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Global Wheat Production Down in 2018

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Global Wheat Production Down in 2018

Global Wheat Production Down in 2018
October 03
09:43 2018

Informa’s Agribusiness Intelligence is predicting global production of wheat will be down year on year in 2018. Wheat futures have hit multi-year highs in recent months as adverse weather curtailed production in key exporting countries, leading to expectations of the first drop in world production in five years, and the first consecutive contraction of global wheat stocks after five years of growth.

Informa’s Agribusiness Intelligence pegged global wheat production at 726 million tonnes for 2018/19, down 33 million tonnes from last year as producers grappled with dry conditions in the EU, Australia and western Russia, and wet and cold conditions in the East of Russia. Globally the weather has had a disruptive effect on the crops in several locations around the world.

European harvests decline due to drought and hot weather

Winter wheat planting in Europe fell on adverse weather during the sowing window bringing expected production below recent years as the harvested area fell. Dry and warm conditions in central Europe encouraged early plant growth, but a lack of subsequent rain brought growing moisture concerns as the campaign progressed. With lower production the price of wheat is buoyant, with 4 year highs for the price of wheat in Paris reported at the beginning of August. In England, early indicators from harvesting in the southeast suggest the UK crop could be down 1.3 million tonnes from last year at 13.5 million tonnes. These suggest yields of 7.6 to 8 tonnes per hectare in the south and east of England, down from the five-year average of 8.2t/ha.

Farmers in the northern regions of Germany have been particularly affected by prolonged dry conditions and the hottest July on record leading to failure in some winter crops. Whereas Germany usually produces some of Europe’s best quality wheat, this year the country’s farmers’ association cut its forecast of German wheat production to 18 million tonnes, falling over 6 million tonnes.

Varied picture across larger geographies in Australia and Russia

Dry weather has plagued wheat growers in the eastern regions of key exporter Australia, but favourable conditions in the west leave Australian production down slightly on-year at 19.1 mlillion tonnes. It remains to be seen what will happen to domestic consumption of wheat, but Australian wheat prices have hit 3 year highs and September is a key month for Australian production.

Russia has been the powerhouse of global wheat production and exports in recent years, but cold and wet weather brought its output down to an expected 69 million tonnes from around 85 million tonnes last year, with exports set to fall from 41.5 to 36.5 mln tonnes. In Russia’s eastern region there was snow left on the fields at a time when farmers are usually planting spring wheat in 20 degree Celsius weather. Temperatures in Siberia in May were down 4-5 degrees Celsius from the average, with precipitation triple the normal levels. Planting in Siberia was pushed into June in some regions, bringing expectations of low yields or abandonment.

Gary Howard, Senior News Analyst, Grains and Oilseeds at Informa’s Agribusiness Intelligence, comments: “After five-year period of surplus, the world looks to be heading for its second consecutive year of deficit in grains production. Despite expectations of slower demand growth this season than we’ve seen in recent years, weather issues in key exporters have narrowed supply.”

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