NAPERVILLE, (Illinois): Global wheat prices earlier this week retreated from multi-month highs as Russia’s parched crop was finally due for some rain, but those rains were somewhat dismal and the forecast is dry again, threatening to curb the top exporter’s harvest.
Average-to-cool temperatures are expected for southern Russia in the first half of May following record April warmth, and the cooldown could be key in avoiding significant crop losses amid an unusually dry spring.
Southern Russia, which grows more than 30% of the country’s annual wheat crop, experienced its driest April in a decade as precipitation amounted to just a quarter of the month’s normal. Temperatures were likely record for April, nearly 10 degrees Fahrenheit (5.4 degrees Celsius) above average.
Such a dry and warm April combination has not been observed in southern Russia in at least three decades. The closest instance was 2012, when Russia’s all-wheat yield notched its worst relative performance of the post-Soviet era.
Dryness may continue for southern Russia as weather models on Thursday pegged May rainfall at about two-thirds of normal by mid-month, but average or below-average temperatures should prevail. Russia’s best overall wheat yields generally occur amid cooler Mays in the south, sometimes offsetting moisture deficits.
Another potential saving grace for southern Russian crops is well above-average soil moisture so far this year. Soil moisture is also solid in regions that grow spring wheat, which makes up about 27% of Russia’s total wheat harvest.
July is the critical period for that crop to maximize yield. Russian agricultural consultancy Sovecon two weeks ago estimated the 2024 wheat crop at 93 million metric tons, close to last year’s levels, and other analysts hold a similar view. The US Department of Agriculture will provide its first official forecast next Friday.
EXPORT RUNDOWN
Crop losses in Russia could be a boon for other global wheat suppliers, though alarms are not yet sounding as Russia has recently been exporting record volumes.
Russia has doubled its wheat crop over the last 20 years and is now responsible for a fifth or more of all wheat exports.
Years ago, Russian wheat production had an unpredictable reputation due to volatile yield swings, though results have been steadier and higher in recent years.
It has been a while since Russia had a wheat disaster, but the 2021 harvest came in about 10 million tons (12%) below initial expectations on unfavourable weather.
That eased exportable Russian supplies in the 2021-22 season, though other exporters picked up some of that slack, especially as prices surged following the Ukraine invasion. India, an on-and-off exporter, shipped a huge record of 8 million tons that year.
India’s wheat stocks are now at a 16-year low, and the country may be forced to import wheat for the first time since 2017. India imported 6 million tons of wheat in 2016-17 and about 1.2 million in 2017-18. Australia, which exports most of its crop, had a record wheat harvest in 2021-22 and was the No. 2 exporter behind Russia. Australia’s wheat output heavily depends on global weather patterns, and the recent El Nino is not ideal.
Australia’s recently harvested 2023-24 crop was about a third smaller than in the prior year, and exports are set to fall a similar degree, by more than 11 million tons. Major exporter France is also facing issues with its crop, and the European Union’s upcoming wheat harvest could be a four-year low.
The United States, which was last the world’s leading wheat exporter in 2016-17, has sold an above-average amount of wheat for export in the 2024-25 season starting June 1.
That could help US wheat shipments rebound off a 52-year low in 2023-24. Karen Braun is a market analyst for Reuters. Views expressed above are her own.