Wheat
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Wheat Global Market Outlook

• The global production has been rising at a CAGR of approx. 2.58% over the coming five years. Production in 2018-19 was estimated to be 758.24 MMT, a modest increase by 1%, due to high supply in the European Union (EU) and Russian offset by lower harvest in the US.

• The key factors driving the growth include an emphasis on wheat production in Russia due to export potential and the end-use industries such as feed and food, especially in Southeast Asia, with consumption having risen by approx. 3% from last year.

• With respect to the wheat starch industry, approx. 4.7-4.9 metric million tons (MMT) is produced annually. The major producing regions are France, the US, Germany, the Netherlands, Australia, the UK, Belgium, Canada, Japan, and China.

Global Wheat Market Trends

• As per Beroe’s wheat market study, the overall production is likely to increase owing to favorable climatic conditions in the US, the EU, India, the UK, and China, among others. This record-high production will help market players keep the worldwide global grain stockpiles at peak levels. In Kazakhstan, Russia, Canada, and Australia, wheat production is expected to see a marginal decline due to decreasing acres dedicated for wheat farming and rather allocating the area for barley and canola.

• The worldwide export prices for corn steeply surged in May 2021, and wheat followed the suit. This was majorly owing to concerns regarding poor climatic conditions in the Northern Hemisphere and the inflationary expectations that echo the anticipated demand curve.

• In the next couple of years, the usage of wheat in animal feed will expand, particularly in the EU, where a significant yield will support this trend. The US and the UK are exhibiting a similar trend, fueled by increasing wheat production. On the flip side, the usage of wheat in animal feed in East Asia is projected to decline against the rising consumption of corn.

• In addition, through the coming decade, bioethanol production is likely to contribute to the global wheat market. Furthermore, the rising demand for antiseptics amidst the COVID-19 crisis is projected to persist propelling bioethanol production for at least the next couple of years.

Global Wheat Market: Drivers and Constraints

Drivers

Increasing Consumption of Wheat Globally 

• The market report opines that the worldwide wheat demand in 2021 is slated to reach a record high majorly owing to rising consumption in South Asia for food items consisting of wheat. Consumer food choices in China and India have moved towards wheat items thus driving the demand.
• The demand for wheat will further be driven by the processing sectors for the production of products, such as pasta, flour, and noodles.

Rising Usage in Animal Feed

• In the next couple of years, the usage of wheat in animal feed will expand, particularly in the EU, where a significant yield will support this trend. The US and the UK are exhibiting a similar trend, fueled by increasing wheat production. On the flip side, the usage of wheat in animal feed in East Asia is projected to decline against the rising consumption of corn.

Constraints

Increasing Health Concerns 

• Rising awareness of gluten allergies and potential health risks associated with gluten food products are likely to hinder wheat consumption.

Volatile Weather Conditions

• Furthermore, fluctuating weather conditions recorded in multiple parts of the globe are projected to hit the market revenue pool.

Contract Structure

• Animal feed manufacturers generally procure moderate amount of wheat, which could be between 200 MT and 500 MT in six months
• Beer, wine, and bakery manufacturers normally procure a small amount of wheat, such as 1,000–1,500 MT on a yearly basis
• For both these industries, a short-term contract (3–6 months) can be negotiated with the suppliers

Price Benchmarking

• The key regions for wheat supply are the EU and Russia
• MATIF price is the global benchmark for the EU trade of wheat
• The export price is the global benchmark for Russian trade of wheat

Prices are expected to witness fluctuations based on the export demand. Russian export prices are the benchmark, as it is the biggest exporter of wheat.

Large buyers, who choose fixed-price short-term contracts (3 months), should enter into the contract in January 2018.

Global Supply–Demand Analysis

• The global production has remained nearly stable from the previous year, but has been growing at a CAGR of 2.37% over the past six years.

• However, the global production was likely to decrease by 3.7% in 2018 – 2019 F, owing to abnormal weather conditions and likely reduction in yield in key producing regions, such as the EU, the US, and Russia.

Wheat Production by Country (2017– 2018 E)

• Around 70% of the total wheat production is dominated by the top five wheat-producing nations.

• In Asia, China and India are the world's second and third-largest wheat-producing countries owing to the large arable land and favorable climatic conditions.

• Russia's wheat production is growing appreciably at a CAGR of 14.8% over the last six years. However, the US is cutting down on its wheat production, with more focus on corn and soybean.

Global Wheat Trade Dynamics

• Exports of Egypt, the world's largest importer of wheat, experienced a shortfall to reach 11.3 MMT in 2016– 2017, but they were expected to revive in 2017 – 2018 to reach 12 MM.

• Russia has increased its market share for exports by 10% over the last five years, growing at a CAGR of approx. 25% to displace the EU and US as the top exporter in the world.

• The EU exports have risen at a CAGR of 15.7% over the last five years owing to rich harvests in regions, such as France. The EU displaced the US to become the largest exporter, after Russia, since 2014 – 2015.

• Wheat exports from Russia have grown at a phenomenal CAGR of 17% between 2013 and 2016 and were expected to further increase in the future, making Russia the top exporter in 2016 – 2017, displacing the EU.

• Egypt is the world's largest importer. Russia and the EU compete with China for exports to Egypt. The latter has a shortfall in domestic wheat supply by about 11 MMT, making it import-dependent.

• Russia and the EU incur 0% export tariffs to Egypt as the latter requires imports to meet demand.

Why You Should Buy This Report

• This market intelligence report on the wheat industry offers details about the best contract structures, pricing models, and KPIs.

• The research study lists the wheat price trends, industry norms, and payment terms in countries such as the US, China, the UK, Egypt, and India.

• It delivers an outline and SWOT analysis of major companies providing wheat.

• It provides regional wheat market outlook, drivers and constraints, and Porter’s five force analysis across different regions and countries.

• Furthermore, this wheat market analysis incorporates comprehensive insights into factors that will impact the growth of vendors across the globe.