How Russia and Ukraine Dominate the Global Wheat Market

Wheat is one of the most important crops in the world, providing food for billions of people and feed for livestock. It is also a major commodity in the international trade, with an estimated value of $66.2 billion in 2022. But which countries are the biggest exporters of wheat, and how do they affect the global wheat supply and prices?

Which countries are the biggest exporters of wheat?

According to the Food and Agriculture Organization (FAO), the world produced about 776 million tonnes of wheat in 2021, of which about 198 million tonnes were exported. The top five wheat exporters in 2021 were Russia, Australia, the United States, Canada and France, accounting for more than 60% of the global wheat exports.

Russia

Russia is the largest global wheat exporter, exporting volumes worth more than $7.3 billion in 2021. It has a vast area of arable land, favorable climatic conditions and low production costs. Russia has also invested in improving its wheat quality and infrastructure, such as ports and railways, to boost its export capacity. Russia mainly exports its wheat to countries in Africa, Asia and the Middle East, where demand is high and growing.

Ukraine

Ukraine is another major wheat exporter, ranking sixth in 2021 with exports worth more than $4.7 billion. Ukraine has a similar geographic advantage as Russia, with fertile soils and access to the Black Sea. Ukraine also has a diversified export market, selling its wheat to countries in Europe, Asia and Africa. Ukraine’s wheat exports have increased significantly in recent years, thanks to its political and economic reforms and integration with the European Union.

Together, Russia and Ukraine exported more than a quarter (25.4%) of the world’s wheat in 2019, according to the Observatory of Economic Complexity (OEC). They have also become more competitive in the global wheat market, offering lower prices than other major exporters like the United States and Canada. This has enabled them to capture a larger share of the global wheat trade and influence the world wheat prices.

Challenges

However, Russia and Ukraine also face some challenges and risks that could affect their wheat exports in the future. For instance, both countries are vulnerable to weather shocks, such as droughts, frosts and floods, that could reduce their wheat yields and quality. They also face political uncertainties and conflicts, such as the ongoing tension between Russia and Ukraine over Crimea and eastern Ukraine, that could disrupt their trade relations and security.

Moreover, both countries have to deal with the environmental and social impacts of their intensive wheat production and export. For example, they have to manage their water resources efficiently, as irrigation accounts for a large share of their water consumption. They also have to ensure that their wheat production does not compromise their food security or biodiversity.

Russia and Ukraine are dominant players in the global wheat market, exporting large volumes of wheat to various regions of the world. They have achieved this position by exploiting their natural resources, improving their infrastructure and offering competitive prices. However, they also face some challenges and risks that could affect their wheat exports in the future. Therefore, they have to balance their economic interests with their environmental and social responsibilities.

The Global Wheat Trade: Trends and Challenges

Wheat is one of the most important staple crops in the world, feeding billions of people and providing livelihoods for millions of farmers. Wheat is also a major commodity in the international grain trade, with global exports reaching a record high of 198 million tonnes in 2021, according to the International Grains Council (IGC). However, the global wheat market faces several challenges, such as climate change, geopolitical tensions, trade disputes and food security issues. In this blog post, we will examine some of the trends and challenges in the global wheat trade, focusing on the role of the biggest exporters and importers.

The Biggest Exporters of Wheat in the World

According to the Food and Agriculture Organization (FAO), the top 10 wheat exporters in 2021 were:

Russia: 27.4 million tonnes, worth $7.3 billion
Australia: 25.6 million tonnes, worth $7.1 billion
United States: 24 million tonnes, worth $7.3 billion
Canada: 21.5 million tonnes, worth $6.6 billion
Ukraine: 19.4 million tonnes, worth $4.7 billion
France: 16.1 million tonnes, worth $4.5 billion
Argentina: 9.5 million tonnes, worth $2.5 billion
Germany: 7.1 million tonnes, worth $2 billion
Romania: 6.9 million tonnes, worth $1.8 billion
India: 6.1 million tonnes, worth $1.7 billion

These 10 countries accounted for 90% of the global wheat exports in 2021 by value, according to the World’s Top Exports website.

Russia is the world’s largest wheat exporter, accounting for more than 18% of international exports. Russia has benefited from favorable weather conditions, low production costs and a weak currency that makes its wheat more competitive in the global market. Russia mainly exports its wheat to countries in Africa, Asia and the Middle East, where demand is high and growing.

Australia is the second-largest wheat exporter in the world, accounting for more than 15% of international exports. Australia has recovered from a severe drought that affected its wheat production in 2018 and 2019, and has achieved a record harvest of 33.3 million tonnes in 2020/21, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). Australia mainly exports its wheat to countries in Asia and the Middle East, where it enjoys a reputation for high quality and reliability.

The United States is the third-largest wheat exporter in the world, accounting for nearly 13% of international exports. The United States has a diverse wheat production system that can supply different types and qualities of wheat to meet the needs of various markets. The United States mainly exports its wheat to countries in Asia, Latin America and Africa, where it faces competition from other major exporters.

The Biggest Importers of Wheat in the World

According to the FAO, the top 10 wheat importers in 2021 were:

Egypt: 13 million tonnes
Indonesia: 11.5 million tonnes
Turkey: 10.5 million tonnes
China: 9.5 million tonnes
Brazil: 7 million tonnes
Bangladesh: 6.5 million tonnes
Algeria: 6 million tonnes
Morocco: 5.5 million tonnes
Iran: 5 million tonnes
Philippines: 4.5 million tonnes

These 10 countries accounted for more than half of the global wheat imports in 2021 by volume, according to the IGC.

Egypt is the world’s largest wheat importer, accounting for more than 6% of international imports. Egypt relies on wheat imports to meet its domestic consumption needs, as its domestic production is limited by water scarcity and land availability. Egypt mainly imports its wheat from Russia, Ukraine and Romania, where it can find low prices and convenient delivery terms.

Indonesia is the second-largest wheat importer in the world, accounting for more than 5% of international imports. Indonesia has a growing demand for wheat products, such as noodles, bread and cakes, as its population increases and incomes rise. Indonesia mainly imports its wheat from Australia, Canada and Ukraine, where it can find high quality and consistent supply.

Turkey is the third-largest wheat importer in the world, accounting for nearly 5% of international imports. Turkey has a large domestic consumption of wheat products, such as bread, pasta and bulgur, as well as a significant flour milling industry that exports flour to neighboring countries. Turkey mainly imports its wheat from Russia, Ukraine and Kazakhstan, where it can find proximity and preferential trade agreements.

The Challenges and Opportunities in the Global Wheat Trade

The global wheat trade is influenced by various factors, such as weather conditions, crop production, demand and consumption, trade policies, exchange rates and transportation costs. Some of the challenges and opportunities that the global wheat trade faces are:

Climate change

Climate change poses a threat to the global wheat production and trade, as it can affect the frequency and intensity of droughts, floods, heat waves, pests and diseases that can reduce yields and quality. However, climate change can also create opportunities for adaptation and innovation, such as developing new varieties of wheat that are more resilient to stress, improving irrigation and soil management practices, and diversifying cropping systems and markets.

Geopolitical tensions

Geopolitical tensions can disrupt the global wheat trade, as they can lead to trade sanctions, tariffs, quotas, embargoes and conflicts that can affect the availability and affordability of wheat. For example, the ongoing political and military crisis between Russia and Ukraine can affect their wheat exports and imports, as well as the transit of wheat through their territories. However, geopolitical tensions can also create opportunities for cooperation and dialogue, such as establishing regional and multilateral trade agreements, resolving disputes through arbitration and mediation, and enhancing food security and humanitarian assistance.

Trade disputes

Trade disputes can affect the global wheat trade, as they can result in trade wars, anti-dumping measures, subsidies and countervailing duties that can distort the market and create unfair competition. For example, the recent trade dispute between China and Australia has affected their wheat trade, as China has imposed tariffs and anti-dumping duties on Australian barley and wine, which are substitutes for wheat. However, trade disputes can also create opportunities for negotiation and resolution, such as using the World Trade Organization (WTO) dispute settlement mechanism, engaging in bilateral consultations and dialogues, and seeking alternative markets and suppliers.

Food security issues

Food security issues can affect the global wheat trade, as they can increase the demand and prices of wheat, as well as the vulnerability of importing countries to supply shocks. For example, the COVID-19 pandemic has affected the global wheat trade, as it has caused disruptions in production, transportation and distribution of wheat, as well as increased demand for staple foods and food aid. However, food security issues can also create opportunities for collaboration and solidarity, such as strengthening the global food system resilience, enhancing the transparency and coordination of trade policies, and supporting the development of local food systems.

The global wheat trade is a complex and dynamic system that involves many actors and factors. The global wheat trade faces several challenges, such as climate change, geopolitical tensions, trade disputes and food security issues. However, the global wheat trade also offers many opportunities for adaptation, innovation, cooperation and resolution. The global wheat trade plays a vital role in ensuring food security and economic development for millions of people around the world.

References:

https://www.fao.org/faostat/en/#data/QCL/visualize

http://www.fao.org/faostat/en/#data/QC/

http://www.fao.org/faostat/en/#data/QC
https://www.igc.int/en/gmr.aspx
https://www.aljazeera.com/news/2022/2/17/infographic-russia-ukraine-and-the-global-wheat-supply-interactive
https://www.weforum.org/agenda/2022/08/top-10-countries-produce-most-wheat/

https://en.wikipedia.org/wiki/List_of_countries_by_wheat_exports

https://www.aljazeera.com/news/2022/2/17/infographic-russia-ukraine-and-the-global-wheat-supply-interactive

https://www.weforum.org/agenda/2022/08/top-10-countries-produce-most-wheat/

http://www.fao.org/faostat/en/#data/QC/