Wheat price likely to remain weak unless corn shock occurs

Chances for a spring rally in wheat prices appear slim, and the best chance for changing that outlook might depend on another crop: corn.

In this calendar year, wheat futures peaked in mid-February and have since fallen, as did most crop markets, partly on trade uncertainty stemming from president Donald Trump’s tariff threats.

Wheat is also under pressure from expectations that Europe’s production will recover and Russia’s crop will be better than the dire forecasts made in winter.

Hope for a ceasefire in Ukraine also weighed on prices for a while, but that dissipated as fighting continued.

Last week, some crop markets showed strength, but not wheat.

From the high in mid-February to the end of last week, the nearby hard red wheat futures contract plummeted about 15 percent.

The spring wheat contract fell close to 10 percent.

In Canada, the basis has improved, helping to moderate the decline in cash prices. PDQInfo.ca says that over the same period, the cash price in southwestern Saskatchewan for No. 1 CWRS fell about 4.5 per cent.

One reason for the extreme weakness in hard red winter is the expectation for a jump in year-end stocks.

The U.S. Department of Agriculture forecasts that hard red stocks at the end of 2024-25 will climb to 408 million bushels, or 64 percent of use, up from about 36 percent two years ago.

By comparison, the hard red spring stocks-to-use is forecast at 40 per cent.

U.S. all-wheat year-end stocks are forecast to climb to 42.9 percent from 38.3 percent last year.

The growing U.S. stocks are influencing the futures market even as the global stocks-to-use ratio is expected to decline, due mostly to reduced, but still large, ending stocks in China.

The condition of hard red winter crops now growing in the southern U.S. Plains is weaker than it was last year, but is close to the 10 year average.

Dryness is a concern, especially in Nebraska, but the monthly forecast for May is for normal rainfall in the region.

Combined hard and soft winter wheat plantings are forecast at 33.3 million acres, down about one per cent from last year, and spring wheat area is 10 million acres, down six per cent. Durum is a little more than two million acres, down two per cent.

Total U.S. wheat is forecast at 45.4 million acres, down two per cent from 2024 and the smallest since record keeping began in 1919.

The condition of Russian winter wheat has improved this spring but is still expected to be the smallest in several years

Consultancy Sovecon now forecasts total winter and spring wheat production at 79.7 million tonnes. That is down from 81.6 million tonnes last year and 91.5 million two years ago.

Russian exports in the last couple of months were significantly less than year-ago amounts, reflecting last year’s smaller crop.

European farmers hope for a recovery from last year’s disappointing production. It was a better fall and winter than last season, but the northern half of the continent has been dry the past two months and will need moisture soon for reproduction. Southern areas received better rainfall recently.

China’s winter wheat crop appears headed to a normal harvest without major stress. Beijing put the brakes on grain imports about this time last year, hoping to support domestic crop prices at a level that keeps farmers happy.

It is expected to import only 3.5 million tonnes of wheat this crop year, down from 13 to 14 million in each of the previous two years.

Overall, there is no panic-inducing problem so far with global winter wheat crops that will be harvested in the next couple of months.

The other major crop now in the field is Brazil’s second corn crop. Could it provide price support?

A higher corn price could encourage livestock feeders to use more relatively cheap wheat in their rations.

It was dry in February and March in large parts of Brazil’s growing area, but April brought needed showers.

Corn prices in Brazil are much stronger than last year at this time, mostly because of increased demand from domestic ethanol producers.

The outlook for May is for drier and warmer than normal weather over much of the corn-growing region. If serious problems develop, that would support global corn prices.

However, the effect might be lessened by U.S. farmers’ seeding plans.

The USDA forecasts U.S. corn area at 95.3 million acres, up 4.7 million from last year.

The U.S.-China trade war and the potential for weaker soybean exports to the Asian giant had farmers favouring corn.

So prices are hard to predict, but if South American problems get worse and corn prices rise, then the spill-over effect could help wheat prices.

Tags: China, crop, exports, forecast, corn, imports, Brazil, U.S., prices, winter wheat, Europe, Canada, Outlook, Production, wheat