The European Union is heading towards a smaller wheat crop this year as drought and extreme heat shrink yields in some regions, offsetting more favourable prospects elsewhere after timely rain.
Soft wheat yields in the EU for the 2022-23 marketing year (July-June) have been slashed for a third straight month in June, drawing supply concerns as smaller EU output could further stretch wheat markets in the absence of key supplies from the Black Sea. Soft wheat yields were cut to 5.76 mt/ha from 5.89 mt/ha, the EU Commission said June 21. The latest projection is also below the five-year average of 5.84 mt/ha for soft wheat yields.
A senior government official said on Monday Ukraine’s grain harvest was likely to drop to around 48.5 million tonnes this year from 86 million tonnes last year following Russia’s invasion. First Deputy Agriculture Minister Taras Vysotskyi said the total area sown had fallen by 25% and the 2022/23 exportable surplus could be 30 million tonnes, meaning significant loss of revenue. The wheat harvest would be around 17-20 million tonnes, he said.
Global wheat markets are embarking on the 2022/23 season with a great deal of uncertainty. The impacts of the ongoing war in Ukraine, trade policy changes in several countries, and high international prices will shape much of the wheat market outlook. International wheat prices are at levels not reached since 2008, following a season of tight global availability due to reduced harvests in some major exporting countries and export suspensions by others, including Ukraine (a major exporter) and India (an emerging exporter), along with supply concerns for 2022/23 also adding pressure.
Due to global supply concerns, Egypt, perennially among the world’s largest wheat importers, will allow wheat shipments with a moisture level of up to 14% for a year, up from 13.5%. Egypt usually sources most of its wheat from Russia and Ukraine, where conflict has disrupted its purchases of relatively cheaper Black Sea wheat and inflated global prices. The North African country received 82% of its wheat from Ukraine and Russia in 2020, and a March US Department of Agriculture (USDA) report estimated Egypt would import a total of 12 million tonnes of the staple food crop in 2021-22.