Policy Backgrounders

Global Food Security Wheat Update

October 06, 2023

This serves as an update to our Policy Backgrounder “Global Food Prices and Inflation,” reporting on CED’s Trustee Roundtable with Professor Edwin Price, Department of Agricultural Economics, Texas A&M University and including CED Trustees David Smith, Chief Executive Officer, Associated Wholesale Grocers; Jason Potter, Chief Executive Officer, Fresh Market; and Laura Karet, Former Chair and CEO, Giant Eagle, Inc. 

Despite the July suspension of the Black Sea Grain Initiative, the price of wheat has fallen to a near three-year low. The FAO Food Price Index (FFPI) averaged 121.4 points in August 2023, down 2.1 percent from July. The FAO Cereal Price Index averaged 125.0 points in August, down 0.7 percent from July and standing 14.1 percent below its value a year ago. Despite recent falls in estimated harvests for Australia and Canada, Russia’s surplus has offset fears of falling yields by other major wheat producers in terms of total global supply. However, with reductions from producers other than Russia, higher prices are likely ahead—analysts warn that the futures price is below the underlying value of the wheat, raising the risk that an unexpected disruption in supply could lead to a jump in prices, forcing traders to buy futures contacts to cover potential losses.

• Ukraine, Poland, and Lithuania reached a deal that will shift grain inspections from the Ukraine-Poland border to a Lithuanian port on the Baltic Sea. The three countries expect this change to expedite grain exports to countries most impacted by food price inflation riven by Russia’s departure from the Black Sea Grain Initiative.
• Global wheat production for Market Year (MY) 2023/2024 is projected at 787.3 million metric tons (mmt), down 0.41 percent from the previous year. Decreased global wheat production largely results from dry weather in Australia and Canada.
• Estimates for US Hard Red Winter (HRW) exports have been lowered 10 million bushels to 155 million, the lowest on record. HRW has seen a downturn in acreage and has been affected by drought conditions in consecutive years, contributing to US exports of HRW being uncompetitive with other suppliers including Russia and the European Union.