Global wheat production is likely to fall for the first time in four years, according to a closely watched US government forecast of the upcoming crop season, confirming fears of a further tightening of supply and rising food inflation.
Wheat prices rose after the US Department of Agriculture issued its first world estimates for the 2022-23 crop season on Thursday. Futures for the new crop for September delivery traded in Chicago rallied as high as $12 a bushel, up 8 per cent on the week, before easing slightly. Euronext wheat futures traded at a two-month high of €411.50 a tonne.
Grain traders, food companies and governments have been keeping a close eye on supplies since Russia’s invasion of Ukraine disrupted farming in the country, one of the top five wheat exporters. The USDA predicted on Thursday that Ukraine’s wheat production would fall by a larger than expected 35 per cent from the year before, to 21.5mn tonnes.
The USDA forecast 2022-23 total global wheat output at 774.8mn tonnes, the first decline since the 2018-19 season. Global buffer stocks are expected at 267mn tonnes, down for the second year in a row and the lowest level in six years.
The war in Ukraine had exposed the interconnected nature and fragility of agricultural systems, with serious consequences for food security, the UN World Food Programme said in reference to a report on the global food crisis published earlier this month. The number of people facing acute food insecurity totalled a record 193mn in 2021, the WFP said.