Wheat harvest outside Ukraine under threat, adding pressure to global supply

The weak European forecast and war in Ukraine come ahead of what many analysts expect to be a smaller-than-usual harvest in other global bread baskets like India and Australia. A bad harvest in the EU could further pressure grain markets. Sharply higher prices have already roiled many developing countries that rely on imports.

Strategie Grains, an agriculture consulting firm, is now forecasting a more than 5% fall in French wheat production, according to a report published Thursday. It cited dry conditions across Europe in May.

France accounts for about 18% of European agricultural production, according to the French Ministry of Agriculture. It is the fifth-biggest grower of wheat in the world, behind China, India, Russia and the U.S. France is also the fourth-biggest wheat exporter, making it an important global market player. In addition to dry weather, recent severe storms damaged agricultural acreage across the country, including wheat, fruit and vineyard land, according to the country’s National Farmers’ Union Federation.

Strategie Grains said it expected the EU to produce almost 5% less wheat this year compared with last year. It is forecast to produce 278.8 million metric tons of all grains in the 2022-2023 growing season—down more than 4% from last year, because of the dry weather.

“Combined with spells of extreme heat—the mercury having risen well above seasonal averages—this weather took a negative toll on the condition of all cereal crops in Europe, during the period of critical yield formation phases," Strategie Grains wrote Thursday.

The U.N. Food and Agriculture Organization, meanwhile, said in its twice-a-year Global Food Report on Thursday that global grain production—which includes crops such as corn, wheat and other grains—is expected to hit 2.78 billion metric tons in 2022, down 16 million metric tons from 2021. While a relatively small decrease, it is the first decline in four years, the U.N. said.

Much of this hit has come from the expected loss in production from Ukraine amid the war. Farmers there have said that the Russian invasion and occupation of swaths of territory in the fertile east of the country has stymied routine farm operations, such as planting during the critical late Spring period. The country’s stores remain full from a lack of Black Sea export routes.

India, meanwhile, has barred its wheat from being exported amid the surge in global prices. Exports of Russia’s crop—expected to be bumper this year by some analysts—are complicated by Western sanctions. Most agricultural products aren’t on any country’s sanctions list, but shipping and paying for Russian grains is now more complicated. That is likely to bottle up exports.

—Lucy Papachristou in Brussels contributed to this article.