by Mehmet Uğur Gürkaynak – International Milling Directory
As noted in the November AMIS (Agricultural Market Information System) report, the global wheat market remains a critical focus for policymakers, traders and producers. Wheat production is expected to exceed last year’s levels, despite a slight decline in production forecasts for 2024. Strong harvests in key producing countries such as Australia, China, Kazakhstan and the United States support this forecast, offsetting challenges in other regions.
Utilisation for the 2024/25 marketing year is projected to remain stable compared to 2023/24, with higher feed utilisation, particularly in Asia, boosting demand. This stability emphasises the indispensable role of wheat in global food and feed systems, despite external pressures. However, global wheat trade is expected to decline from 2023/24 levels as imports from China and the European Union (EU) decline and exports from the EU, the Russian Federation and Ukraine fall. These changes reflect the restructuring of global trade dynamics as countries adapt to domestic and international challenges.
By the close of 2025, stocks are expected to fall below opening levels, with the EU and the Russian Federation experiencing the most significant declines. This trend could have long-term implications for global supply stability, especially if adverse weather conditions or geopolitical tensions persist.
Impact of regional politics on the wheat market
Policy decisions and market adjustments played a significant role in shaping the wheat market. In early October, Egypt raised its reference wheat purchase price for the 2024/25 harvest season by 10% to support local production amid disruptions caused by the ongoing conflict between the Russian Federation and Ukraine. The Russian Federation, on the other hand, imposed an unofficial export price floor of USD 250 per tonne and restricted international sales to Russian grain companies. These measures are aimed at stabilising domestic markets and maintaining price levels.
Turkey resumed wheat imports in October after a four-month ban and introduced a partial quota system to regulate supplies. The Turkish Flour Millers Federation communicated this policy adjustment to its members, reflecting the country’s strategic efforts to manage domestic and external demand. In the EU, Slovenia expanded its wheat sector State Aid programme under the Transitional Crisis Transition Framework, an initiative first launched in 2022 to address the challenges arising from the Ukraine conflict. These regional policies underline the interconnected nature of the global wheat market and the importance of coordinated responses to external pressures.
Planting and harvesting conditions for wheat vary considerably across regions. In the northern hemisphere, winter wheat sowing is progressing under mixed conditions. Extreme rains in Western and Southern Europe and the United Kingdom have delayed sowing, while conditions are favourable in Turkey. The Russian Federation is facing predominantly dry conditions despite recent rains, and continued drought in Ukraine has delayed crop development. In the United States, planting is progressing despite dry areas, while Canada is benefiting from favourable conditions.
Harvest has started in the southern hemisphere, with mixed results. In Australia, some areas experienced exceptional conditions, while dry weather and frost adversely affected yields in other regions. In Argentina, improvements were seen in the central regions due to recent rains, but prolonged drought in other regions probably reduced yields. These regional variations emphasise the critical role of weather and climate in influencing global wheat supplies.
Weather and geopolitical effects on wheat prices
Price dynamics in October reflected the impact of weather, trade policies and geopolitical factors. The GOI wheat sub-index increased by 2% m-o-m, reflecting unfavourable sowing weather in major producers. In Russia, fob offers increased following the reintroduction of the minimum price floor, but eased as weather conditions improved. In Ukraine, prices were higher on slow farmer sales and continued buying interest, despite security risks to seaborne shipments. In the United States, prices declined as rains improved crop prospects, spread effects in the corn and soybean markets and a stronger US dollar.
Wheat futures prices on CME and Euronext declined slightly in October, reflecting competitive Black Sea wheat prices and record shipments from the Russian Federation. These declines were partially offset by increased rainfall in southern Russia and concerns over Australian crop conditions. Meanwhile, Algeria’s decision to exclude France from tenders limited opportunities for the EU’s largest wheat exporter, weighing on Euronext prices.
Market volatility and investment trends were also highlighted in the AMIS report. Implied volatility in CME wheat futures was higher, pointing to market fragility. Investment flows showed a significant movement at the end of September and hedge funds made the largest agricultural futures purchases in the last four years. However, hedge fund positions were little changed in October, reflecting a cautious mood amid global uncertainties.
October indicators highlighted limited export demand for US and European wheat amid strong Black Sea wheat supplies. These trends point to a nuanced market outlook, with regional differences influencing global price dynamics and trade flows.
The AMIS report provides critical insights into the complexity of the global wheat market. As production, utilisation and trade undergo significant shifts, stakeholders must navigate a dynamic environment shaped by policy decisions, weather conditions and geopolitical factors. As winter wheat planting progresses and harvesting begins in the southern hemisphere, the course of the market will depend on the interplay of these factors.