Chicago wheat futures are now back to trading near the $5 a bushel price point, a value not seen since early 2020. It has been a wild price ride in just four short years.
Wheat futures reached a price pinnacle in late February 2022, after Russia invaded Ukraine. Wheat futures traded nearly as high as $13.50 a bushel after the invasion. Since then, wheat prices have been slowly trading lower as the world breathed a sigh of relief that despite the ongoing war, wheat is still being produced throughout the Black Sea region.
Acting nonchalantly, wheat futures continue to trade in a lackluster, lower-price pattern. It feels like no matter the global supply news regarding wheat and no matter the geo-political conflicts occurring in major wheat growing regions of the world, wheat futures remain aloof to the happenings pertaining to it.
Will wheat futures continue to endure a quiet lull for prices at these historically lower values, or will bargain buying begin?
From a marketing perspective
Looking at U.S. supplies of wheat, the Aug. 12 U.S. Department of Agriculture report increased the “all wheat” U.S. yield by a very modest .4 bushels per acre, to 52.2 bushels per acre. This increase in yield was offset by lower harvested acres for “all wheat.” The USDA lowered harvested acres by 900,000 acres. The July report had harvested acres at 38.8 million, and the August report instead showed the lower value of 37.9 million acres.
The total wheat production number in the United States was then lowered to 1.982 billion bushels, down from 2.008 billion bushels on the July report. With the lower production, “all wheat” ending stocks for 2024-25 were also lowered to 828 million bushels, down from 856 million bushels on the July report. While the reduction of ending stocks was supportive, the 828 million bushels number is still higher than 702 million bushels from the 2023-24 season and noticeably higher than 507 million bushels, which the industry saw in 2022-23. This is why wheat prices overall remain at lower values.
However, looking at the global picture, the scenario gets a bit more interesting. In the world, wheat demand remains strong while total global supplies are being continually reduced.
The result is that global ending stocks for wheat for the 2024-25 crop year are now pegged at 256.62 million metric tons, down from 257.24 MMT in the July report. This is down from 262.36 MMT in the 2023-24 crop year, and also still down from 271.44 MMT from the 2022-23 crop year.
Prepare yourself
While wheat futures seem content to sit in a modest trading range for now, the global demand picture and lower global supplies of wheat are something that must not be ignored.
While past performance is not indicative of future results, it is also important to be aware of a seasonal pattern for December Chicago wheat futures that suggests prices begin to gain in value starting in mid- to late- September. With global strife continuing, and U.S. elections just around the corner, some countries may decide to step up and secure wheat supplies as we head into late 2024. Global demand is strong, and the current wheat value is a potential bargain.
If you have questions, you can reach Blohm at [email protected] or find her on twitter @naomiblohm.
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