Wheat

Wheat updates

Potential tariffs looms over wheat markets while Russia cuts wheat exports.

Wheat markets are focused on geopolitics and international trade. Prospects for improved pricing are mixed with downside risk from tariffs and upside potential from export markets.

U.S. grain markets were roiled in January by the threat of U.S. tariffs levied against Canada and Mexico. Ahead of the Trump Administration’s February 1 tariff deadline, grain markets saw selloffs. Traders took short positions to reduce the risk of price impacts from retaliatory tariffs. Although the full implementation of these tariffs was delayed, markets saw a preview of expected bearish impacts on U.S. wheat and pulse crop markets should tariffs come to pass. Impacts to prices may be blunted if Mexico and Canada exclude grains as U.S. commodities subject to retaliatory tariffs. Many analysts expect this to be the case.

Russia's 2025 wheat export forecast has been cut to the lowest levels in five years due to a self-imposed reduction in export quotas. This action indicates a rapid depletion of Russia’s domestic grain supplies and a shift towards meeting domestic needs. Russia faced a tough production year, with nearly 30% of the wheat crop in poor condition. This resulted in a 10.9% reduction in production from the previous year, while record Russian wheat exports during first half of the marketing year (July-December) depleted on-farm wheat stocks by 25%.

The global wheat stocks-to-use ratio is at 32%, the lowest amount in over 11 years. Excluding China's stocks, the global wheat stocks-to-use ratio drops to 19%, the lowest since 2007/08. Despite this, higher prices are unlikely without significant production cuts.

Profitability

December 11, 2024

Wheat: Breakeven profitability - Bearish 12-month outlook

Global export competition and a strengthening U.S. dollar will create headwinds for wheat growers. While bearish price signals add to these headwinds, winter wheat conditions are improving as drought eases.

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