Global Wheat Market Faces Pressure Amid Weather, Export, and Policy Dynamics

The global wheat market is under pressure as technical and fund-driven selling aligns with a stronger U.S. dollar, limiting the competitiveness of U.S. exports. Declines in Paris milling wheat and a cautious outlook ahead of key USDA reports signal market fragility. While U.S. Plains snowfall has improved soil moisture and winter wheat conditions, global players remain focused on Russia’s export activity, Ukraine’s agricultural stability, and harvest outputs in Argentina and Australia. Notably, U.S. hard spring wheat stocks have rebounded slightly week-on-week but are still sharply lower year-over-year, reflecting longer-term supply challenges.

Ukraine, a critical player in global grain exports, has significantly increased its shipments this season, exporting 22.442 million tonnes of grains and pulses by January 8, up from 19.422 million tonnes a year earlier. Wheat and corn dominate Ukraine’s exports, with wheat accounting for 9.977 million tonnes and corn 10.162 million tonnes. Despite the geopolitical challenges, Ukraine’s robust performance reinforces its strategic importance in balancing global grain supply. Flour exports, though smaller in volume, remain steady and predominantly wheat-based.

China, the world’s largest cereal grain producer, is pivoting toward domestic grain security with its ambitious 2024–2035 action plan. Although it produced a staggering 652 million tonnes of cereal grains in 2024, China remains heavily reliant on imports of high-quality wheat from Canada, Australia, and Russia to meet consumer and industrial demands. The plan underscores a strategic shift toward self-sufficiency, focusing on boosting domestic production quality, increasing consumer awareness of cereal grain benefits, and integrating grains into national dietary policies. This move seeks to reduce China’s vulnerability to global market fluctuations while fostering a more sustainable grain economy.

UK wheat prices began 2025 with upward momentum, supported by global weather concerns in key producing regions like Russia and Argentina. Spot prices for UK feed wheat exceeded £180/t ex-farm during the first week of January, maintaining parity with year-earlier levels, while May futures opened at £190/t, a slight increase from the previous month. Meanwhile, EU and UK grain production for 2025 is projected at 298 million tonnes, up from 278.5 million tonnes in 2024, with wheat output (excluding durum) forecasted at 140.4 million tonnes due to larger planted areas and average yields.

In the U.S., wheat trading displayed mixed performance. Chicago SRW, KC HRW, and MPLS spring wheat futures saw midweek losses, erasing gains posted earlier in the week. U.S. wheat exports reached a four-year high in November at 1.417 MMT, bringing the marketing year's first-half exports to 425 MMT. Ahead of the USDA Winter Wheat Seedings report, market expectations point to a slight decrease in planted acreage to 33.366 million acres.

Weather concerns in key growing regions and geopolitical factors influenced global wheat prices. Reduced exports from Ukraine and Russia are expected to be partially offset by higher shipments from Argentina and Australia. EU soft wheat exports totaled 11.16 MMT as of January 5, down 33.93% from the same period last year. Additionally, South Korean importers recently purchased 125,000 MT of wheat, with 60,000 MT likely sourced from the U.S.

Rain forecasts in Argentina have eased earlier concerns over dryness that had supported grain prices earlier in the week. Despite these factors, wheat markets have seen temporary support from regional production challenges, including lower Kansas crop ratings and fluctuating export dynamics.

Data for Technical Analysis (1D) CFD US Wheat Futures - Mar 25 (ZWH5)

Resistance : 542.12, 544.22, 547.62

Support : 535.32, 533.22, 529.82   

1D Outlook 

Source: TradingView  

Buy/Long 1 If the support at the price range 529.32 - 535.32 is touched, but the support at 535.32 cannot be broken, the TP may be set around 542.12 and the SL around 523.32, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 542.12 - 548.12, TP may be set around 556.00 and SL around 532.32, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 542.12 - 548.12 is touched, but the resistance 542.12 cannot be broken, the TP may be set around 533.04 and the SL around 551.12, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 529.32 - 535.32, TP may be set around 522.00 and SL around 545.12, or up to the risk appetite.       

Pivot Points Jan 9, 2025 02:10AM GMT