Global wheat prices fall to multi-month lows on abundant supply forecasts

On Thursday, the price of European wheat experienced a notable decline on Euronext in Paris, with the most actively traded futures contract settling at EUR 192 per ton. 

This significant drop pushed the price to its lowest level since March 2024, indicating potential shifts in market dynamics and supply-demand balances. 

The decline could be attributed to a confluence of factors, including robust harvest forecasts in key European growing regions, which suggest an abundant supply entering the market. 

Furthermore, global economic uncertainties and a stronger euro against other major currencies might have also played a role, making European exports less competitive. 

This figure represents a slight dip below the previous low for the year, which was recorded in July. 

Abundant global supply

Carsten Fritsch, commodity analyst at Commerzbank AG, said:

Meanwhile, in a significant update earlier this week, IKAR, a prominent Russian consulting firm, has once again adjusted its projections for Russia's agricultural output. 

The firm has increased its forecast for Russia’s wheat harvest, raising it by an additional 500,000 tons to a total of 86 million tons. 

Concurrently, IKAR also revised its estimate for Russia's wheat exports upwards by the same amount, now anticipating 43 million tons to be shipped globally. 

This latest revision reflects a continued optimistic outlook on Russia's agricultural sector, suggesting robust yields and a strong capacity for international trade in the coming period. 

The consistent upward adjustments from IKAR indicate a growing confidence in the overall strength and productivity of Russia's wheat industry.

Strong harvest forecasts in key regions

Additionally, Ukraine's largest farmers' union predicts a wheat harvest of 21.8 million tons, a figure slightly exceeding the Economy Ministry's forecast.

Canada also plays a crucial role in the global wheat market, consistently contributing a substantial supply. 

This year, despite a slight anticipated decrease from the previous year's record, the wheat crop is still projected to be exceptionally large, reaching an impressive 35.5 million tons. This figure, according to Statistics Canada, underscores the nation's continued significance as a major wheat producer and exporter.

While the 35.5 million tons may be marginally lower than last year's exceptionally high yield, it remains a considerable volume, indicating a healthy and productive agricultural sector. 

This consistent supply from Canada helps to offset potential shortages in other parts of the world and ensures a steady flow of this essential commodity.

Fritsch said:

“Here, too, the signs point to an abundant supply," he added.

Next week, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) will publish its new forecast for the wheat crop in Australia, which is set to be harvested starting in October.

“There are many indications that ABARES will revise its June forecast of 30.6 million tons upward.” Fritsch added. 

Crop volume is currently projected by private forecasting institutes to be between 32 and 35 million tons.