Wheat Category Intelligence
Report Coverage
- Wheat Starch Industrial Process
- Global Wheat Trade Dynamics
- Cost Structure Analysis – Wheat
- Regional Market Outlook- Russia, US, China, India, EU
Production Size
Production Size North America
54.59 MMT
Production Size Europe
144.06 MMT
Production Size China
128.94 MMT
Wheat Market Trends
Category Intelligence on Wheat covers the following
- Information relating to market, supply, cost, and pricing analysis
- Hard to find data on cost and TCO models, supplier details, and performance benchmarks
- Macroeconomic and regional trends impacting cost, supply, and other market dynamics
- Category-specific negotiation and sourcing advice
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Industry Outlook & Drivers
Wheat Global Market Outlook
- The global production has been rising at a CAGR of approx. 2.58 percent over a period of five years. Production in 2017 – 2018 is estimated to be 758.24 MMT, a modest increase by 1 percent, due to high supply in the EU and Russian offset by lower harvest in the US
- The key factors driving the growth include emphasis on wheat production in Russia due to export potential and the end-use industries such as feed and food, especially in South East Asia, with consumption having risen by approx. 3 percent from last year
- With respect to wheat starch industry, approx. 4.7-4.9 MMT is produced on an annual basis. The major producing regions are France, the US, Germany, the Netherlands, Australia, the United Kingdom, Belgium, Canada, Japan and China
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 benchmark, since Russia is the biggest exporter of wheat
Large buyers, who choose fixed-price short-term contracts (3 months), should enter into the contract on 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 percent over the past six years.
- However, the global production is likely to decrease by 3.7 percent in 2018 – 2019 F, owing to abnormal weather conditions and likely reduction in yield in key producing regions, like the EU, the US, and Russia
Wheat Production by Country (2017– 2018 E)
- The world's wheat production is growing at a CAGR of 2.37 percent for the last six years, and around 70 percent of the total production is dominated by the top five wheat-producing nations
- Among Asian regions, 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 percent in about over 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, experience a shortfall to reach 11.3 MMT in 2016– 2017, but they are expected to revive in 2017 – 2018 to reach 12 MM
- Russia has increased its market share for exports by 10 percent over the last five years, growing at a CAGR of approx. 25 percent to displace the EU and US as the top exporter in the world
- The EU exports have risen at a CAGR of 15.7 percent over the last five years, due to rich harvests in regions, like 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 percent between 2013 and 2016 and are 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 an import dependent
- Russia and the EU incur export tariffs of 0 percent to Egypt, as the latter requires imports to meet demand
Wheat Market Frequently Asked Questions
- What key factors are driving the growth of wheat production?
- The key factors that are driving the growth of the wheat market include – emphasis on wheat production in Russia due to export potential and the end-use industries such as feed and food especially in South East Asia with consumption having risen by approx. 3-percent from last year.
- Who are the top 5 key producing countries for wheat and what’s their market share?
- The key producing countries include: E.U. (32 percent) China (20 percent) India (17 percent) Russia (13 percent) The U.S. (11 percent)
- How much wheat do animal feed manufacturers produce in six months?
- According to Beroe’s report, animal feed manufacturers produce a moderate amount of wheat ranging between 200 MT and 500 MT within a six-month time frame.
- What’s the average amount of wheat procured by beer, wine, and bakery manufacturers in a year?
- On an average, beer, wine, and bakery manufacturers procure wheat ranging anywhere between 1,000 MT to 1,500 MT every year.
- Explain the wheat price forecast benchmarking process w.r.t the industry?
- The price benchmarking indices for the wheat market is categorized based on the key supply regions namely the E.U. and Russia: MATIF price is the global benchmark for E.U. trade of wheat Similarly, export price is the global benchmark for the Russian trade of wheat
- What’s the ideal contract length that can be negotiated with the suppliers in the wheat industry?
- As per Beroe’s analysis, for both the animal feed and beer, wine, and bakery industries, a short-term contract of 3- 6 months can surely be negotiated with the suppliers.
- What is the key supply constraint and drivers that influence the wheat market?
- Following the insights of Beroe’s report, there’s nearly a 1.8 percent rise in the global industrial (wheat processing) demand during the 2017 – 2018 period. On the contrary, the global feed demand has seen a drop of nearly 1.7 percent.
- What is the general wheat market price in key regions?
- The global wheat market price in key regions are: Russia ($194/MT) E.U. (173€/MT) U.S. (154$/MT)
- By what percentage has Russia increased its market share for exports and why?
- As per Beroe’s analysis, Russia increased its market share for exports by 10 percent over the last five years at a CAGR of approximately 25 percent to displace both the EU and the U.S. as the top exporter in the world.
- What will lead to a decrease in the global production of wheat over the years?
- According to the global wheat market data report shared by Beroe, global production is likely to decrease by 3.7 percent owing to abnormal weather conditions and likely reduction in key producing regions like the E.U., the U.S., and Russia.
- What are the two leading cost drivers of the wheat industry?
- The two primary cost drivers are: Increase in the cost of labor in the US.. by 3 – 4 percent compared to the previous year Decrease in the cost of fertilizers in the U.S. region by 7 – 8 percent compared to the previous year
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