There is wheat, but how to get it?
Logistical constraints may hamper world wheat trade at a time when buyers are relying on a handful of exports to fill the deficit left by Russia‘s grain ban, analysts and a wheat trading association said.
Despite ample production and high world carryover stocks, which the International Grains Council pegs at 181 million metric tons, shipping problems may limit the amount of wheat that reaches global markets.
Transport networks are facing particular strain this year because much of the world’s wheat is concentrated in a few major exporters after severe weather problems forced Russia to cede its share of international trade this season.
Buyers are pinning their hopes on exports from major producers the US, Australia, Argentina and Canada, all of which are expected to have substantial wheat crops this year.
Soy and corn competition
In the US, the world’s biggest wheat exporter, the problem is particularly acute. Record soy and corn crops mean wheat will have to compete for its share of export facilities this year at a time when authorities are already planning to close river systems feeding key soft wheat shipping port Portland from December to March.
Some grain elevators may be reluctant to ship wheat because they are accustomed to storing corn and soybeans.
Supply disruptions could also put upward pressure on wheat prices. Already at elevated levels after soaring to two-year highs in the wake of Russia’s ban on grain exports, analysts fear that any supply shocks could push wheat markets higher.
Source: CME Group