Global wheat market faces challenges in 2024 with rising prices and climate impact

The year 2024 presents significant challenges for the global wheat market, driven by increases in wheat prices and possible crop failures due to climate change. In response to this context, the Brazilian Wheat Industry Association (Abitrigo) organized, on the afternoon of August 27th, a webinar to discuss the main bottlenecks and opportunities in the sector.

The event, entitled “Wheat market scenario in Brazil and the World”, was mediated by Maurício Ghiraldelli, director of Supplies at Viterra Milling, and featured presentations by Elcio Bento, Market analyst at Safras & Mercado, and Douglas Araujo , director of PRTK Consultoria.

During the event, Ghiraldelli highlighted the importance of the current period for the wheat market, as it coincides with harvests in the Northern Hemisphere, responsible for 85% of world production, in addition to the Southeast and Central-West regions of Brazil. He highlighted that the occasion was essential for sharing information that can help in making strategic decisions throughout the wheat production chain.

Elcio Bento, in his analysis of the Brazilian market, identified three crucial factors for wheat pricing: national production, international prices and exchange rate. According to him, the balance between shortages and excess production in Brazil determines import and export parities. For the 2024/25 cycle, Bento predicts that the country will have to maintain the pace of imports and, at the same time, maintain exports. “Last year we exported more, even with a similar harvest, but it was wheat not used on the domestic market. If this year’s grain is of quality, we will have to hold it in Brazil,” he said.

Bento also compared prices on the domestic market with international prices, highlighting that, in the Paraná region, there is a 2% difference in relation to the Kansas market, in the United States. This margin, according to him, reflects an attempt to accommodate prices, after a period of increase, with a view to pricing the new harvest.

Douglas Araujo addressed the global wheat panorama, highlighting a small increase in supply and demand figures compared to the previous year, although still below consumption, which resulted in smaller stocks. He explained that the current scenario is marked by a cycle of interest rate cuts in the most developed countries, such as the United States, Switzerland and the United Kingdom, while emerging economies, such as Brazil, India and China, face an intermediate situation.

Araujo highlighted that these economic changes, combined with the behavior of funds in the stock market, directly influence the formation of prices in the global physical market. “The weight of the economy, interest rates and inflation are reflected in the decisions of global agents”, he commented.

Argentina: a separate case

In the Latin American context, Argentina stands out for the rapid correction of the previous year's inflationary situation. Araujo considered the Argentine case to be particularly interesting, as the ongoing economic recovery should positively influence the next harvest. He pointed out that this improvement could change the global outlook, as Argentine producers adjust the distortion caused by real interest rates.

Abitrigo's webinar, therefore, brought to light the complexity of the wheat market in 2024, highlighting both the challenges and opportunities that will shape the future of the sector in Brazil and the world.