pandemic, along with the imposition by many governments of renewed lockdown measures has raised further uncertainties about how demand will develop.

The US Department of Agriculture’s Foreign Agricultural Service (FAS) said in its Grain: World Markets and Trade report, published Nov. 10, that “world wheat prices remained firm this month, mostly due to dry weather impacting the start of the growing season in the Northern Hemisphere and unfavorable production conditions in Argentina.”

“Strong global export demand drove further price spikes in Canada, the European Union, Russia and the United States, demonstrated by robust export sales reports this month,” the FAS said. “Concerns about the rise in COVID-19 infections worldwide and recent rains in Russia and the US Plains softened price increases more recently.”

In its Wheat Outlook, published on Nov. 13, the USDA’s Economic Research Service put global supplies of wheat in 2020-21 at 1.073 billion tonnes, up 700,000 tonnes from its earlier estimate, despite a small cut in production, because of an increase in carry in.

“More abundant wheat supplies support a 1.7-million-tonne lift in consumption with gains attributable primarily to increased feed and residual use in China and the European Union,” the ERS said. “In China, abundant supplies of sub-milling grade wheat are expected to supplement feed rations. Wheat feed and residual use is raised in the EU following a significant cut in corn feeding stemming from reduced domestic and Ukraine-grown corn availability.”

The United Nations Food and Agriculture Organization said in its Food Price Index report, published Nov. 5, that “wheat export prices rose further in October, reflecting strong global demand amidst shrinking export availabilities, poor growing conditions in Argentina and continued dry weather adversely affecting winter wheat conditions in parts of Europe, northern America and the Black Sea region.”

Wheat (US), No. 1, hard red winter, ordinary protein, export price delivered at the US Gulf port for prompt or 30 days shipment. Source: US Department of Agriculture; World Bank[/image-with-caption

In its Oct. 29 Grain Market Report, the International Grains Council (IGC) said “uncertainty about production prospects in some regions propelled world wheat export prices higher during October.” Its index for wheat prices rose by 7% on the month.

“Much of the focus remained on poor growing conditions for Argentina’s 2020-21 crop, where some local analysts sharply lowered production expectations,” the IGC said. “Market participants also continued to monitor closely difficult seeding conditions for 2021-22 Northern Hemisphere crops, including in parts of Europe, the Black Sea region and North America.

“Strong export demand and steep gains in row crop values, especially for maize, also contributed to generally bullish sentiment in markets. Market tone turned softer toward the end of the month, under pressure from improved weather for 2021-22 crops in some areas and worries about escalating cases of COVID-19 in many countries.

“Early-month price support in the US came from lower-than-anticipated official production estimates, while tighter-than-envisaged stocks at the end of the first quarter of the marketing year signaled higher-than-foreseen demand.”

The IGC said solid export demand, albeit showing signs of waning as prices climbed, and escalating maize values, contributed to positive price sentiment. The Council quoted US HRW export prices as having risen by $24 during the month, to $273 fob (Gulf), with SRW climbing by $24, to $273 fob, and HRS (14%) up by $18, to $295 fob (PNW).

The IGC also reported higher export values in Russia, citing good export demand, logistical challenges and dry conditions for the 2021-22 crop as driving the increase.

“Due to high local milling wheat and feed prices, there was sustained speculation about possible government measures to contain domestic values,” the IGC said.

Russia’s farm ministry has since come up with a plan to limit grain, defined as wheat, barley, maize and rye exports between Feb. 15, 2021, and June 30, 2021, to 15 million tonnes.