IndexBox has just published a new report: ‘World – Wheat – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.
This year, harvests in the EU, the U.S., the UK, Argentina, Morocco and Ukraine are expected to increase, leading to a growth in wheat production. Even though global stockpiles of grains will remain high, there are boosted expectations for inflation due to forecasts of record demand and increased prices for other cereal grains. The rising global population and bioethanol production are key factors leading to this growth in demand for wheat. Another driving factor is the emerging trend in the EU to use more wheat in animal feed rather than barley.
Key Trends and Insights
In 2021, global wheat production is expected to rise by 13M to 932M tonnes (IndexBox estimates). Overall, crop production is expected to increase due to positive weather conditions in the EU, the U.S., the UK, Pakistan, Brazil, Egypt, China, India and Argentina. This record level of production will help keep global grain stockpiles high. In Russia, Kazakhstan, Australia and Canada, a small drop in crop production is expected. In Canada, this is a result of decreasing acres designated for wheat production and instead allocating the space for canola and barley.
In May 2021, global export prices for corn sharply increased, and wheat followed in suit. This was largely due to fears of poor weather conditions in the Northern Hemisphere. Another impact comes from the inflationary expectations that reflect the expected demand growth. In Canada, the price grew by $48 per tonne, in the US by $56 per tonne and in the EU by $43 per tonne. In Australia, the price also grew by $35 per tonne due to strong exports, while in Argentina, it grew by $27 per tonne. Russian prices grew by $34 per tonne but remained at a competitive level. World Bank expects the average wheat price (Wheat, US, HRW) to surge by 9% in 2021 to $230 per tonne and then to continue growing gradually.
Global demand for wheat in 2021 should reach a record level primarily due to increased demand in South Asia for food products containing wheat. Consumer food preferences in both India and China have shifted toward wheat products and thus driven up demand.
In the next few years, the use of wheat in animal feed is expected to expand, especially in the EU, where a high yield will enable this growth. A similar trend is expected in the U.S. and the UK, driven by growing wheat production. However, in East Asia, the use of wheat in animal feed is predicted to decrease against the rising use of corn.
In the next decade, bioethanol production should additionally cause the market for wheat to grow. Another key factor will be the increased demand for antiseptics arising from the COVID-19 pandemic. This surge in the antiseptic industry is expected to continue driving bioethanol production for at least the next few years.
Wheat Consumption by Country
The global wheat market stood at $295B in 2020, increasing by 3% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).
China (280M tonnes) constituted the country with the largest volume of wheat consumption, accounting for 31% of total volume. Moreover, wheat consumption in China exceeded the figures recorded by the second-largest consumer, India (105M tonnes), threefold. The third position in this ranking was occupied by Russia (66M tonnes), with a 7.2% share.
From 2012 to 2020, the average annual growth rate of volume in China stood at +1.6%. In the other countries, the average annual rates were as follows: India (+1.4% per year) and Russia (+14.6% per year).
In value terms, China ($123.6B) led the market alone. The second position in the ranking was occupied by India ($27.7B). It was followed by Russia.
The countries with the highest levels of wheat per capita consumption in 2020 were Russia (455 kg per person), France (331 kg per person) and the UK (266 kg per person).
Wheat Imports by Country
In 2020, supplies from abroad of wheat decreased by -8.1% to 167M tonnes, falling for the second consecutive year after three years of growth. In value terms, wheat imports contracted slightly to $39.9B in 2020.
In 2020, Egypt (9.6M tonnes), China (8.2M tonnes), Italy (8M tonnes), Indonesia (7.2M tonnes), Algeria (7M tonnes), Brazil (6.6M tonnes), the Philippines (5.7M tonnes), Japan (5.4M tonnes), Morocco (4.9M tonnes), Nigeria (4.7M tonnes), the Netherlands (4.4M tonnes) and Spain (4.1M tonnes) represented the main importer of wheat in the world, generating 45% of total import. Mexico (4M tonnes) occupied a minor share of total imports.
From 2012 to 2020, the biggest increases were in China, while purchases for the other global leaders experienced more modest paces of growth.
In value terms, the largest wheat importing markets worldwide were Egypt ($2.7B), China ($2.3B) and Italy ($2B), with a combined 18% share of global imports.
China saw the highest rates of growth with regard to the value of imports in terms of the main importing countries over the period under review, while purchases for the other global leaders experienced more modest paces of growth.
Source: IndexBox AI Platform
