The decline in global wheat prices witnessed in recent months could slow and prices could start to move sideways over the coming months, says the Agricultural Business Chamber (Agbiz).
The latest report from the International Grains Council placed the 2023/24 global wheat production at 783 million tonnes, down 3% from the previous season.
Still, this would be the second-largest global wheat harvest on record. In line with these downward revisions in production estimates and increased consumption, the 2023/24 global wheat stocks could fall 7% year on year to 263 million tonnes.
The agricultural organisation’s chief economist Wandile Sihlobo said such an outlook was not entirely favourable for wheat-importing countries.
“Still, we doubt that prices would surge to levels we witnessed a year ago following the invasion of Ukraine by Russia, which disrupted the flow of wheat supplies from the Black Sea region. In addition, while the Black Sea Grain Deal has not been renewed yet, the price reaction has not been as dramatic as some might have feared. Most wheat origins are trading below $335 (R6369) per tonne, compared to levels more than $400 per tonne a year ago,” Sihlobo said.
South Africa is one of the largest wheat importers in the African continent. In the 2023/24 season, South Africa’s wheat imports could amount to 1.60 million tonnes, according to Agbiz estimates. This would be mildly down from last season’s import forecast of 1.66 million tonnes.
“The reasonably large carry-over stock, combined with the expected decent harvest in the 2023/24 season, is the primary reason for this year’s expected mild decline in imports.
The Western Cape province, which accounts for just more than two-thirds of South Africa’s wheat plantings of 537 050 hectares, has had one of the most favourable production conditions in a long time. The province’s wheat and other winter crops are in good condition, having benefited from conducive winter rainfall.
The expected large winter crop in the Western Cape has somewhat overshadowed the decline in production in the Free State and Northern Cape. Overall, South Africa’s 2023/24 wheat production is forecast at 2.14 million tonnes, up 2% from the previous season. This is according to data from the Crop Estimates Committee (CEC).
On Wednesday, the CEC will release their second monthly production forecast for winter crops. Agbiz said they thought the wheat production forecast data would likely remain unchanged from the previous month.
The current 2023/24 season was better than the previous season.
Agbiz said with the uncertainty around the renewal of the Black Sea Grain Deal still lingering, the market, fortunately, had not overreacted.
“We think market participants are appreciative of the fact that there are large global wheat supplies, but the temporary challenge is movement. Despite the decline in 2023/24 global wheat production, the current expected harvest of 783 million tonnes is still the second-largest crop on record.”