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Summary
Global wheat markets are facing a potential supply squeeze in 2025, with carryover stocks projected to hit multi-year lows despite record production. While prices are expected to rise modestly, the outlook remains heavily dependent on harvests in key markets like India and China. This analysis examines the current market dynamics, price projections, and critical factors that traders and investors should monitor in the coming months.
Market Fundamentals Point to Tighter Supplies
The global wheat landscape is poised for significant changes in the 2025-26 season, with supply-demand dynamics shifting toward a tighter market. According to the latest International Grains Council (IGC) projections, global wheat carryover stocks are expected to decline to 259 million tonnes (mt) in the 2025-26 season, down from 265 mt in 2024-25 and significantly below the 273 mt recorded in 2023-24.
This reduction in ending stocks comes despite wheat production reaching an anticipated record high of 807 mt globally. The paradox is explained by consumption outpacing production, with global wheat usage projected to hit an unprecedented 813 mt, driven largely by increased feed and residual use across major markets.
Price Outlook Remains Cautiously Bullish
Current wheat futures on the Chicago Board of Trade (CBOT) are trading at $5.42 per bushel, influenced by lower-than-expected planting in the United States. However, price movements have been more restrained than market fundamentals might suggest, primarily because:
- Markets have already factored in reduced US plantings
- Expectations that Russian and Ukrainian wheat will continue flowing to global markets following recent ceasefire agreements
- Strong production forecasts from India and China creating a counterbalance to tightening supplies elsewhere
Research agency BMI has revised its wheat price forecast for 2025 upward to $5.85 per bushel from a previous projection of $5.80. Meanwhile, the USDA currently forecasts prices at $5.50 per bushel, though this outlook is expected to be updated in the upcoming World Agricultural Supply and Demand Estimate (WASDE) report.
Russian Supply Dynamics Creating Market Friction
Recent developments in the Russian wheat market highlight the complexity of current global supply chains. Despite being the world's largest wheat exporter, Russia is experiencing interesting domestic price movements:
- Internal bids for 12.5% protein wheat have increased by 200 roubles per tonne—the first such increase since February—reaching approximately $211 per tonne in rouble terms
- This domestic price increase coincides with the Russian rouble strengthening against the dollar (84.19 vs. 105.6 a month ago)
- Paradoxically, export prices for Russian wheat have decreased by $2 to $250-254 per tonne despite limited supplies
According to SovEcon, Russian wheat stocks stood at 11.6 million tonnes as of March 1, representing a 34% year-on-year decline. While vessels have resumed calls at Black Sea ports, shippers face supply constraints and deteriorating margins, potentially leading to reduced export volumes in the near term—a factor that could provide support to global prices.
India and China: The Major Swing Factors
Much to the disappointment of market bulls, India's wheat crop is reportedly exceeding expectations, surpassing even the government's forecast of a record 115 mt harvest. India's Food Corporation has already procured over 600,000 tonnes more than anticipated for the country's strategic buffer stocks.
Similarly, preliminary reports suggest favorable conditions for China's wheat crop. As the world's largest wheat producer and a significant importer, China's harvest results will be crucial in determining the direction of global wheat markets over the next 4-6 weeks.
Trade Implications
Despite record consumption, global wheat trade is projected to decrease to 201 mt in the coming season. This reduction in trade volume, coupled with tightening supplies, suggests potential opportunities for strategic positioning by importers and exporters alike.
For importers, securing supplies earlier in the season might prove advantageous if price forecasts materialize. For exporters with available stocks, the potential for improved margins exists if global supplies tighten as projected.
Conclusion
The global wheat market in 2025 presents a nuanced picture of record production counterbalanced by even higher consumption, resulting in declining stocks and moderately bullish price projections. While market fundamentals suggest upward price pressure, much depends on the final output from major producers like India and China.
For traders and investors, the key watchpoints over the coming months will be the finalization of harvest data from these Asian giants, updated USDA projections in the WASDE report, and the evolving export capacity from Russia's Black Sea ports. These factors, more than any others, will determine whether wheat prices reach the projected modest increases or face more significant volatility as global stocks continue their downward trajectory.