The Wheat Market : Analysis & Forecasts

The Wheat Market : Analysis & Forecasts

1- The state of the wheat market

“Wheat is a versatile grain that can be grown in a variety of climates and dates back to 10,000 B.C.. The price of the US Dollar is one of the main driving factors of wheat prices as well as supply-demand imbalances.” Markets Insider

The wheat market is a highly competitive one because of the numerous producers active in the industry. On the contrary to other markets, there isn’t any actor who could influence the market’s price with its own output. The price is predetermined and producers should sell at this  price.

In the US, wheat is the 3rd largest field crop produced following corn and soybeans. Wheat is marketed as a commodity and consumed worldwide as a staple food in cereals, breads, pasta etc.

According to the US wheat production’s classification, there are 5 major classes : hard red winter, hard red spring, soft red winter, white and durum. They all have a different end-uses :

• Hard red winter & hard red spring are for bread flour

• Soft red winter is for cakes, cookies, pastries…

• White wheat is for noodles, crackers & cereal products

• Durum is used for pasta

2- Key Figures

• The wheat consumption worldwide accounted for 759.5 million metric ton in 2020 

• It is forecasted to reach a CAGR of 4.1% by 2026

• The largest and fastest growing market is Asia Pacific : China was the leading country worldwide for wheat consumption (137 million metric ton) ; India is the 2nd with 102 million metric ton consumed

• In 2019, global wheat production accounted for 765.8 million metric ton, growing by 3.9% compared to the previous year

• In 2019, the total area harvested stood 215.9 million hectares

• In terms of production in 2019, the leading countries were China (134 million metric ton), India (102 million metric ton) and Russia (75 million metric ton) that accounted together for 41% of the global production

Statista 2021

3- Trends :

• Organic food grains 

• Whole grains especially for flour, breads and pasta

• A shift to other grains with the “free-from gluten” : rice, chestnuts, coco, corn 

4- Impacts of the Covid-19

The COVID-19 pandemic impacted on food security, particularly for grains like wheat. Due to the reduced supply, export restrictions by major grain exporting countries, the prices of wheat are expected to rise in many parts of the world.

But the pandemic isn’t the only factor of supply chain’s disruptions : due to climate change (droughts, storms, fires), there was a poor harvest in 2021, especially of durum wheat which led to a 90% price spike for raw ingredients.

Sources : Mordor Intelligence ; AgriCensus ; Trading Economics

uFoodin Team