Wheat Under Pressure as Crop Conditions Improve and Export Demand Slows

In the early months of 2025, wheat markets were shaped by geopolitical developments, especially ongoing tensions in the Black Sea region and shifting U.S. tariff policies. These factors disrupted trade flows and influenced currency movements, leaving traders wary. However, as the growing season progressed, market focus shifted toward core fundamentals—particularly weather patterns and crop conditions in major producing regions. Analysts observed that improved weather forecasts across the U.S., Russia, and Europe began to ease earlier concerns, putting downward pressure on prices.

Weather improvements are expected to enhance yields across key regions. In the U.S. Plains, rainfall is helping relieve stress on winter wheat, while showers in France, Germany, and parts of the Black Sea region have improved soil moisture. Still, dry conditions persist in the eastern Midwest, Delta, and parts of Ukraine, Russia, and China. These mixed conditions have influenced futures prices, with U.S. wheat contracts falling broadly.

Regionally, price movements have been mixed. U.S. wheat quotes declined due to a stronger dollar and slow export sales, making American wheat less attractive to buyers. The USDA’s April report noted a $1 per tonne drop in U.S. prices, while Argentine quotes rose $8 amid shrinking exportable supplies. Russian wheat prices increased $7, supported by a firm ruble and tight inventories. EU wheat rose $6 due to strong exports to the Middle East and North Africa, though competitiveness was hampered by the rising euro and improved domestic crop outlooks. Australian quotes slipped $2 despite sustained export demand.

Globally, the wheat market remains under pressure from shifting supply dynamics and volatile trade flows. The International Grains Council (IGC) projects global wheat output for 2025/26 to reach a record 806.4 million tonnes—a 1% increase from the prior year—led by a rebound in EU production. Exporter output may hit 391 million tonnes, the highest since 2022/23. However, volatility persists, particularly due to currency shifts and regional supply imbalances.

Despite the expected production gains, the USDA revised its global 2024/25 wheat outlook downward. Output estimates were cut for the EU and Saudi Arabia, and exports from Russia, Australia, and the EU were reduced. These declines were only partly offset by higher projections from Canada and Ukraine. Although global ending stocks rose slightly, they remain at their lowest since 2015/16, with the stocks-to-use ratio among major exporters still below the long-term average.

In the U.S., the USDA’s April outlook for 2024/25 projects higher wheat supplies, driven by the highest imports since 2017/18. Domestic use is slightly down, exports are reduced, and ending stocks are expected to rise. Still, the season-average farm price remains unchanged at $5.50 per bushel. Export demand remains soft, especially for Hard Red Spring and Winter wheat.

Looking forward to 2025/26, early projections suggest potential tightening of global wheat supplies. The USDA’s attache forecasts that Ukraine’s wheat harvest could fall to a 13-year low due to drought and waning profitability. Russia’s outlook is more stable, yet its April wheat exports plummeted—down nearly threefold from a year ago—due to low margins and weak global demand. Major buyers like Egypt and Israel have significantly cut purchases, while Ukraine, Romania, and Bulgaria have gained market share thanks to more competitive pricing.

Ukraine’s wheat exports remain under pressure from both weather and falling demand. While prices at Black Sea ports have stayed relatively stable, overall exports are down over 11% year-over-year. Output has dropped substantially due to reduced acreage and continued conflict-related disruptions. Still, Ukraine exports a disproportionately high share of its limited crop, as domestic feed demand remains low. In Russia, despite previously high export volumes, wheat is now priced above competing origins, eroding competitiveness. The number of active exporters and functioning ports has also decreased significantly, limiting future capacity.

Recent tenders from major buyers such as Jordan, Tunisia, and Algeria illustrate a growing shift toward cheaper origins. Russian wheat is now consistently priced higher than both French and U.S. grain, losing ground to more competitively priced Eastern European exporters. This shift in buying patterns highlights structural challenges for Russian wheat in reasserting market share amid high domestic prices and weaker global interest.

In Europe, sentiment remains cautious. Euronext wheat futures for September fell to €207.50 per tonne, the lowest since late August. Although a weaker euro has cushioned some of the impact from falling U.S. prices, uncertainty about North African demand and diplomatic tensions with Algeria remain in play. Nonetheless, if the euro continues to ease and Black Sea prices stabilize, European wheat may regain global competitiveness.

Meanwhile, projections for 2025/26 indicate further shifts in global planting trends. In the U.S., high-protein spring wheat plantings are expected to hit a 55-year low, while winter wheat conditions are worse than the previous year. In contrast, Argentina could see record planting if an export tax cut is extended. Canada plans to expand wheat acreage, and EU yields are projected to rise by 8%. However, dryness in Australia may cut its output by 16%, adding another layer of uncertainty to global supply forecasts.

As a result, U.S. wheat futures are likely to remain under pressure amid improving crop conditions and sluggish export demand. Unless weather conditions deteriorate or export sales unexpectedly strengthen, U.S. wheat futures could face further downside toward the $5.30 support level in the coming weeks, with resistance seen near the season-average price of $5.50.

Data for Technical Analysis (1H) CFD US Wheat (ZWN5)

Resistance : 541.64, 541.73, 541.88

Support : 541.36, 541.27, 541.12

1H Outlook   

Source: TradingView 

Buy/Long 1 If the support at the price range 540.76 - 541.36 is touched, but the support at 541.36 cannot be broken, the TP may be set around 541.64 and the SL around 540.46, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 541.64 - 542.24, TP may be set around 542.60 and SL around 541.06, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 541.64 - 542.24 is touched, but the resistance 541.64 cannot be broken, the TP may be set around 541.25 and the SL around 542.54, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 540.76 - 541.36, TP may be set around 540.60 and SL around 541.94, or up to the risk appetite.       

Pivot Points Apr 24, 2025 03:34AM GMT