Rabobank: ‘The wheat market is on fire’

22-Apr-2022 - Last updated on 22-Apr-2022 at 21:55 GMT

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Russia’s invasion of Ukraine has sent shockwaves rippling through the food supply chain, but thanks to a confluence of factors, the wheat market – in particular – is “on fire,” say analysts at Rabobank.

Ukraine and Russia together account for nearly 30% of global wheat exports, and it is "impossible to assess how much of this volume will be lost” at a time when wheat stocks globally are the lowest they have been since 2006/2007, US spring wheat acres are down, and the drought in the southern plains continues to intensify, said the bank in its latest North American agribusiness review.

“When the world needs all the wheat it can muster, the US hard red winter wheat belt is suffering from a drought and extreme weather…

"Not only are winter wheat crop condition ratings reaching their all time lows, but recent wind storms in the southern plains have blown the wheat out of the ground, making the crop there a total loss.”

Whatever happens, a reduction in global wheat supplies means we can expect to see an increase in US wheat exports in at least the current crop year, said Rabobank, which gamed out a scenario whereby the US ships an additional 200m bushels for the 2022/23 crop year, resulting in a 50% increase in the national average wheat price to near $10.60 a bushel, “an all-time record.”