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This year, harvests in the European Union (EU), the United States (US), the United Kingdom (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 increased 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 increased demand for wheat. Another driving factor is the emerging trend in the EU to use more wheat rather than barley in animal feed.
Key trends and insights
This year, global wheat production is expected to increase by 13 million to 932 million tons (IndexBox estimates). Overall, crop production is expected to increase due to favourable weather conditions in the EU, the US, the UK, Pakistan, Brazil, Egypt, China, India and Argentina.
This record level of production will help keep global grain stockpiles high. However, in Russia, Kazakhstan, Australia and Canada, a slight drop in crop production is expected. In Canada, this is the result of a decreasing number of hectares designated for wheat production. This space is allocated for canola and barley instead.
In May 2021, global export prices for maize sharply increased and wheat followed 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 US$48/ton, in the US by US$56/ton, and in the EU by US$43/ton.
In Australia, the price also grew by US$35/ton due to strong exports. Meanwhile, the price increased by US$27/ton in Argentina. Russian prices increased by US$34/ton but remained at a competitive level. World Bank expects the average wheat price (hard red winter wheat, US) to surge by 9% in 2021 to US$230/ton, and then to gradually continue growing.
Global demand for wheat in 2021 should reach a record level primarily due to increased demand in South Asia for food products containing wheat. In addition, consumer food preferences in both India and China have shifted toward wheat products and have thus driven 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 US 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 increasing use of maize.
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 US$295 billion 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 (280 million tons) 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 (105 million tons), threefold. The third position in this ranking was occupied by Russia (66 million tons), 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 growth rates were as follows: India (1,4% per year) and Russia (14,6% per year).
In value terms, China (US$123,6 billion) led the market. The second position in the ranking was occupied by India (US$27,7 billion) followed by Russia.
The countries with the highest levels of wheat per capita consumption in 2020 were Russia (455kg per person), France (331kg per person) and the UK (266kg per person).
Wheat imports by country
In 2020, wheat supplies from abroad decreased by 8,1% to 167 million tons, falling for the second consecutive year after three years of growth. In value terms, wheat imports contracted slightly to US$39,9 billion in 2020.
In 2020, Egypt (9,6 million tons), China (8,2 million tons), Italy (8 million tons), Indonesia (7,2 million tons), Algeria (7 million tons), Brazil (6,6 million tons), the Philippines (5,7 million tons), Japan (5,4 million tons), Morocco (4,9 million tons), Nigeria (4,7 million tons), the Netherlands (4,4 million tons) and Spain (4,1 million tons) represented the main importers of wheat in the world. These countries generated 45% of total imports. Mexico (4 million tons) occupied a minor share of total imports.
From 2012 to 2020, the most significant 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 (US$2,7 billion), China (US$2,3 billion) and Italy (US$2 billion), with a combined share of 18% 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. – IndexBox AI Platform