The World Bank records a decline in global grain prices amid significant supply

According to the World Bank (WB), world prices for wheat and corn fell to a 3-year low in the first quarter of 2024, and continued to fall in April. The grain market is pressured by significant volumes of offers from the USA and the Russian Federation, as well as active exports from the main producer countries. But already in the next season, significant production will be offset by an increase in consumption.

In the 1st quarter of 2024, the world prices for corn and wheat decreased compared to the previous quarter by 11% and 4%, and compared to the 1st quarter of 2023 by 30% and 25%, respectively. According to the FAO, in March, the prices of American corn fell by 33% to $190.6/t compared to March 2023, and for wheat by 25% to $274.3/t.

In April, prices continued to fall against the background of an increase in the supply and export of grain. Significant harvests in the USA, the EU and the Russian Federation increased competition on the world market.

Thus, in the current season, the Russian Federation plans to export 70 million tons of grain, including 50 million tons of wheat. IGC experts estimate grain exports from the Russian Federation at 63.3 million tons, and from the EU at 47.9 million tons, which corresponds to the plans of the European Union. To stimulate exports, sellers are ready to lower prices, but this does not increase demand. Thus, against the background of significant stocks, China, the main importer of wheat, reduced its purchases in the second half of the season.

WB experts believe that world prices are under pressure from high rates of Ukrainian exports, which were not hindered by the termination of the "grain agreement" and the introduction of restrictions by the eastern EU countries. But they note that due to the small volume of supplies, Ukraine affects the world market much less than the United States, where corn production, according to MSG estimates, this year will exceed last year's figure by 12% and reach 389.7 million tons thanks to the increase in sowing areas and a significant improvement in productivity.

At the same time, the World Bank allows for a local increase in grain prices in Europe against the background of the ban of certain countries on supplies from Ukraine and the EU's intention to introduce a duty on grain imports from the Russian Federation. We will remind that Ukraine and the Russian Federation are the largest suppliers of grain in the EU.

WB experts believe that in the next season the global production of cereals will remain at a high level, in which they are supported by FAO analysts. At the same time, they all expect increased demand for grain, particularly from Argentina, Mexico, Egypt and China, which will correct the market balance.