For the 2023/2024 campaign, Algeria’s wheat imports are expected to rise, hitting 8.7 million tons, as stated in a recent report by the United States Department of Agriculture (USDA). This prediction comes amidst mounting tensions in the global grain market.
These purchases are expected to exceed the previous year’s imports by 1.2 million tons. The USDA forecasts a decline in Algeria’s wheat harvest by 2.7 million tons, leading to a reduction in production of about 600,000 tons.
Drought Impacting Algerian Wheat Harvest
The USDA’s projections are based on satellite imagery analyses, attributing the decreased average yield in non-irrigated areas in Algeria to drought and high temperatures. The yield is expected to fall from 15 quintals in the previous campaign to 13 quintals, primarily in non-irrigated zones.
Contrary to local estimates of 9 million tons, the USDA pegs Algeria’s annual domestic consumption at 11 million tons, making the country the second-largest global wheat importer after Egypt.
Changing Circumstances in Ukraine Affecting Wheat
Algeria’s impending wheat imports are set against the backdrop of ongoing developments in Ukraine. Wheat prices fluctuate depending on the conflict and the harvest predictions of major exporting countries.
Despite the cessation of the agreement on the Black Sea corridor, which enabled the export of 33 million tons of Ukrainian wheat, there has been minimal reaction. This can be attributed to the existence of a secondary export channel through the Ukrainian river ports of Reni and Izmail on the Danube.
Analyst Andrey Sizov from the SovEcon consultancy firm believes, “The halt of shipments from Odessa doesn’t change the situation now. Ukraine can ship over 40 million tons of grain via other routes, roughly corresponding to its export potential for 2023-2024.” According to Ukrainian administration data, the country exported 2.1 million tons of agricultural products, up from 1.6 million tons in July 2022.
However, recent bombings of these ports have changed the dynamics and led to a sudden surge in prices. On Euronext, the December 2023 contract reached 266 Euros per ton on July 24, up from an average of 230 Euros in recent weeks.
While Ukrainian exports continue from the Danube ports, observers have noted the beginnings of infrastructure congestion. Roads are crammed with grain-laden trucks waiting up to 8 days to unload.
The European Union is considering opening a third export channel through the Baltic states. This alternative could allow an annual export of 25 million tons, but at a higher cost.
As for global grain supplies, they remain plentiful due to Russian surpluses from the extraordinary previous campaign with 153 million tons produced, making Russia the leading global exporter. The severe drought affecting the grain-growing regions of the USA does not seem to dampen this optimism, especially since Russia’s wheat production is expected to be significant in 2023, with forecasts of 123 million tons. The only cloud on the horizon is that current rains in Europe are delaying the ongoing Russian harvest.