In the first quarter of 2024, wheat and corn prices in international markets fell to three-year lows and continued to slide down through most of April. Grain markets are buckling under the pressure of heavy supply from the US and Russia, as well as heavy exports from other major producing countries. Leading experts, however, warn of possible positive changes, as in the next season the development of consumption may compensate for the increase in production.
Market dynamics and price trends
The monitoring of the World Bank (WB) shows that in the first quarter of 2024, the world prices of maize and wheat decreased by 11% and 4%, respectively, compared to the previous quarter, and compared to the same period in 2023, the decline is drastic - by 30% and 25% respectively. US corn prices fell 33% to $190.60/t, while wheat prices fell 25% to $274.30/t in March, according to data from the UN's Food and Agriculture Organization (FAO). The WB's report notes the continuation of the downward trend during most of April given the escalating grain supply and exports. Large harvests in the USA, the EU and Russia are cited as the main factor with a strong depressing potential.
Export flows
The International Grain Council (IGC) predicted on April 18 that in the current marketing year 2023/24, Russia will export a total of 63.3 million tons of grain, including 52.1 million tons of wheat, as the export of wheat from the EU is forecast at the level of 34.3 million tons, and from the USA - 19.6 million tons (48.2 million tons, 35.0 million tons and 20.9 million tons - 2022 /23 years). Analysts point out that sellers are willing to lower prices to stimulate exports, but this does not increase demand. For example, major importer China built up significant grain stocks and reduced imports in the second half of the season. World Bank experts note that world prices are also under pressure from the high rates of Ukrainian exports, which were not hindered by the termination of the "Grain Deal" and the restrictions imposed by a number of Eastern European countries. In fact, Ukraine, due to more limited volumes of supply, affects the world market significantly less than the United States, where, according to the Department of Agriculture (USDA), corn production this year will increase by a drastic 12% to a record 389.7 million tons.
The prospects
World Bank experts predict "sustainable high levels" of global cereal production in the upcoming 2024/25 season. However, they say, increased demand from regions such as Argentina, Mexico, Egypt and China is on track to rebalance and offset the impact of increased production.
In addition, there is a possibility of localization of price increases in Europe due to restrictions on the supply of grain from Ukraine to some Eastern European countries, and also due to the EU's proposed tariffs on imports from Russia and Belarus. Leading experts warn that "uncertainty continues, particularly with regard to geopolitical tensions and trade policies, suggesting increased caution and adaptability within the global grain trade."