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Wheat: exports to hit unlikely record

May 18, 2022 at 10:05 AM , Der AUDITOR
Ukraine performs
Ukraine performs
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FRANKFURT/WASHINGTON DC. While Ukraine won the Eurovision song contest on Saturday, the G7 leaders see little cause to celebrate as they warn that Russia is deliberately giving rise to a global food and energy crisis that may cause 50 million people to be confronted with hunger. They also condemn India’s sudden export ban for wheat. Yet, the 2022/2023 projections for wheat in the United States Department of Agriculture’s (USDA) recently issued World Agricultural Supply and Demand Estimates (WASDE) are rather on the optimistic side of things.

G7 condemn Russia and India

Ukraine’s Kalush Orchestra won the 66th Eurovision contest held in Turin on Saturday evening due to the unwavering support of the European public voting by phone. This certainly provided much needed good news for the country, which has been at war for more than 80 days. Only hours before the Group of Seven leading economies warned that Russia’s military war in Ukraine has become a global ‘grain war’ at the expense of the poorest people in the world. India, in addition, took the market by surprise in announcing a ban on wheat exports on the same day

At the conclusion of the G7 summit in Berlin Germany’s Foreign Minister Annalena Baerbock highlighted that as many as 50 million people, especially in Africa and the Middle East may face hunger if no ways are found to release grain stored in Ukraine. The country, in fact, supplied 12% of the world’s wheat, 15% of its corn and 50% of its sunflower oil before the Russian invasion started on 24 February. Baerbock urged Russia to act as the country “has deliberately chosen to extend the military war against Ukraine now as a grain or you can say grain war to many states in the world, especially in Africa.” Issue is that food, feed and energy prices have soared in recent months as supply chains are still reeling from the effects of the pandemic.

The agricultural ministers of the G7 also condemned India’s decision to ban wheat exports. Problem is that a heatwave in March destroyed large parts of the crop in India, which caused prices to soar in the domestic market. The government has now intervened to secure food supplies for the country. While this caused domestic prices to slip, wheat surged by as much as 5.9% in Chicago at the start of the week. Although India’s government stated that it will allow exports backed by letter of credit that have already been issued and to countries urgently requiring supplies, chaos ensued. The Gandiham Chamber of Commerce, for instance, estimates that around 400,000 mt of wheat, initially wating to be exported, are stuck in Deendayal Port and nearby warehouses in India as local media report. Not only will the ban further restrict global supplies for wheat, but it may very well also prompt the prices for other commodities such as rice to rise and ultimately also create a backlash for suppliers in India.

Much more at stake

These dramatic events, however, highlight that much more is at stake. Fact is that nearly all major producing countries are confronted with extreme weather conditions. Unusually warm and dry weather may very well impact production in the EU, particularly in France. Dryness has prompted farmers in the U.S. to write off crops and concerns are being voiced that the impact of the prolonged drought the U.S. is currently experiencing are very much being underestimated. Drought coupled with too wet and too dry conditions are also a problem in Canada and China has experienced unusual autumn floods that has certainly impacted winter wheat production. Extreme weather conditions are also an issue in Australia, which is not expected to maintain last year’s record production. Russia is, however, the noted exception as production is expected to hit a record 80 million mt in 2022/2023 according to the USDA’s WASDE report for May.

Exports to hit record

The USDA is, in fact, surprisingly optimistic in reckoning that wheat exports will hit a record 205 million mt. Global production is, by contrast, anticipated to range 4.5 million mt lower than last year at 774.8 million mt. Issue is that trading activities are expected to gain momentum, whereas supplies and consumption will decline as increases in food use will more than be offset by declining feed and residual use. The estimates for global production and the anticipated rise in exports not only hinge on a possible bumper crop in Russia but also on an uptick in production in the U.S. to 47.05 million mt and a rebound in production in Canada to 33 million mt, despite adverse weather conditions being reported. Although EU production will range at a lower 136.5 million mt, the bloc will still be able to step up exports as the largest feed and residual reductions will occur here, in China and Australia. Australia’s and Argentina’s exports should, however, range 13% and 14% lower. Ukraine still plays a major role in supplying the world with wheat, although the war coupled with transport restrictions are expected to cut exports by nearly half to 10 million mt.

The USDA’s outlook for India has, however, certainly been overtaken by events. Issue is that the Indian government has recently slashed production estimates to 105 million, while WASDE still estimates production at 108.5 million mt. The export ban will also have further implications for exports. In addition, it is unclear in how far the sweeping sanctions on Russia will impede exports from Russia itself and other CIS countries such as Kazakhstan.

World wheat exports in million mt


2021/2022 (est.)

2022/2023 (proj.)


























































WASDE, May 2022

War overshadows impact of climate crises

Although the reassuring facts presented in the USDA’s WASDE report are badly needed for a rational assessment of the market situation in a time when new crises are being reported daily, the speed in which the projected export figures became redundant is alarming. The organisation clearly stresses that it only accounts for the short-term impact of the war in Ukraine in the WASDE report, but events such as India’s export ban, which are caused by the climate crisis, unfolded so quickly and unexpectedly within days after the report was issued that this shows how impossible it has become for anyone to keep on top of proceedings and what grip extreme weather conditions already have on the market. In addition, it should be noted that summer is only about to start in the Northern Hemisphere.

Danger is that the impact of the climate crisis is being underestimated, while attention is too narrowly focused on events taking centre stage elsewhere. Entertaining as the show is, it is high time to focus on the broader issues at stake namely the implications of the war and climiate change on supplies and food security. While large players may have considerable resources at their disposal to better assess the market situation and respond swiftly to events in their own interests, smaller companies and poorer countries will certainly be left to struggle as prices for wheat and other grains along with oil continue to surge and people will be left to starve in many parts of the world.


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price chart milling wheat (CBOT)
price chart milling wheat (MATIF)
price chart corn (CBOT)
price chart corn (MATIF)
price chart sunflower oil (Ukraine)


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