Due to its particular climatic conditions together with the know-how of European farmers and the means deployed by the CAP for over half a century, the European continent is a particularly favourable place for the cultivation of wheat, to which it allocates approximately 22 Mha, or 10% of the world total.

In recent years, European production has fluctuated between 125 and 140 Mt, while exports regularly exceed the threshold of 30 Mt.
This makes Europe one of the largest producers of wheat on a global scale, ranking second after the People’s Republic of China, as well as the second world exporter after the Russian Federation and ahead of the United States. These advantages, determined by the aggregation of individual countries and the legal and economic framework of the markets, would not be such if considered in a disaggregated form and observed by Member State. Therefore, the European Union as a whole, with an average of 17% of world flows over the last ten years of annual exports, constitutes a real agro-exporting power of wheat destined for the countries of North Africa, Algeria, Egypt and Morocco, but also China and Nigeria, while 40% of production remains within the European Union.

France. Mont Saint Michele abbey in a beautiful summer day. France alone accounts for an average of one-third of the wheat exported by the European Union. 123rf

Among the major producing countries, we have France, which alone represents on average a third of the wheat exported by the European Union, followed by Romania with almost 20% of the volume, then Germany with 15%, Lithuania with 7%, and finally Latvia and Bulgaria with 6% each. Around 40% of European wheat exports come from the areas of Eastern Europe that joined the European Union in the 21st century.
However, despite the European continent being one of the main areas of wheat production on a global scale, a quota of the product amounts to around 4-6 Mt per year of which a third is durum wheat. The main countries of origin of these imports are Canada, but also Ukraine, Russia, the United States, Moldova and the United Kingdom.
Furthermore, since the European Union does not have a common external agricultural (or cereal) policy, as the CAP acts as a reference framework only as an internal organisation and regulation tool, the various national products enter into competition with each other once they cross the European borders.

Grain dryer, train and scrap metal in the port of Odessa, Ukraine. The Russian-Ukrainian conflict has had a major impact on Europe. The agri-food sector has not been spared and has suffered significant losses. 123rf

The negative effects of the Russian-Ukrainian conflict that have strongly impacted Europe have not spared the agri-food sector, which has recorded significant losses. The Ukrainian crisis has generated significant distortions about trade between Ukraine and the countries of the Union, upsetting the balance on the quantities of imports/exports existing between these two areas. If we look closely, the quantities exported by the European side to Ukraine, in the period before the conflict, were equal to three billion euros, and imports were seven billion. A parameter completely overturned in 2022 with European exports always remaining at the same level while imports recorded a considerable increase, equal to thirteen billion, of which five related to direct imports from the five countries on the Eastern borders: Poland, Hungary, Bulgaria, Slovakia and Romania.
This imbalance, as is obvious, has generated a close confrontation within the European Union in which the wheat resource has been the main object of contention. The suspension of duties on Ukrainian exports to the EU has diverted part of the Ukrainian harvest, no longer able to reach the previous outlet markets, towards Europe, flooding the markets of the eastern part with low-cost wheat. The producers of these countries have thus found themselves having to deal with a new competitor present on the market, also induced by the Commission, whose exported quantities, of a different quality compared to the European ones and less reliable in terms of health safety, have generated, a considerable drop in prices resulting in significant losses.

Tractor in the field. Spraying fertilization of wheat fields. 123rf

The European market, therefore, was the first to suffer the consequences of the impact of the conflict and the reconfiguration of value chains. Furthermore, within this intricate scenario that saw farmers in this part of Europe protesting with their governments and with the Commission to block the sending of aid to Ukraine until an agreement was found on wheat imports, other countries of the Union – Spain, Italy and France – continued to buy Russian wheat. A scenario in which the agri-food sector finds itself besieged by Ukrainian wheat imports, at a time when the sector must also pay the price resulting from other crises that, combined, gave rise to the sensational protest of tractors on the streets of Europe. (Open Photo: Machine harvesting field of wheat. 123rf)

F.R.

The price of wheat on the entire global market, like that of other cereals, has always been very low, undergoing little change
over the decades.

For the 2024 harvest, the prices of bread-making soft wheat stood at around €225/t, thus falling to a level around 8% lower than in 2023, when the product was traded at around €280/t, while those of durum wheat, again for the 2024 harvest, stood at around €300/t. According to estimates by financial analysts, the durum wheat market is set to record a constant increase in the coming years, and in particular in the decade 2020 – 2030. This is due to numerous factors including the development of the taste for pasta among a large world population and the demographic growth of African countries.

Cargo crane, ship and grain dryer in Port Odessa, Ukraine. Ukrainian exports were filled in 2023 by Russian exports. 123rf

The price of wheat, both soft and durum, depends fundamentally on three basic factors: the quantity of product available; the following year’s sowing forecasts and the quality of the wheat. To these are then added the variables determined by meteorological aspects, the volatility of financial markets, the price of hydrocarbons and phosphates, and geopolitical dynamics. Consider in this regard that in 2021 the disproportionate increase in temperature in Canada and the USA caused production to plummet (especially of durum wheat), influencing price increases in the autumn period, while in 2022, the effects produced by the Russian-Ukrainian war considerably upset the market, unsettling the balance at a global level.
If we look closely, in fact, the two countries involved in the war together represent 30% of world exports, and specifically Russia accounts for 18% and Ukraine for 11%. During the war, in fact, wheat was used as an element of geopolitical pressure, entering the sights of the belligerents. The Russians, in particular, have hit farms and cultivated fields, but also product storage centres, processing plants and transport infrastructure.

Egypt. Fayoume City. Making bread. Bread is a staple food in the Egyptian diet. Egypt imports 85% of its grain from Russia. © FAO/Ami Vitale

Furthermore, the consequent closure of ports in the Black Sea area by Moscow has led to the blocking of grain exports from countries not directly involved in the conflict, such as Kazakhstan, whose product is of excellent quality, but also the disruption of import markets and in particular those of the North African strip such as Tunisia which before the conflict depended on Ukraine for about half of its wheat supplies, importing about 47%.
In addition to Tunisia, there is Egypt where 85% of grain imports come from Russia (52%) and Ukraine (33%). Also, 75% of the cereals imported by Libya come from Ukraine and Russia, while Morocco imports 21% of its grain needs from Ukraine. Then there are countries that are totally dependent on grain imports from Ukraine and Russia like Eritrea, or nearly so like Somalia which is 90% dependent.
The void created by Ukrainian exports was filled in 2023 by Russian exports. In the same period, Russia also increased wheat exports to the regions of sub-Saharan Africa, also in order to use this resource as a soft power tool, to magnify its presence and extend its influence.
In the opinion of some analysts, even the July 2022 agreement for the export of wheat produced on the Black Sea coast, essentially Ukrainian wheat, mediated by the Turkish government, would have had the purpose of maintaining in African and Middle Eastern countries, largely dependent on Ukrainian wheat imports like Lebanon and Ethiopia
at 70% and 60% respectively, that attraction that they feel towards
the Russian Federation.

Loading of grain on a ship. 123rf

This closeness on the part of these countries had, a few months earlier, also been expressed within the General Assembly of the United Nations by their siding with Moscow in the vote that condemned the invasion of Ukraine. Therefore, in the opinion of analysts, the need to avoid the possibility that the lack of access to wheat by these countries could induce Ukraine and the Western allies to discredit the Russian Federation in their own eyes and those of the entire “global South” that represents the vast majority of humanity, has caused Putin to contravene the cruel rules imposed by war, which provide for the strangulation of the enemy also through the use of food resources, allowing their export.
The impact of the war on the sector and the relative change in global trade flows has also caused significant upheavals within the European market, resulting in tensions in the first months of 2024 as farmers took to the streets with their tractors in protest. (Open Photo: Rising wheat prices due to the conflict between Russia and Ukraine. Shutterstock/Miha Creative)
 F.R.

The Asia-Pacific region is emerging as a key region in the wheat market especially that of flour. This is also due to the change in the diet of its consumers, who have switched from rice to wheat products, and also due to the presence of fewer carbohydrates in this cereal compared to rice.

They are now more inclined to wholemeal bread because they consider it more nutritious. However, the demand for flour is also dictated by a change in the cultural paradigm and the frenetic lifestyle of consumers in this area, which leads them to increasingly orient themselves towards ready-made foods and which has generated a growing adoption of Western foods, such as pizza, hamburgers and pasta. These foods have driven the demand for restaurants and food service operators intent on satisfying the ever-increasing food demands of the population.
In particular, according to data provided by the United States Department of Agriculture (USDA), it would emerge that in the 2021-2022 marketing year, China consumed approximately 148.5 Mt of wheat, while India consumed 104.2 Mt.

Traditional Chinese food, steamed dumplings served on the table in a wooden dish. China is one of the world’s leading wheat importers. 123rf

In particular, the People’s Republic of China is the leading producer of wheat globally with a harvest of approximately 137 Mt, again as reported by the USDA, and with a self-sufficiency rate in wheat production equal to 93%.However, despite its high internal production, in 2023 China was again among the leading importers of wheat globally with approximately 12 million tons purchased, making Beijing the country that holds a wheat stock equal to 51.7% of the world total. The reasons that push China to import such a large quantity of wheat, which corresponds to more than half of global reserves, are not yet known, however, the answers could lie both in the desire to support the development of the livestock sector and in possessing large quantities to try to determine future prices, but also by the need to maintain sufficient resources to feed its population that exceeds one billion. Indeed, as highlighted by some analysts, the considerable increase in wheat reserves follows the massive floods that are estimated to have compromised 30% of the harvest in the most affected areas, and the Covid-19 pandemic which with its very strict lockdown has severely limited access to food for millions of people also due to the serious shortcomings of Chinese logistics. On closer inspection, these hypotheses are not far-fetched if we consider that the Chinese law on food security 2024 was recently passed, through which it is intended to achieve “absolute self-sufficiency” in basic cereals, intervening precisely in inefficient agricultural techniques, supply chain bottlenecks and environmental damage caused by the agricultural sector. To this end, it is intended to incentivise investments in high-tech equipment, make production more efficient and introduce severe food waste control measures.

Indian farmer holding crop plant in his wheat field. India is the world’s third largest producer of wheat. 123rf

The objective intended to be achieved through this law is, without a doubt, self-sufficiency in the cereal sector to reduce the country’s susceptibility to global market volatility and geopolitical concerns that could interrupt food supplies. It is clear that China, pursuing self-sufficiency, could reduce the quantity of imported cereals, with potential repercussions on the main cereal exporting countries such as the United States, Brazil and Australia. The drop in demand could, as a result, lead to a reduction in global grain prices, damaging the income of these exporting countries. In the Indo-Pacific region, India, with approximately 110 Mt, is also in third place for global wheat production. However, the country has a stock problem caused by the drop in production in previous years. The lower wheat production in these periods forced the Government to make a record sale of approximately 10 Mt of wheat from its reserves to wholesale buyers, such as millers and biscuit manufacturers. This criticality also led to the blocking, in 2022, of wheat exports to rebuild depleted reserves, at a time when the world was looking to the Indian market to make up for the blockade of Ukrainian exports. This decision strongly influenced the increase in wheat prices recorded in that period, as well as fuelling the problem of food security.
Although the country’s harvests are again flourishing with the 2024 season recording a record production of over 114 Mt, India has not yet rebuilt its reserves and is continuing with this strategy by asking global and domestic trading companies to avoid buying new season wheat from local farmers. (Open Photo: Wheat grains. 123rf)

Filippo Romeo