DESCRIPTION
Wheat Market Global Size:
The global supply of the wheat market is calculated at 1244 MMT in 2023-2024 as per the ELINT Market Research’s procurement market research report. This optimistic figure was built due to increased wheat utilization in worldwide countries to make diverse cuisines like flour, cereals, pasta, drinks, bakery items, noodles, etc. which caused a worldwide consumption worth of wheat 781 MMT in the same forecasted period.
Further, besides rice, wheat operates as a primary commodity in Asian nations, as people use it as flour to make dough, spaghetti, chapatis, and other foods. Moreover, the procurement report states that the ending stocks of wheat goods were calculated at 262 MMT in 2023-2024, which is a relatively lower level of inventory when compared to the past five years’ average. In this context, globally a significant 4% decrease has been seen in wheat-ending supplies. Also, some countries experienced this reduction in wheat commodities at substantial percentages including Russia with 9 percent, the EU with 1 percent, and the US with 41 percent. These lowered stocks affect the international wheat trade dynamics and supply chains.
In addition, some nations appeared as key exporters of wheat goods and created notable trade tariffs. For instance, Russia conducted an export duty of $92.8 per metric ton for wheat products and tried to stabilize regional prices. On the flip side, the European Union experienced a decreased degree of trade tariffs i.e., 0 percent for wheat goods when it is exporting to Egypt. Additionally, when the United States exported wheat goods to Japan it created an elevated trade tariff of 89.1 percent. Hence, these numbers showcase fluctuating trading relations between across borders regions and their influence on global wheat market dynamics.
Market Definition:
The major use of wheat cultivation is for human consumption across diverse applications such as food, beverage, pharmaceuticals, animal feed formulations, brewing, etc. Further, wheat products also have various non-food applications like bioethanol production, finishes, clothing, renewable fuel choices, paints, and more. Furthermore, wheat straw, a byproduct of wheat harvesting, finds use in the production of insulation materials and particleboard, showcasing wheat’s versatility in contributing to industrial processes beyond its traditional role as a staple food crop.
Moreover, wheat straws that derive from harvested wheat help produce plywood and soundproofing products; this utilization demonstrates that wheat is a versatile grain that can massively help in industrial operations also outside of its conventional function as a primary food source.
Wheat Market Drivers:
- Rising R&D Movements in Wheat Cultivation –
Today’s wheat manufacturing businesses are widely investing in research and development activities to enhance traditional cultivation techniques and develop good-quality wheat products. Hence, it is the foremost growth driving factor in the global wheat procurement intelligence market.
- Increasing Health Related Concerns –
Wheat operates as the major nutritious grain that includes nutrients such as proteins, carbohydrates, minerals, etc. Hence, increasing health-related concerns among people drive development in the wheat industry.
Wheat Market Challenges:
- Expansion Gluten Based Allergies –
Besides having various nutritional values, wheat products sometimes face unacceptance from people who are allergic to gluten. Hence, this is a key challenge that wheat-producing firms experience.
- Bad Weather Conditions –
Wheat is a weather-sensitive grain and its farming completely depends on favorable atmosphere conditions. Thus, sometimes weather uncertainties pose challenges for wheat manufacturers.
Wheat Market Opportunities:
- Verastlity of Wheat Grain –
Wheat is a versatile grain that can be grown in multiple countries since it can be sustained in diversified weather situations, heights, and soil types. Thus, this versatility causes major opportunities in the global wheat market.
- Expansion in Wheat Producing Countries –
Apart from major wheat-producing countries i.e., the USA and Russia, other nations also contributing to the manufacturing moves, which pose significant opportunities for industry participants. Thus, even after, 3 percent less production in 2023-2024, the wheat production is on elevated levels.
Wheat Market Segmentation:
- Various Qualities of Wheat –
Key qualities of wheat include baking, granulating, and animal meals, which is a prominent segmentation factor in making different food items like breads, pastries, biscuits, animal food products, and more.
- End User Sectors –
Major end-user sectors of the global wheat market include food, beverage, livestock, industrial operations, and more. Hence, it is another noteworthy segmentation factor.
Regional Outlook of the Wheat Market:
ELINT’s procurement market analysis exhibits prominent countries that are progressively conducting wheat manufacturing, consuming, exporting, and importing activities and also hold a substantial percent share in the international market. In this context, major wheat-producing countries include China at 17.6%, the EU at 16.9%, India at 13.1%, Russia at 11.6%, and the US at 6.2%. Further, when it comes to key nations that are vastly consuming wheat goods include the EU at 13.7%, China at 18.3%, India at 13.3%, Russia at 5.7% and the US at 3.87%
Moreover, significant countries that are fulfilling worldwide wheat goods demand by exporting include Russia at 20.1%, the EU at 16%, Canada at 12.4, Australia at 12%, and the US at 10.7%. Additionally, countries that depend on major supplying regions to meet their wheat demands include Indonesia at 5.5%, Egypt at 5.4%, Turkey at 5%, China at 4.7%, and Algeria at 4.1%.
In addition, the report reveals pricing dynamics of wheat products in some of the prominent nations including Russia with 321 $/MT price, the EU with 264 €/MT cost, and the US with 323 $/MT expense. Further, weather impacts were reported varied in 2023-2024 for various nations such as Russia, EU, and Canada experienced favorable conditions and the US experienced unfavorable conditions.
Benchmark Price Indices in the Wheat Market:
MATIF Euronext in the EU and FOB Novorossiysk Export Price in Russia function as the significant benchmark price indices in the global wheat market that help in executing efficient trading activities in both countries.
Engagement Models in the Wheat Market:
The 3-6 months long contract engagement model offers flexibility to stakeholders to negotiate pricing layout in the global wheat market. This contract type usually comprises commodity exchanges such as ASX, NSW, and KC HRW to execute basis adjustments for wheat from Missouri/Kansas, USA. Market participants can employ these engagement models. Further, Australia preferred Oct-Dec 2023 and USA/Canada preferred Sep-Nov 2023 as the best price-lock months to optimize their procurement strategies.
Price Drivers of the Wheat Market:
Shortage of nitrogen fertilizers drives price dynamics for the global wheat market since the cultivation activities costs get higher. Another major price driver is the lack of wheat supply in major manufacturing regions due to weather impacts like the EU and the US.
Key Suppliers of Wheat Market:
Major suppliers of wheat are Archer Daniels Midland (ADM), Cargill Inc., Tate & Lyle, Tereos SA, Roquette Freres, and Ingredion Inc.
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