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Global wheat ending stocks shrinking. Rally ahead?Global wheat ending stocks shrinking. Rally ahead?

Ag Marketing IQ: Technicals, fundamentals and seasonals may be aligning to nudge prices higher.

Naomi Blohm

September 14, 2023

5 Min Read
Wheat field with analysis chart over top showing rally
Getty Images

When Russia invaded Ukraine in February of 2022, global wheat prices spiked higher on concerns of dramatic global production loss. Before the war began, Chicago wheat futures were trading near $8 per bu., with prices peaking just over $13 one month later!

After the initial shock and awe of the war wore off, it was deemed that the world would indeed have enough wheat.

With the notion of available global supplies, wheat prices began to trade lower. Since the $13 wheat price the world saw in March of 2022, Chicago wheat prices are now trading in price discount territory near $6. 

What’s happened

Since the war began, the global providers of wheat have stepped up to either attempt to grow more wheat or make sure that what was grown was available to reach the countries in need through protected safe vessel passage. This combination allowed the world to feel secure that wheat would be available to the world, thus sending prices lower on the perception of available supply.

With low global wheat prices, one would assume that the world is awash with wheat. That’s just not the case.

USDA’s September WASDE report indicated that global supplies of wheat are slipping lower. World ending stocks of wheat were reduced to 258.6 million metric tons, well below pre-report estimates looking for ending stocks to be closer to 264 mmt.

Supply was cut 7.2 mmt and usage was mostly unchanged, taking world ending stocks down 7 mmt from last months report.

This global ending stock number is actually the lowest since 2015/16.

From marketing perspective

The combination of strong demand and lower production is leading to lower global ending stocks for many countries around the world. And many of those countries are the leading global exporters of wheat.

First, let’s look to our friends to the north. On the recent USDA report, Canadian wheat production was decreased 2.0 million tons to 31.0 million metric tons. Since the USDA report was released, Statistics Canada pegged the crop even lower, putting their 2023-24 all wheat production at 29.835million metric tons.

Australia has been dealing with drought. USDA’s WASDE report showed Australia with lower production by 3 million metric tons, to 26 million. Production in Argentina was lowered to 16.5 million metric tons, down from 17.5 last month. A decrease in production was also noted for the European Union with production coming in at 134 million metric tons, down from 135 last month. When looking at all of the information, according to USDA, “If realized, this would be the first year-to-year decline in global wheat production since 2018/19.”

Prepare yourself

With wheat prices trading dramatically lower for over one year, the tide may be turning as fundamentals, technical charts, and seasonal price aspect may be aligning for a price recovery bounce at a minimum.

From a technical perspective, December Chicago wheat futures posted a bullish hook reversal after the WASDE report, as the news of lower global supplies was deemed supportive.


Looking at the 5- and 15-year price pattern, the seasonal price tendency for December Chicago wheat futures suggest a one month price recovery may be possible soon, often in conjunction to last trading day for the September contract.  

Of course, past performance is not indicative of future results, but this is something to be mindful of. It may provide a marketing opportunity for producers should a price rally occur.

Traders will also be eying global geo-politics next week when UN Secretary-General Antonio Guterres discusses the potential for a new Black Sea grain deal with Ukrainian President Volodymyr Zelenskiy, Turkish President Recep Tayyip Erdogan and Russian Foreign Minister Sergei Lavrov.

For a market that feels like it has been stuck on an “automatic sell button” for the past year, it might be time to re-think that strategy and wake up to the bargain buy value that the current wheat price represents.

Reach Naomi Blohm at 800-334-9779, on Twitter: @naomiblohm, and at [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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