Global Wheat Trade Faces Significant Decline
The global wheat trade is expected to experience a substantial contraction, with the US Department of Agriculture (USDA) projecting a decline of up to 9% in the 2024/2025 season compared to the previous year. This decline marks a significant downturn, the sharpest one-year reduction seen in decades.
Declining Imports from Key Markets
A primary driver behind this decline is the drop in imports by major wheat-consuming nations, including China and Pakistan. Improved domestic wheat production in these countries has reduced their dependency on imported grains.
In March, the USDA notably cut its forecast for Chinese wheat imports to 6.5 million tonnes. This forecast was subsequently lowered further in April, predicting an even steeper fall to just 3.5 million tonnes—a staggering drop of 10 million tonnes from the previous season, where China imported 13.6 million tonnes. This declining trend significantly impacts exporters, particularly Australia, which relies heavily on the Chinese market.
Ongoing Trade Tensions
Although the USDA did not specifically reference the ongoing trade war between the US and China, the prevailing trade policies—coupled with high import tariffs—have set the stage for these diminished import forecasts. Last year, China ranked as the fourth-largest destination for US wheat, purchasing $482 million worth of grain. As a result, the export outlook for US wheat has been adjusted downwards.
Additional Trade Restrictions
Beyond the situation in China, other global factors are contributing to the contraction of wheat trade. For instance, Turkey has implemented import restrictions due to surging domestic stocks. Moreover, the anticipated wheat harvest for top exporting nations like Russia, the European Union, and Ukraine is expected to be smaller in the 2024/2025 season, leading to decreased export volumes.
Export Adjustments from Major Producers
The export forecast for the European Union has dropped significantly, revised from an earlier expectation of 27 million tonnes to 26.5 million tonnes—about 30% lower than the previous season and the lowest since the 2018-2019 period. In contrast, Ukraine’s wheat export forecast has seen a slight increase of nearly 500,000 tonnes to a total of 16 million tonnes, though this remains below last season’s 18.6 million tonnes. Furthermore, Russia is projected to export about 44 million tonnes this season, a decline from over 55 million tonnes last year.
Record Production Amidst Low Stocks
Although the USDA has revised global wheat production forecasts downwards, it remains at record levels. Ending wheat stocks have been adjusted from 260.1 million tonnes to 260.7 million tonnes; however, this figure still represents the lowest global wheat ending stock since the 2015-2016 season.
A Broader Decline in Grain Trade
The downturn is not limited to wheat, as the world trade in other grains is also expected to diminish. Overall grain trade—including wheat, corn, barley, and rice—is projected to shrink by 7% in the 2024/2025 season. A significant contributor to this decline is the reduction in global corn production, particularly in the US, the world’s largest exporter. Simultaneously, China’s own production of corn is on the rise, leading to a projected decrease in imports of 65%.
