KANSAS CITY, MISSOURI, US — Despite the war in Ukraine and the blockade of the Black Sea, it is supplies from Ukraine and Russia that are keeping world wheat prices down, while maize and other coarse grains have turned higher, amid slow farmer selling in South American producers.

The United Nations Food and Agriculture Organization’s  (FAO) latest Food Price Index, covering September, was published on Oct. 6. It shows average global grain prices up 1% month-on-month, but 14.6% below their September 2022 level. A 5.3% increase in international coarse grain prices drove the overall rise for the sector and was itself driven by a 7% increase in maize prices in September, after seven months of falls. The rise for maize was “driven by a confluence of factors, including strong demand for Brazil’s supplies, slower farmer selling in Argentina and increased barge freight rates due to low water levels on the Mississippi River,” the FAO said.

The FAO blamed the 1.6% month-on-month fall in wheat prices on “ample supplies in the Russian Federation, where production prospects were lifted in September.”

The FAO also raised its forecast for global cereal production in 2023 by 3.8 million tonnes from the previous forecast, bringing it to 2.819 billion, up 0.9%, or 26.5 million tonnes, from the 2022 crop. 

“The improved outlook reflects better wheat production prospects, with the forecast for the world outturn revised upward by 3.7 million tonnes in September to 785 million tonnes,” the FAO said. “The upgrade in prospects is almost entirely based on recent and more positive yield estimates from the Russian Federation and Ukraine compared to earlier expectations, owing to continued favorable weather conditions.

“These upward revisions offset a steep cut to the forecast for Canada’s wheat output due to extensive and persisting dry weather in the key producing states of Alberta and Saskatchewan, leading to lower overall yield expectations. Similarly, wheat production forecasts for Argentina and Kazakhstan were scaled back, as prolonged dry and hot weather has degraded crop conditions and led to a trimming of yield forecasts.”

The FAO’s forecast for world coarse grains production, at 1.511 million tonnes, is virtually unchanged from the previous forecast and is a 2.7%, or 39.2-million-tonne, increase from the previous year. 

“The forecast for global maize production was raised slightly this month, driven almost entirely by improved prospects in Brazil, reflecting the latest area and yield estimates from the ongoing main crop (safrinha) harvest,” the FAO said. “Brazil is experiencing conducive overall weather conditions this year, underpinning the excellent prospects, with production seen reaching a record high in 2023.” 

The organization also trimmed its forecast for the world’s barley crop “marginally,” something it said had the effect of “reinforcing expectations of a year-on-year decline in 2023.” The recent cutback to the global forecast is mainly the result of a downgraded production outlook for Canada, where the dry growing conditions across the Canadian Prairies have sharply lowered yield prospects, the FAO explained. 

The FAO now puts world cereal utilization in 2023-24 at 2.804 billion tonnes, which it said was still 0.8% (21.8 million tonnes) higher than in 2022-23 despite a 3.1-million-tonne downward revision in September. 

“The forecast for total wheat utilization has been lowered by 1.7 million tonnes since the previous report to 783 million tonnes, but still exceeds the 2022-23 level by 0.5%,” the FAO said. “The increase from last season stems almost exclusively from higher food consumption, foreseen to offset an anticipated fall in feed use of wheat, while other uses are set to remain unchanged.”

Stronger demand for maize

The UN body is now expecting total utilization of coarse grains in 2023-24 at 1.5 billion tonnes, 1.1 million down on its previous forecast, but 1.2% above 2022-23. 

“The bulk of the year-on-year increase is due to expectations of a stronger demand for maize (especially for feed use),” the FAO said. “Sorghum utilization (almost exclusively for feed use) is also seen increasing, while barley utilization is set to contract.”

The unrevised forecast for world grain trade in 2023-24 is around 466 million tonnes, a reduction of 1.7%, or 8 million tonnes, from the previous year, with wheat exports put at an unchanged 193 million tonnes, down 3.5%, or 7 million tonnes, from 2022-23, reflecting “higher exports foreseen for the Russian Federation, supported by ample supplies, offset downward revisions to exports from Australia and Canada, where production prospects were lowered,” the FAO said.

World trade in coarse grains in 2023-24 also is unrevised from last month at 220 million tonnes, down 0.7%, or 1.5 million tonnes, from the previous year, “mainly reflecting an anticipated contraction in global maize trade,” the FAO said. 

The FAO’s forecasts for world trade in maize in 2023-24 was unrevised at 178 million tonnes, “as an upward adjustment to maize shipments expected from Brazil, where supplies are abundant thanks to a record harvest, were balanced by slight downward revisions to sales by Paraguay and the United States.”

The International Grains Council’s (IGC) view of wheat trade is that “with smaller deliveries to Europe, the CIS and Asia only partly countered by predicted brisker to African arrivals,” it “is expected to retreat from last year’s peak, pegged at 195.9 million tonnes (down 6%), 1.3 million lower month-on-month.” 

In its September report, the London, England-based international organization said that monthly revisions for imports include cuts for South America, notably for Chile, Colombia, Ecuador and Peru, on reduced surpluses in Argentina and Canada, the main suppliers, while deteriorating supply prospects in Australia cut forecast deliveries to China and the Philippines. 

“Purchases by Brazil are trimmed on a larger projected crop,” the IGC said. “While the bulk will again be sourced from Argentina, the share of Russian supplies could grow further. The downgrades are partly countered by increased import forecasts for North Africa and the EU, tied to improved prospects for durum trade. Reflecting strong early-season purchases by Italy, the projection for the EU is raised by 300,000 tonnes, to 5.8 million, still less than a half of last year’s volume amid prospects for smaller arrivals from Ukraine.”

The IGC added 2 million tonnes to its export figure for Russia, bringing it to a record 48.5 million tonnes, up from 47.7 million the year before, “on a larger crop number and a record pace of shipments, privately estimated at 11.6 million (up 72%) as of mid-September. Turkey’s exports are also forecast higher than before on an uprated projection for durum dispatches.”

The IGC added: “EU exports (July/June) lagged last season’s pace by 28% as of Sept. 17, but declining local export prices and tightening supply prospects at some other origins have prompted fresh buying interest recently, including from China. The Council’s projection is maintained at 34.3 million tonnes (33.1 million), but with potential downside linked to reported crop quality issues in some growers.”

Shipments from Ukraine, which were 2.5% in the first 2 1/2 months of the marketing year, “are on track to reach the Council’s full-year projection of 12 million tonnes, unchanged month-on-month despite higher-than-previously-estimated output,” the IGC said. “While efforts are underway to boost transshipment via EU ports, intensified attacks have reportedly curbed export capacity at Danube River ports and discouraged some buyers.

“The all-wheat export outlook for Kazakhstan is tentatively maintained at 9 million tonnes (down from 9.8 million last year), pending updates on this season’s crop quality in light of heavy harvest time rains.”

The IGC forecast the third successive year of declining maize trade, to 171.5 million tonnes, down 5%, “as an anticipated contraction in EU purchases more than offsets forecast larger imports into Asia, including to China, South Korea and Vietnam.” 

Major decline in EU imports

The EU’s maize imports are expected to fall by 29% to 20.8 million tonnes, mostly reflecting larger domestic availabilities. As of Sept. 17, “cumulative arrivals totaled 3.2 million tonnes (down 45% on same period of previous year) amid a marked slowing in arrivals from Ukraine,” the IGC said. 

China’s imports are forecast to rise by 13% to 22 million tonnes, “including larger imports from Brazil, facilitated by last year’s signing of a phyto-sanitary protocol,” the IGC said. “July and August arrivals from that origin totaled 3.3 million tonnes.”

“Amid ample exportable supplies, lower prices and reduced Ukrainian competition, US dispatches (September/August) are forecast to rebound to 48.5 million tonnes (up 15%),” the IGC said. “Although cumulative export commitments lagged the previous season by 9% as of Sept. 7, totaling 11.2 million tonnes, the year-on-year deficit has narrowed considerably in the period since the last Grain Market Report.”

For Ukraine exports (Oct/Sep), the forecast is unrevised at 18 million tonnes, down 38% from last year.

“With grain exports still almost wholly directed across the country’s western borders, logistics remain difficult owing to ongoing attacks on port and storage infrastructure, especially along the Danube River,” the IGC said. “However, deliveries by road reached a five-month peak in August, while traders also reported larger dispatches by rail. With threshing of the 2023-24 crop just starting, new crop supplies are yet to enter the export pipeline.”

The IGC is expecting Brazilian exports to reach a record of 52 million tonnes, a figure 8% higher than last year.

Chris Lyddon is World Grain’s European correspondent. He may be contacted at: [email protected].