lowest level since records began in 1985. That is good news for grain importing countries, effectively widening their choice of supplier to more distant origins with minimal additional transport cost. Wheat Outlook Global wheat prices have struggled to get far off the five-year lows they reached earlier this season in response to record 2015 crops and stock build-ups. A mild rally in Chicago in December and in the EU at the turn of the year largely reflected the ongoing concerns we highlighted in our last review about crops in the former Soviet countries being at greater risk of ‘winterkill’ after droughts downsized and delayed planting plans, emergence and development. However, the two main producers, Russia and Ukraine, have been a bit luckier since with some much needed showers and a long spell of unusually mild conditions, probably helping some of those crops that were border-line for abandonment manage to get established after all. Some snow cover also arrived just in time to
protect crops as weather turned more typically colder. That said, by mid-January it seemed much of that snow had been washed away in Ukraine, where winter crop losses will likely still be quite substantial. At this stage, that land seems most likely to go to maize – to make up for last year’s crop shortfall in Ukraine’s largest export grain – and possibly to sunflowers too. Russia, the largest wheat supplier of the two, is probably doing rather better than Ukraine and is officially expecting a crop not much smaller than last year’s big one which, officials now claim, reached a new record 61.8million tonnes (versus 2014’s 59.7million). If Ukraine does produce, say five million or six million tonnes less wheat this summer, as some analysts suggest, it will not be game-changing in terms of global wheat export availability or world wheat export prices which, nowadays, have considerable influence on domestic prices on European and other consuming markets. Argentina resurfacing as an important export force could potentially partially offset this as its new more liberal government frees up trade from quotas, export duties and currency controls. With the ink hardly dry on these edicts at the turn of the year, Argentina has already been undercutting not only the usually cheapest Russian and Ukrainian suppliers but also the EU – which had recently been offering the best fob quotes (before freight) to big buyers like Egypt. For wheat, maize and soya, Argentina’s new ‘business-friendly administration is likely to result in larger sown areas and a rising export presence in years to come. As recently as 2011/12 season,
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