Wheat plantings ahead of next year’s harvest will, thanks to high prices, prove “large”, but will be capped by high costs, the United Nations said, as it reported grain values rising at their fastest in seven months.
“High crop prices are expected to sustain large [wheat] plantings in 2023,” the UN food agency, the Food and Agriculture Organisation, said.
However, the FAO added that “elevated production costs could potentially limit area expansions.”
The forecast tallies with that of the International Grains Council, which has forecast global wheat sowings remaining above average for 2023, but falling year on year nonetheless, including in the European Union, thanks to high production costs.
The FAO forecast sowings staying “at above-average levels” in China as well as in India, where a “remunerative” minimum support price guaranteed by the government was “maintaining the attractiveness” of the crop.
The agency also reported decent winter wheat planting progress in the EU where “sowings were completed in the northern countries in September and are progressing well in most other countries”.
Weather has proved “conducive… except for dryness in parts of Spain, Italy and Romania.”
‘Severe liquidity constraints’
However, in the US, another major exporting country, although sowings had managed an “average” pace, some key wheat-growing states had suffered “prolonged drought conditions”.
The US Department of Agriculture this week reported US winter wheat making it worst start on record, in terms of its crop condition score.
In Russia, meanwhile, heavy rains had hampered seedings, meaning that with “the planting period nearing its end, the pace of winter wheat sowings was reported to be lower year-on-year as of mid-October”.
Seedings in Ukraine were viewed as suffering from both weather and the knock-on effects of Russia’s invasion.
“Severe liquidity constraints due to the war is seen reducing wheat acreage, while also heavy rains have slowed the pace of plantings,” the FAO said.
Grain prices strengthen
The agency reported wheat prices as measured within its food price index rising by 3.2% last month, “mostly reflecting continued uncertainties related to” the UN-brokered deal to allow safe passage of Ukraine grain shipments.
Grain prices, including also the likes of coarse grains and rice, rose by 3.0%, their quickest increase since March, to a four-month high.
However, food prices overall eased by 0.1% nonetheless, falling for a seventh successive month, and matching the longest losing streak since 1998.
Dairy prices performed weakest among the food groups covered, dipping by 1.7% month on month, undermined by “lower-than-anticipated purchases by China and lacklustre demand for spot supplies”, the FAO said.
“Most importing countries were well covered for their immediate needs.”
‘Lingering heavy stock levels’
Prices of vegetable oils fell by 1.6% to a 20-month low “driven by world lower prices of palm, soy and rapeseed oils, which more than offset higher sunflowerseed oil quotations”.
While sunflower oil values were buoyed by “uncertainty over the future of the export corridor in Ukraine amid rising geopolitical tensions”, palm oil prices were “broadly weighed by lingering heavy stock levels in South East Asia”, and soyoil depressed by “on outlooks of ample supplies”.
Meat prices fell by 1.4%, led by lamb values, which were hit by “seasonally increasing supplies from Oceania amid subdued import purchases”.
“Likewise, world pig meat prices dropped substantially on weak global import purchases,” the FAO said, while beef prices fell “slightly on high current supplies and rising availability of slaughter cattle, notably in Brazil”.