Head of Commodity Strategy
Key points
Wheat futures in Chicago and Paris are showing signs of recovery after recently hitting four-year lows, supported by the outlook for a poor harvest in Western Europe, particularly in France, the EU's largest producer. Heavy rainfall in late 2023 disrupted winter wheat sowing, leading to poor crop establishment, increased diseases, and lower overall quality. Last month, the French agriculture ministry sharply reduced its 2024 soft wheat output estimate, now expected to be 25% below last year's, marking one of the worst harvests in 40 years. Southeastern Europe also faced extreme heat, impacting spring crops due to drought.
Supporting the recent recovery are dry weather concerns in the US and an announcement from Ukraine's agriculture ministry, limiting the country’s 2024-25 wheat exports to 16.2 million tons. US wheat exports have also surpassed last year's pace. On the demand side, Egypt, one of the world's largest wheat buyers, issued its biggest-ever wheat tender last month, nearly 20 times its usual size, following President Abdel Fattah al-Sisi’s decision, driven by food security concerns.
Each month, the US Department of Agriculture (USDA) releases its forecast for wheat carryover stocks. In August, the USDA projected world stocks at the end of the 2024/25 marketing year to reach 257 million tons, 9 million tons below the previous year and 26 million tons under the five-year average. US ending stocks were forecast at 828 million bushels, slightly above the five-year average of 758 million. The USDA’s next update is due on September 12.
Ample cheap supply of wheat from Russia, plentiful U.S. production and expectations of large harvests in Canada and Australia may counter the risk of a strong rebound in prices. However, large bets on lower wheat prices by speculators in the Chicago market has for now left the market vulnerable to a short covering.
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Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Commodity Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Head of Commodity Strategy
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