Global wheat prices seen under pressure on record output
Global wheat prices are expected to face downward pressure in 2025 due to record production but may find short-term support from tightening supplies. USDA forecasts a 2024-25 season-average farm price of $5.55/bushel, while ING anticipates a gradual increase, averaging $6/bushel for 2025. Despite record global production of 793.2 million tonnes, carryover stocks will hit a nine-year low of 258.8 million tonnes due to high consumption and reduced Russian stocks.
Global wheat prices will likely come under pressure in 2025 on record production but tightening supplies may offer short-term support, analysts have said. Wheat prices continue to decline on soft red winter harvest expectations. “Our revised forecast for the 2025 annual average second-month CBOT-listed wheat price has been adjusted downward from $6.05/bushel to $5.80,” said research agency BMI, a unit of Fitch Solution. “The 2024-25 all-wheat season-average farm price is lowered $0.05 per bushel to $5.55 based on USDA (US Department of Agriculture), NASS (National Agricultural Statistics Services) prices reported to date and expectations for futures and cash prices for the remainder of the marketing year,” the USDA said in its outlook for January.
Trade tensions
“We expect both the global and US wheat market to tighten next season, which should mean that prices move higher from current levels. However, wheat could also get caught up in trade tensions (in view of Donald Trump set to take over as US President) with a large share of US production exported to global markets,” said ING Think, the economic and financial analysis wing of Dutch multinational financial services firm ING.
It forecasts CBOT wheat prices to trend higher through 2025 and prices to average $6/bushel over the year.
BMI said wheat’s upside potential would remain limited, but tightening supplies are expected to provide price support to the grain. ING Think said despite the expectation of a tighter market, CBOT wheat prices still came under pressure in 2024. This was because the ending stocks in the US this season are estimated to grow 17 per cent YoY to 815 million bushels (22 mt).
9-year low ending stocks
BMI said global ending stocks for the 2024-25 season are projected by the USDA to be at their lowest since the 2015-16 season, with a forecasted 3.6 per cent decline year-on-year, compounded by a deteriorating Russian outlook. The USDA outlook said global wheat production in the 2024-25 season (July-June) is forecast 0.3 million tonnes (mt) up at a record 793.2 mt. Global wheat exports are forecast at 212.3 mt and consumption is forecast at 801.9 mt. That will leave the global carryover stocks at 258.8 mt, a nine-year low. The Russian harvest is expected to be 81.5 mt but it will be over 10 per cent down year-on-year. “This decline, alongside consecutive seasons of high export levels, has resulted in a significant contraction in Russian ending stocks, which are expected to decrease to 8.2 mt,” BMI said. This is a 30 per cent year-on-year reduction and the lowest since the 2019-20 season, indicating further tightening of supplies in the 2025-26 season. “We expect this scenario to support global wheat prices in the latter half of 2025,” the research agency said.
To read more about Wheat News continue reading Agriinsite.com
Source : The Hindu Business line
