Wheat prices drop despite tighter ending stocks

Spring wheat markets have been trending sideways during the past week after dropping like a stone over the past month.

The impending Northern Hemisphere harvest is one of the reasons why wheat markets are under pressure.

Harvest is underway in India and China, while the U.S. Hard Red Winter wheat crop is still two months away from initial harvest. The prospects for record production in 2025 is weighing on wheat prices.

The International Grains Council’s latest Grain Market Report estimates 2025 wheat production at 807 million tonnes, which is up by eight million tonnes from last year. If this production is achieved, it would be a record for the global wheat outlook.

A rebound in the European wheat crop from last year’s disappointing production is largely responsible for the increase.

Production in Russia, Ukraine and Kazakhstan is expected to drop from last year. Wheat output from these three countries is expected to drop by 4.3 million tonnes from last year. This offsets a portion of the expected increase in EU production.

The weather in the Black Sea region is still a concern because snowfall during the winter has been well below normal. Winter cereal crops in the region were in poor condition going into winter due to persistent dryness.

Australian production is expected to drop by 3.6 million tonnes, while Argentina’s output is expected to increase by 600,000 tonnes. These crops are going to be planted in the next few months and will be harvested in November and December.

Markets are not as concerned with the Southern Hemisphere production because these supplies are more than nine months away from hitting the market.

The IGC estimates the U.S. crop at 52.4 million tonnes, which is 1.3 million tonnes lower than the 2024 crop. This is a bit of a surprise because winter wheat area in the United States increased this year, and spring wheat area is largely expected to remain unchanged.

The U.S. Department of Agriculture will release its estimates for spring wheat and durum area on March 31.

Winter wheat crops are in mostly good to excellent condition with the top producing state of Kansas reporting 48 per cent of the crop in good to excellent condition on March 16. The USDA rated 28 per cent of the winter wheat in Texas and 46 per cent of the crop in Oklahoma as good to excellent.

Canadian production was estimated by IGC at 36 million tonnes, which is up by one million tonnes from last year. This estimate is slightly larger that the current Agriculture Canada estimate of 35.2 million tonnes.

Wheat area is expected to increase by 2.6 per cent this year due to increased spring wheat planting.

One of the interesting points from the IGC report is that although wheat production will be a record, wheat stocks are expected to drop in the 2025-26 marketing year.

Ending wheat stocks are expected to drop by six million tonnes to 259 million tonnes. This is down from 265 million tonnes in the 2024-25 crop year and 273 million tonnes in 2023-24.

Why is the wheat price dropping in the face of tighter ending stocks this year? The answer seems to be two-fold.

One reason is that with harvest beginning in the Northern Hemisphere, stocks are on the rise and there is no apparent tightness in the marketplace.

Secondly, crop conditions remain mostly good in the EU, U.S. and the Black Sea region. Until there is a weather scare that threatens 2025 wheat production in a major producing region, wheat prices are likely to trend sideways.

Tags: Ukraine, U.S., Russia, output, China, Argentina, harvest, Hard Red Winter-wheat, Kazakhstan, durum, EU, spring wheat, prices, markets, Production, wheat, India, crop