Global wheat markets begin to recover amid easing bearish factors

World wheat markets are showing the first signs of recovery after a period of high volatility and mostly bearish news. Futures are gradually stabilizing after the war risk premium that had been building since early March disappeared from the market.

In early April, expectations of a ceasefire and possible peace agreements reduced the speculative component in prices. This effectively led to the elimination of the war premium that had previously supported quotations at an elevated level.

Additional pressure on the market was caused by the latest report from the United States Department of Agriculture (USDA), which turned out to be bearish for price dynamics. In the United States, ending wheat stocks increased to 938 million bushels compared to 826 million a year earlier due to increased imports and reduced utilization.

The global balance also worsened in terms of price pressure: key exporting countries recorded increases in production and stocks. In particular, production increased in the EU by 1.11 million tonnes, in Russia by 800 thousand tonnes, and in Argentina by 120 thousand tonnes.

Stocks at leading exporters increased by 1.41 million tonnes, and the stocks-to-use ratio rose to 67.1 days, the highest level since the 2018/19 season. This signals an increase in global supply and pressure on prices in the medium term.

At the same time, weather conditions in the US are becoming a key factor supporting the market. In the southern plains of the country, the development of winter wheat is ahead of average indicators, but the condition of the crops remains mixed: only 32% are assessed as good or excellent, and the same number as poor or very poor.

The market situation in the coming weeks will largely depend on weather conditions in the southern states of the US, where precipitation is critically needed to maintain crop potential. It is the weather factor that may become the key driver of further wheat price movements.

Tags: wheat, prices