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In the first quarter of 2024, global prices for wheat and corn reached three-year lows, confirmed by the World Bank review. Analyst estimates show that the decline is continuing into April. This situation in the grain market is largely explained by record supply, including active grain exports from Russia, the USA, and other key supplying countries.
However, in the next season, the supply-demand situation may balance out, as consumption is expected to grow, offsetting high production volumes.
Global prices for wheat and corn in the first quarter of 2024 hit three-year lows, as reported by the World Bank's review in April. A noticeable price decrease was recorded both quarterly and annually, amounting to 11% and 4% respectively for corn and 30% and 25% respectively for wheat.
For example, in March, the average price of American corn on the world market was $190.6 per ton (33% lower than a year ago), and wheat was $274.3 per ton (25% lower than in March 2023). The World Bank notes the continued downward trend in April.
Current prices are significantly influenced by the increase in grain supply and active exports. High yields in the USA, Russia, and the European Union have led to increased competition in the global market.
For example, Russia plans to export around 70 million tons of grain this year, including over 50 million tons of wheat, to meet domestic needs. The International Grains Council estimates Russian exports at 63.3 million tons and the EU at 47.9 million tons, in line with EU plans.
Despite exporters being willing to lower prices to ship such volumes, demand is lagging due to high stock levels, and the key wheat importer, China, reduced its purchases in the second half of the season.
According to the World Bank, the decreasing pressure on prices is also attributed to Ukrainian exports, despite the winding down of the "grain deal" and import restrictions from Eastern European countries. Corn exports are particularly active. However, due to Ukraine's relatively small export volume, its impact on the global market is not as significant as the record shipments from the USA.
It's worth noting that corn production this season amounts to 389.7 million tons, which is 12% higher than in the previous agricultural year. The expansion of planting areas did not play as significant a role as the increase in yield.
According to the World Bank forecast, grain prices in Europe may significantly increase in the near future due to bans on shipments from Ukraine and possible duties on grain from Russia by the EU. Ukraine and Russia are the largest grain importers to the EU.
The World Bank predicts continued high levels of grain production in the next season (specific forecasts are not yet available), while the FAO also believes that production will remain at a high level (more details see "Kommersant" from March 15).
Organizations expect that demand for grains will also increase and balance the market. Consumption is expected to grow in Argentina, Mexico, Egypt, and China, which is of interest to Russia, as these countries are key markets for Russian agricultural products.
