Since July, futures prices for all three wheat categories have fallen, losing over $2 per bu. Lately, it seems that no matter the friendly headline that pops up on the newswire, wheat futures remain content to stay flat.

Will the market ever find upward momentum again?

What’s happened

Over one month ago I pointed out that although wheat prices had been decreasing, so were global supplies. Ending stocks are trending lower for both U.S. and global ending supplies.

Yet, the market seems to be ignoring this fact. Instead, traders seem content with the notion that because wheat is grown all over the world, supplies of wheat will be available anytime.

From a marketing perspective

Looking at recent USDA data, China is the world’s largest grower of wheat, producing 137 million metric tons. Next is the European Union, producing 134 mmt, followed by India with 113.5 mmt. Rounding out the top five global producers is Russia with 85 mmt and United States with 49.31 mmt.

While wheat supplies seem plentiful, it should be noted that many countries will not have a bumper crop. Australia is currently harvesting a smaller crop, pegged at 24.5 mmt and Argentina's wheat crop has been reduced by drought coming in at 16.5 mmt.

Russian supplies and exports

According to the most recent USDA report, Russia will grow 85 million metric tons of wheat for the 2023/24 crop year, with expectations that they will export 50 million metric tons.

Recently, agricultural research firm SovEcon, has reduced its outlook for Russian wheat exports in the 2023/24 marketing year, to 48.8 million metric tons for the year. We will see if USDA acknowledges that notion in the November WASDE report.

China picks up import pace

According to the October USDA WASDE report, Chinese wheat production for the 2023/24 crop year is projected at 137 million metric tons. It is important to note that China uses everything it grows for its domestic needs, and on top if it will need to import 11 million metrics tons of wheat from global suppliers.

China’s needs, to import wheat, has been noted in the marketplace. In mid-October, USDA announced an export sale of 181,000 metric tons of soft red winter wheat to China, following another sale of 220,000 metric tons to China the prior week. Previously, the U.S. had not reported wheat sales to China in its daily morning reporting system since July 2021.

In addition, a recent article from Reuters pointed out that China bought around two million metric tons of new-crop Australian wheat in October, for shipments starting in December. The article also disclosed that China had booked approximately 2.5 million metric tons of French wheat since September, for December-March shipment.

While China has become a net importer of wheat, they sure seem to have took advantage of the recent price pull back, and secured a portion of their needs.

Prepare yourself

With wheat prices back to historically lower price levels, will additional end users step up purchases? After all, there are two global wars to contend with, and any flare up may affect commodity prices. Will end users want to get in front of that to secure supplies? Or have end users gone back to a complacent “hand to mouth” purchase mentality, and will only buy when needed?

What global news is needed to actually get the funds to exit their hefty net short futures positions? I’m not sure is the answer to the above questions.

Yet for now, the price trend remains down for wheat.

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

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