This is usually a weak time in the wheat markets as the Northern Hemisphere winter crops approach the harvest period.
However, the longer-term trend in wheat prices has been dramatic. Nearby spring wheat futures are currently trading below the US$6 per bushel level, which is the lowest since December 2020.
The main driver of the drop in wheat prices has been a long-term bearish position in wheat by the managed money funds.
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Funds were net short 163,135 contracts of Chicago, Kansas City and Minneapolis wheat on April 15. Funds have maintained a net short position in the market since October 2022.
This position has driven any premium out of the wheat markets, and the funds appear to still believe that wheat futures are overvalued.
The U.S. Department of Agriculture’s May crop report will provide critical direction for the wheat markets when the first production estimates of the 2025 crop will be released.
The International Grains Council has already released its figures for the 2025-26 crop year. The forecast calls for an increase of eight million tonnes in global wheat production to 806 million tonnes.
The increase in production will not be enough to cause a drop in the projected 2025-26 ending stocks.
Lower prices have caused an uptick in demand for Canadian wheat.
Wheat exports for the crop year to date (April 20) is on pace to challenge last year’s record level. Wheat (excluding durum) exports have hit 14.71 million tonnes and is only 61,100 tonnes behind last year.
To put that in perspective, the pace this year is one Panamax vessel behind last year 37 weeks into the crop year. Wheat exports are now flowing from both east and west coast ports with the opening of the St Lawrence Seaway in late March.
Strong exports are a good argument that wheat prices are not overvalued. The fundamentals seem to be positive for the global wheat situation, but a catalyst will be needed to push the markets higher.
Without a weather scare in a significant producing region, the wheat market is destined to trade sideways in the coming months as harvest begins in North America.
Bruce Burnett is Glacier FarmMedia’s senior editor for weather and markets.
