Global wheat prices are anticipated to face downward pressure in 2025, as record production levels outweigh short-term support from tightening supplies. Analysts have revised their forecasts for Chicago Board of Trade (CBOT) wheat prices lower, citing ample U.S. stocks and bearish market sentiment. While global wheat production is expected to hit a record 793.2 million tonnes, declining output in Russia and Europe may contribute to tightening supplies later in the year.
The U.S. Department of Agriculture (USDA) forecasts a nine-year low in global wheat carryover stocks, expected to drop to 258.8 million tonnes. Risks tied to the ongoing Russia-Ukraine conflict, climate anomalies such as La Niña, and broader geopolitical trade tensions could significantly influence wheat prices in the coming months. While bearish sentiment prevails in the short term, analysts project prices to strengthen in late 2025 as tightening global supplies offset market pessimism.
Key Market Developments:
- CBOT wheat prices are now forecasted to average $5.80 per bushel in 2025.
- Global wheat production is projected to reach an all-time high of 793.2 million tonnes.
- U.S. ending stocks are expected to rise 17% year-on-year to 815 million bushels.
- Russian wheat production is estimated to decline by 10%, dropping to 81.5 million tonnes.
- Tightening global supplies are predicted to provide price support in late 2025.
Despite record global wheat production, the market faces considerable challenges. The latest forecasts from BMI have revised CBOT wheat prices downward to an average of $5.80 per bushel in 2025, largely driven by increased U.S. ending stocks. The USDA’s forecast for the 2024-25 all-wheat season sees a slight decline in the farm price to $5.55 per bushel. Analysts note that a 17% year-on-year rise in U.S. ending stocks, projected to reach 815 million bushels, further dampens market sentiment.
Compounding these factors is the bearish stance among institutional investors, with managed money participants holding a net short position of 95,009 wheat contracts as of December 2024. Despite a forecasted 3.6% year-on-year drop in global wheat ending stocks, sentiment remains pessimistic, largely due to abundant U.S. stocks and ongoing trade uncertainties.
Geopolitical and Climate Factors at Play
The ongoing geopolitical tensions, particularly the Russia-Ukraine conflict, remain a significant factor in wheat price volatility. Analysts anticipate a 10% reduction in Russian wheat production, falling to 81.5 million tonnes. This would also result in a 30% drop in Russian ending stocks, expected to decline to 8.2 million tonnes. Additionally, European wheat production is forecast to fall by 9% year-on-year, driven by adverse weather conditions, which could further tighten global supplies.
Nevertheless, analysts predict a potential price recovery in the latter half of 2025, driven by the tightening global wheat supply. Factors such as geopolitical risks, unpredictable weather patterns, and the pace of interest rate adjustments by the U.S. Federal Reserve remain key variables that could influence the market’s trajectory in the second half of the year.
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