Climate impacts global wheat production in the 2021/22 harvest

The Brazilian Wheat Industry Association (Abitrigo) brought together representatives from the global wheat industry on the afternoon of Thursday, October 14th in the “International Harvest 21/22” webinar. The online event provided an overview of the prospects for the harvest, quality, volume, stocks and price behavior in Argentina, Canada, the United States, Paraguay, Russia/Ukraine/Lithuania, the European Union and Uruguay.

The webinar moderator and relationship manager at hEDGEpoint Global Market, Roberto Sandoli Jr, highlighted that the global cereal harvest ended up being much smaller than expected at the beginning of the year, due to the influence of weather factors, but prices should remain firm in the international market.

“The drought was one of the main factors in reducing the harvest, especially for producers in the Northern Hemisphere. On the other hand, excess rain in some countries also had a negative impact, in this case in relation to the quality of wheat”, he explained.

Argentina

Argentine wheat managed to fully supply the export program to Brazil throughout the year, according to the president of Ciara-CEC, Gustavo Idigoras, in addition to also having managed to diversify the destinations of national production. “Brazil receives approximately 46% of the wheat exported by Argentina. However, there is an increasing presence of Asian and African countries among buyers of Argentine cereal, with emphasis on Indonesia, Bangladesh and Kenya”, highlighted Idigoras.

Projections for Argentina's 2021/22 harvest are positive, according to the president of Ciara-CEC. The estimated production is 19,2 million tons of wheat, in an area of ​​6,6 million hectares. “This will result in the country having an export capacity, if not greater, very similar to that of the 2020/21 harvest”, he details.

Genetically modified (GM) wheat was one of the topics covered during the webinar. Idigoras recalled that commercialization still remains illegal in Argentine territory and presented an opinion from the country's Ministry of Agriculture, which reinforces this message. “HB4 wheat will not be authorized to be sold in Argentina until it is formally approved by Brazil”, he concludes.

Canada

According to the director of Market Analysis and Commercial Policy at Cereals Canada, a company that represents the entire sector chain in the country, Daniel Ramage, the drought and high temperatures, especially after the sowing period, negatively impacted quality and conditions of wheat planted in Canadian soil. “Cultivation got off to a good start in the producing regions, but dry weather conditions and high summer temperatures affected the harvest and resulted in accelerated harvesting in some areas,” he comments.

In 2021, 21,7 million tons of wheat were produced, an amount 33% lower than the average of the last 5 years. Productivity was also affected by the drought, with 2,4 tons of wheat per hectare being recorded, when an average of 3,5 tons per hectare of productivity was expected for spring wheat.

United States

The American wheat harvest was also influenced by drought and high temperatures, but even so, it recovered from the historic low in planted area, which occurred in the last biennium, according to the vice president of foreign operations at U.S. Wheat Associates, Michael Spier .

“We saw a 5% increase in the area planted with wheat on North American soil. However, extreme droughts impacted production across the country, which fell 10% compared to the previous year,” he explains.

The pace of sales of wheat in the United States suffered a 21% reduction at the beginning of the 21/22 harvest, which has already reached half of the export target estimated by the USDA in the first four months of the new commercial year. For Brazil, there was a 33% increase in wheat exports hard red winter last year.

Paraguay

Frosts still continue to determine the direction and quality of the Paraguayan wheat harvest, according to the president of the Union of Cooperatives of Paraguay – UNEXPA S.A., Ruben Zoz. This climatic factor caused the loss of 31% of all wheat production in the country.

“The harvest suffered a loss of 332,5 thousand tons of wheat, which represents 33% of Paraguay's total production. It is expected that the final stock of the cereal will also show a significant drop, as both consumption and supply of wheat are low in the country”, highlights Zoz.

There was also a rise in cereal prices in the country, whose main producing departments are Alto Paraná and Itapua, both bathed by the Paraná River, and Brazil and Uruguay as the main export destinations.

Russia, Ukraine and Lithuania

Despite the crop failure, the quality of Russian wheat and the availability of cereal produced in Lithuania and Ukraine were the highlights brought by SODRUGESTVO's Head Wheat, Douglas Araújo, during the webinar.

“Russian and Lithuanian wheat is fully authorized to be used in Brazil. Ukrainian is also permitted, but a series of limitations prevent Ukrainian cereal from being converted into business on Brazilian soil,” he explains.

The naturally fertilized soil is one of the differences in Russian production. The country is the world's largest exporter of the cereal and, even with a 13% decrease in the 21/22 harvest, the country's wheat continues to present the same quality as in previous years.

European Union

The increase in planted areas is the hallmark of wheat in the European Union today, according to the trader at Grain Merchant Wheat – Soufflet Négoce, Victor Buczynski. Countries such as Romania and Bulgaria had good crop yields, while France, Germany and the Baltic countries had losses in relation to summer expectations;

“The total export potential of the European Union is increasing, which could range from 25,6 to 32 million tons of wheat, due to the greater area of ​​wheat planting across the continent, especially France and the United Kingdom”, he states.

China has generated good demand for wheat for Europe, mainly for France. Furthermore, the European cereal has competition from wheat produced in Russia and countries north of the European Union in the Algerian market, historically the largest buyer of French wheat, but which changed the specifications for cereal purchases last year.

Uruguay

The new Uruguayan wheat crop occupies an area 6% larger than the previous crop, highlights the representative of the country's Ministry of Agriculture, Agriculture and Fisheries, Catalina Rava. She states that the health status of the cereal is excellent, despite water scarcity impacting production.

“We expect a good yield from the new wheat crop in the country, even with the 4% reduction in production expectations in Uruguay, which now stands at 900 thousand tons. The potential remains intact, despite the fact that we are entering the period in which the risk of contamination of the crop by Fusarium is greater and because we are suffering from a water deficit”, he highlights.

The webinar “International Harvest 20/21” can be seen in full on the Abitrigo channel using the link available here.