With northern hemisphere wheat heading into the important yield-determining month of May, attention is turning to how things are looking for Australia’s major export market competitors, according to RaboResearch general manager Australia and New Zealand Stefan Vogel.

For the US, he said, this year’s plantings saw wheat acreage increase by nine per cent to a seven-year high. But what would usually be a bearish price driver has been somewhat offset by weather issues.

“Winter wheat, by far the larger crop in the US, is in poor shape due to dryness while spring wheat plantings are battling a late start to spring,” he said.

In Canada, the area of wheat planted is expected to increase slightly, Mr Vogel said, but a forecast return to average yields is expected to keep the crop size relatively unchanged year on year.

“And for the EU, the wheat crop is in good shape overall with, so far, no significant surprises expected compared with last year,” he said, “while Argentina will only begin planting wheat in late May, still allowing time to recover from ongoing drought, and the core wheat-growing regions in the south have already received some much-needed rain.”

So, Mr Vogel said, with limited surprises in these key wheat-exporting regions, the difference to global supply and exports in 2023/24 will likely once again come from the Black Sea region and from Australia. “Both have exported very strong wheat volumes so far in 2023 and both are also looking to lower production in the coming cycle,” he said.

Mr Vogel said Ukraine is expected to see another 10 to 20 per cent reduction in its wheat production and a 20 per cent cut in barley and corn.

And Ukrainian exports will continue to depend on two key factors.

One is the continuation of the Russia/Ukraine grain export deal allowing Ukraine to ship further wheat through its ports to the world market, he said. “This deal – which nowadays accounts for about 70 per cent of wheat volumes that leave Ukraine – is highly political with Russia ramping up pressure on the west to remove sanctions in order for it to renew the deal which is due to expire again in late May,” he said.

The second factor, Mr Vogel said, is Ukraine’s ability to transport grain by rail, road and river through neighbouring countries in the EU, where farmers have recently complained about too much Ukrainian grain on world markets hurting their prices. “Some EU member states halted trade, at least temporarily, but resolutions seem to be underway and the EU itself has considered those standalone decisions by countries, like Poland and Hungary, unacceptable in what is a common EU market.”

Similarly important, according to Mr Vogel, will be Russia’s wheat export volumes over the next 18 months.

“So far this year, Russia has shipped about twice as much wheat as the same time last year and is unlikely to slow much in the remaining months of this season,” he said. “Looking into 2023/24, Russian wheat production is unlikely to match the record seen last year, but, given remaining inventories, local consultants are estimating exports will be close to this season’s record shipments. So this will remain a price concern.”

Overall, Mr Vogel said, 2023/24 global wheat production is likely to fall close to the level seen two years ago rather than reaching last year’s record. But exports might remain strong and competition from corn also needs to be considered.

“The US is expected to expand corn acreage by four per cent and, if yields recover to trend levels, this would mean a lot of additional feedgrain looking for markets,” he said.