According to published data by PKO BP, they expect that in the second half of the year the average purchase price of wheat in Poland will be 2-12 percent lower. y/y. The assumption is to implement forecasts regarding global harvests in the 2024/2025 season. – We do not exclude the scenario of annual price increases in the fourth quarter of 2024. The risks for our forecast are changes in weather conditions and geopolitical risks. The possible recovery of demand for agricultural raw materials will probably result in price increases, analysts estimate.
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What grain prices are forecast? Thorough analysis
What are the global grain balances?
These on a global scale are not as pessimistic as previously forecast.
– In May and June, the main analytical centers revised down their forecasts of global harvests in the 2024/2025 season. among others under the influence of deteriorating production prospects in Russia and Ukraine. Nevertheless, the USDA's July forecasts turned out to be more optimistic. According to them, wheat production in the world may increase by 0.9%. y/y (compared to the forecast of +0.2% y/y in June) and corn will decrease by 0.05%. y/y (-0.4% y/y). However, due to the decline in stocks, the global grain balance will be less comfortable – we read in the Agro Nawigator report.
What's in the EU? According to PKO BP, the European Commission estimates that cereal harvests in the EU-27 will increase by 1.8% y/y, mainly as a result of better corn and barley harvests.
– According to preliminary estimates of the Central Statistical Office, the sown area of basic cereals and mixtures is to decrease by 0.8%, and in the case of spring crops by 4.4%. Drought was an unfavorable factor for domestic crops. IUNG estimated that in April and May 19% of winter cereal crops and 25% of spring cereal crops were at risk of drought, although later periods brought a significant improvement in moisture conditions. The EC estimates (at the end of June) that the total grain harvest in Poland may be lower by 3% y/y – we read in the report by PKO BP analysts.
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Harvest 2024. A lot of local destruction and flooding after storms. Prices down
What about the grain trade?
Here, bank representatives also presented their forecasts. They show that foreign sales of cereals from Poland remain at a high level.
In the first 10 months in the 2023/24 season amounted to 10.7 million tonnes, which meant an increase of as much as 17% y/y. With significantly lower imports, this allowed for a record high surplus in grain trade, reaching 9.7 million tons (+70% y/y). It is worth noting, however, that export revenues, despite a significantly higher volume, were 18% lower y/y due to the decline in grain prices, it was reported.
This is not the end of the data. According to EC data, EU grain exports in the 2023/2024 season reached the volume of 42 million tonnes, i.e. 2% lower y/y.
– At the same time, EU imports decreased by 16% y/y, including corn by 27% y/y to 19.4 million tons (lower demand due to higher EU production), including from Brazil by as much as 63% y/y – we read in Agro Navigator report.
What about grain prices?
– The deteriorating prospects for global grain production resulted in significant increases in grain prices in May. Wheat prices on Euronext exceeded EUR 260/t. But June has already brought a clear downward correction in prices, among others. under the influence of reduced pessimism regarding the harvest of the main players. Prices at the end of June stabilized at a level below EUR 230/t, higher than at the end of the first quarter of 2024, although still below last year's level. According to data from the Ministry of Agriculture and Rural Development, the average domestic purchase price of consumer wheat in June 2024 was lower by 1.5% y/y, and for feed corn by 11.4% y/y – according to the report.
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Rain interrupts harvest in southwestern regions. Just in time
