The global wheat market has witnessed a recent shift in its narrative, with expectations for exportable wheat supplies in 2024-2025 no longer projected to fall to multiyear lows. This is a notable change following recent trends, but analysts caution that the relief may only be short-lived. Russia and Ukraine, two key players that contribute approximately 30% of global wheat exports, are facing bleak prospects for their upcoming harvests. As a result, the concerns about dwindling supplies could resurface for the 2025-2026 season.
Earlier forecasts from the US Department of Agriculture (USDA) indicated that global wheat stocks-to-use (SU) ratios among major exporting nations were heading to a 17-year low of 14.56%. However, recent updates have raised this figure to 15.89%, which is the second highest level in the last six years. This improvement is largely due to a significant reduction in Chinese wheat import estimates over the past three months. Despite this uptick, the projected figure still remains below the long-term average of above 18%, dating back to the late 2010s.
The USDA has also pointed to concerning harvest figures for Ukraine, projecting a 2025-2026 wheat harvest of only 17.9 million tonnes—marking a 13-year low and a 23% decline from the previous year. Ukrainian agricultural conditions, including extremely dry soil during planting and poor profitability, have adversely affected sown areas. Meanwhile, Russian forecasts for the same period suggest a wheat harvest between 79.7 million and 82.5 million tonnes. While favorable weather could improve yields, the early harvest estimates are alarming, particularly as Ukrainian wheat exports are anticipated to be less than half of previous record volumes.
Adding to the complexities, the ongoing conflict following Russia’s 2022 invasion of Ukraine has put Black Sea shipping under strain, severely impacting Ukrainian exports. Although Russian food and fertilizer exports are not directly affected by Western sanctions, Moscow is demanding the lifting of measures against its companies involved in these shipments as a condition for maritime cooperation. While Russian exporters reported record volumes in the 2022-2023 and 2023-2024 marketing years, the forecast for 2024-2025 indicates a drop in exports to three-year lows, driven by last year’s diminished crop. Amidst these uncertainties, there have been promising discussions regarding a potential ceasefire between Russia and Ukraine.
However, any resolution would not significantly influence the harvest estimates for 2025-2026 since most of the crops have already been planted. The US also expects a slight decline in wheat plantings for 2025-2026, with winter wheat in worse condition compared to last year. Globally, there remains a mix of prospects. Argentina could see a record wheat harvest if a temporary export tax cut continues, while Canadian farmers plan to increase their wheat area.
Conversely, drought conditions in parts of Australia could result in a decrease in its wheat crop. The European Union is expected to see a rise in soft wheat yields. As Argentina, Australia, Canada, the EU, and the United States collectively account for approximately 54% of global wheat exports, their performance will be critical as the USDA prepares to release its initial outlook for 2025-2026.