Global wheat trade is forecast at a record for 2017/18, with Sub-Saharan Africa projected to have the strongest year-over-year import growth of any region.

In fact, over the last decade as a whole, Sub-Saharan Africa has been a major driver of rising global wheat trade. Stagnant production and rapid consumption growth have been the main motivators of rising import demand in the region. Consumption is escalating on long-term trends of urbanization, rising incomes, and population growth.

This year specifically, record global production and relatively low prices have further catalyzed import demand in Sub-Saharan Africa. Russia is an increasingly important supplier for the region as many of these markets are primarily focused on obtaining low-priced supplies. In light of Russia’s record crop and large exportable surplus, Sub-Saharan Africa’s demand growth has provided an outlet to absorb some of those excess supplies.

After Sub-Saharan Africa, the region with the next largest projected growth in imports this year is the Middle East. There, higher imports are offsetting Iraq’s lower crop quality and Turkey’s diminished stocks. In contrast, the largest forecast reduction from 2016/17 is for South Asia on account of sharply lower imports for India due to its ample 2017 harvest. Also down from the previous year are imports for North Africa (larger crops for Algeria, Morocco, and Tunisia) and South America (reduced demand in Brazil).

Wheat: World Markets and Trade Overview

For 2017/18, record global production is raised slightly this month, mainly on a larger crop for Morocco. Global trade is forecast down fractionally but remains a record. Imports are forecast up for Algeria, Japan, Kenya, Philippines, and Turkey. Exports are projected higher for Argentina, Kazakhstan, and Russia but lower for Australia and the European Union. The U.S. season-average farm price is unchanged at $4.65 per bushel.

Growth in Demand Seen Across Many Markets in Sub-Saharan Africa

Sub-Saharan Africa is the region propelling year-to-year growth in global import demand in 2017/18. The major countries driving this change are:

• Nigeria: Imports are forecast up 5 percent from the previous year. In urban areas of the country, wheat is generally more affordable and available than locally grown staples such as cassava, millet, and yam. Furthermore, wheat has been used for humanitarian aid to insecure farming communities.

• Sudan: Imports are forecast up 6 percent, offsetting a smaller crop. Consumption is forecast higher as implied by strong imports.

• Kenya: Imports are projected at 2.3 million tons, up 30 percent from last year based on rapid consumption growth and expansion in milling capacity.

• South Africa: Imports are forecast up more than 60 percent from the previous year as the latest crop was damaged by drought.

• Ethiopia: Imports are projected up nearly 70 percent as government tendering has increased to meeting growing demand and to rebuild wheat stocks.

• Angola: Imports are forecast at 1.2 million tons, which is up nearly 200,000 tons from the previous year. The country’s milling capacity has expanded and consumption (as implied by the pace of trade) is growing rapidly.

• Tanzania: Imports are forecast at 1.1 million, up 30 percent from a year before. Rising demand for wheat products is met through imports as domestic production is less than 10 percent of consumption.

• A multitude of smaller markets, including Ghana and Mauritania, are also showing significant consumption growth, as indicated by rapid imports to-date.

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World Agricultural Supply and Demand Estimates

Wheat

Projected 2017/18 U.S. wheat ending stocks are raised this month by 30 million bushels to 1,064 million, all on lower feed and residual use. The NASS Grain Stocks report, issued March 29, implied less feed and residual usage for the third quarter (December-February) than previously estimated. This report also showed record U.S. corn stocks on March 1, which are expected to continue displacing wheat for feed use for the remainder of 2017/18. No other supply or use categories are changed this month. Based on NASS prices and marketings reported to date along with price expectations for the rest of 2017/18, the season-average farm price is unchanged at the range of $4.60 to $4.70 per bushel.

World 2017/18 wheat supplies increased this month by nearly 3.0 million tons as production is raised to a new record of 759.8 million, mainly on Morocco’s higher production estimate as it recovered from a severe drought in 2016/17. Global supplies also increased with a multi-year reduction in Iran’s food, seed, and industrial use, which raised carry-in stocks by nearly 2.0 million tons.

Projected global 2017/18 trade is virtually unchanged on increased exports from Russia, Kazakhstan, and Argentina nearly offsetting lower exports from the EU and other exporters. Russia’s exports are raised 1.0 million tons to 38.5 million, which surpasses last year’s record exports by more than 10 million. Russia continues to displace the EU and other exporters in several markets. Imports are lowered for Morocco, Brazil, and Colombia while increased for Algeria, Ethiopia, Japan, Kenya, Turkey, and the Philippines. Projected 2017/18 world consumption is higher, primarily on increases in the EU and Indonesia, which more than offset reductions in Iran, India, and the United States. However, the increase in global supplies still exceeds the additional consumption as 2017/18 global ending stocks are 2.3 million tons higher this month at 271.2 million, a new record.