All three wheat contracts in the United States moved higher during the week ended Nov. 21, but the futures continue to face headwinds.
World wheat production: The International Grains Council cut its forecast for world wheat production in 2024/25 by two million tonnes — now at 796 million tonnes. That was mainly due to cuts in the European harvest. Crops in France and Germany were hurt by heavy rains. If realized, the global wheat crop would still be up by one million tonnes on the year, although the IGC expects ending stocks will tighten given increased consumption.
Russia/Ukraine: The war between Russia and Ukraine intensified as the conflict passed the 1,000-day mark. Ukraine fired U.S.-made long-range missiles into Russia for the first time and Russia retaliated with increased missile attacks of its own. The escalation gave the wheat markets a boost, reigniting concerns over disruptions to wheat shipments through the Black Sea. However, both countries need the money brought in by grain exports, and cheap wheat continues to move from the region.
Lack of farmer selling: While wheat prices came off their lows, values are still at their weakest levels in four years and farmers are reportedly reluctant sellers around the world. Many grain millers and other wheat buyers are not covered as much as usual, increasing the chances that production issues anywhere could spark a rally.
Winter wheat: The latest condition ratings for the U.S. winter wheat crop improved by five points in the good-to-excellent category, to 49 per cent, with 94 per cent of intended acres in the ground. The U.S. crops are entering dormancy so news out of the Southern Hemisphere should provide additional direction for wheat. Australia is harvesting a bumper crop, and delayed rains have cut into estimates in Argentina.
Source: The Western Producer