Germany Enters Suriname’s Wheat Market
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Based on the current acreage estimate, German Wheat production in 2023 is expected to reach around 22 million tons, as in the previous year. However, demand in the domestic market is now stagnating due to falling animal numbers – and is expected to be 18 to 19 million tons despite increasing starch production capacities. This means that consumption would remain unchanged compared to the previous two years but one to two million tons lower than five years ago.
The “surplus” of around three to four million tons would have to be sold again on the export market. At first glance, that doesn’t sound like a lot, but then the quality of the Wheat produced becomes very important. In 2022/23, the Wheat quality in Germany, especially the protein content, was far lower than usual. Typical importing countries, such as countries in West or South Africa, which usually buy German Wheat, now primarily source their supplies elsewhere.
German Wheat competes with Wheat from France. And Morocco in north-west Africa has become the most important sales market for German Wheat in the current financial year. But in years with average harvests in France, countries such as Morocco and North African Algeria are likely to import more French Wheat again. According to AgFlow data, Germany exported 6,981 tons of Wheat to the United Kingdom in July 2023, followed by Suriname (5,500 tons). Wheat shipping port was Vierow. It is located on the NE coast of Germany and is classified as a medium-sized port.
When it comes to exports, France simply has a freight advantage over Germany. And that brings Germany to the second factor influencing the price of Wheat: the EU Wheat supply. The EU Wheat supply situation has improved significantly in the current marketing year compared to previous years. Closing Wheat stocks, also thanks to high Wheat imports from Ukraine, are now likely to be as high as last before 2020/21.
With average production volumes in 2023/24 and stable demand, the export surplus from the EU would remain high, especially in France, Poland, Romania, and the Baltic states. The growing conditions are currently significantly better in the southeast of the EU, where higher yield losses were incurred in 2022.
The Global Wheat Supply Situation and Germany
The global Wheat supply situation is the most crucial factor influencing Wheat price formation. At the moment, there are real growth problems in the USA. However, the importance of the USA for the world Wheat supply has decreased noticeably since 2005. Russia, meanwhile, became increasingly important here. This was clearly shown in 2022/23: Russia exported Wheat in record quantities despite sanctions and repeated threats from Russia to restrict exports.
Currently, Russia covers 25 percent of global Wheat import demand. Also, in 2023/24, Russia (alongside Australia from winter 2023/24) will become the most important influencing factor for the world supply. The main question here will be whether Russia can repeat its record exports. Russian exports remain very high, with a current production of over 85 million tons (up to 102 million tons last year). And in the medium and long term, Russia will again take the leading role in setting prices for Wheat for the marketing year.
Taken as a whole, one thing can be said for the German Wheat and rapeseed market: With the current harvest estimates for 2023, the German Wheat market will have a challenging time developing a life of its own – especially in the Wheat market, Germany is all too dependent on developments in France or Russia.
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