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Abundant Wheat Supplies Depress World Prices, But Hope Emerges by Carol Ryan Dumas Capital Press, December 24, 2024

There's a potential for drought in Russia, and
potential for drought in Australia is being predicted.

Increases in Russian and U.S. wheat production in 2024 have added to large supplies of wheat in the world, analysts say.

"We're seeing a lot more wheat in the world, and more supply means our prices aren't looking particularly good," said Colby Field, University of Idaho Extension economist.

Looking locally, production of soft white wheat in the Pacific Northwest has increased a little. And again, higher supply means lower prices. But the U.S. price might be low enough to stimulate exports, he said.

Production forecast

Recent USDA forecasts, however, show there is reason for optimism.

There are more exports of U.S. white wheat to East Asian markets, and weather impacts in the European Union and Brazil should put a little bit of a damper on their wheat production, bringing prices up a bit.

Lower production should reduce EU exports, and export quotas should reduce Russian exports.

"This decrease is predicted to be a greater deficit than the increase in production from the United States and the growth from Ukraine. A nine-year low for global ending stocks ... should bring prices up a bit," he said.

People are consuming more wheat, and if there's less on hand, that should ultimately bring prices up a bit, he said.

Market giant

"Russia is the major world exporter, and so what they do definitely drives a lot of the market. And they have a trend for decreasing ending stocks," he said.

That could open some opportunities for U.S. trade relationships and open more demand from Russia's major import customers.

There's been some reports that the Russian stocks are fairly low quality. And that's one place the United States can compete pretty significantly with its higher quality product, he said.

There's also potential for drought in Russia, and potential drought in Australia is predicted this next year. Those drought impacts reducing stocks should help U.S. exporters have a little more competitiveness dealing with the giant in the export market, he said.

In addition, no one knows what's going to happen with the Russia-Ukraine conflict. Any reduction in Russia's ability to export through the Black Sea could also decrease some of their exports.

U.S. exports

"U.S. wheat seems to be pretty popular these days. We're seeing increased year-over-year exports, larger wheat sales to our international buyers than last year," he said.

Idaho is the top barley-producing state, growing almost 35% of the U.S. crop. There's been an acreage decline in the U.S., driven by change in domestic demand due to less consumption of beer.

"There's also been mild marketing issues in the last few years for one of the big contractors," he said.

But Idaho's acreage is fairly stable, and yield and prices have been increasing for the last 10 years -- with a pretty significant increase in price per bushel post-pandemic.

Related Pages:
Global Wheat Stocks Tight, Prices Volatile in Year of War, Drought by Carol Ryan Dumas, Capital Press, 12/20/22