Wheat Market Outlook – December 23, 2024

Wheat Tender: Saudi Arabia, December 17, 2025

Source: Mercantile

Saudi Arabia originally tendered for 595k mt of Feb-Apr milling wheat but instead bought 804k mt at $262.52-$269.89/mt. The price was dependant on the shipping window and destination port.
Leading into the tender it was evident that Romania and Bulgaria would price well at the tender. We learned later in the week that South American wheat (largely from Argentina) also won a significant portion of the tender.
There was one sale at $280/mt where Russian wheat was sold to a riskier port for April.
Both U.S. and Australian wheat were far to expensive to win any business.

Global Wheat Production and Trade

There is a lot of competition in the wheat markets as wheat is produced around the world. Below is a brief synopsis on last week’s market events in the major wheat origins.

FUTURES

2025 contract Chicago winter wheat closed at $533-0, unchanged on Friday, down 19-2 cents on the week.
2025 contract Kansas winter wheat closed at $544-6, up 1-4 cents on Friday, down 12-2 cents on the week.
2025 Minneapolis hard red spring wheat closed at $690-2, up 3-4 cents on Friday, down 8-2 cents on the week.
U.S. wheat futures are currently trading 2-3 cents higher at the time of writing.

Canadian Wheat

March spring wheat contracts returned to the bottom end of the range last week. Although tested on Thursday, the $5.85 support continues to hold. At the end of the month, spring wheat will be forced to decide if it will continue to follow the channel lower through the $5.85 support or break above the channel and trade higher.

Source: Barchart

The AAFC updated its S&D to incorporate Stats Canada’s production estimates. Recall that STC recently raised Canadian non-durum wheat production by 829k mt to 29.1 million mt, up 1 per cent from last year. The AAFC accounted for the larger production by raising its demand estimates. The AAFC increased its export number by 450k mt from November to 21.25 million mt, this now reflects a 2 per cent decline in exports from last year. Domestic feed use was raised by 378k mt to 4.4 million mt, up 13 per cent from last year. Ending stocks were left at 3.8 million mt, down 10 per cent year-over-year.

Source: Mercantile, based on AAFC data

While the average cash value of spring wheat in western Canada has steadily improved from the harvest lows. The heavy lifting has been done entirely by the basis and not the futures. Since the harvest lows that were established at the end of August, the average cash price of wheat has appreciated by $1.40/bu. Over 90 cents of the increase was due to an improvement in the basis, while futures only improved by less than 50 cents. Similarly, the 12-cent improvement in cash bids since the beginning of December has been entirely in the basis which is up 13 cents while futures were a penny lower. The main reason for the improvement in the basis is the weakening of the Canadian dollar.

Source: Mercantile, based on PDQ data

Canadian non-durum wheat exports in week 19 were 536.1k mt. The season total now 7.8 million mt, down 1 per cent form last year and inline with the AAFC’s fresh export estimate. Deliveries remained strong in week 19 at 578.3k mt, keeping the visible supply unchanged at 2.4 million mt.

Source: Mercantile, based on CGC data

Canadian Durum

The AAFC decreased feed demand slightly (14k mt) from its November report, but otherwise left its estimates unchanged. Stats Canada’s 163k mt decline in production was largely taken out of ending stocks which were reduced by 150k mt to 800k mt. This now reflects a 60 per cent increase on last year with an unchanged stock/use ratio of 11 per cent. Stats Canada’s 6.3 million mt production estimate reflects a 35 per cent increase in production year-over-year.

Source: Mercantile, based on AAFC data

Canadian durum exports in week 19 were large at 310.3k mt. Most of the exports in week 19 were from Vancouver (181k mt), but there was also 91.5k mt shipped from the St. Lawrence and 21k mt shipped from Thunder Bay. YTD exports are now 1.9 million mt, up 70 per cent from last year compared to the AAFC’s 4.9 million mt estimate which reflects a 38 per cent increase in exports.

Source: Mercantile, based on CGC data

Global Durum

Algeria bought an unknown volume of Mar-Apr durum on Wednesday at $340-352/mt (depending on vessel size and shipping window). The average price calculates to about $9.35/bu at the elevator in Saskatchewan. Upwards of 300k mt of Canadian durum is thought to have been traded. Tunisia bought 100k mt of durum at $339.49-$340.69/mt. The price, which calculates to about $9.10/bu at the elevator in Saskatchewan is though to be too low for Canada to have traded and was likely filled with EU or Turkish durum. Although the average C&F price for durum has been falling since mid November, the weak Canadian dollar means that the calculated price at the elevator in Saskatchewan has been relatively consistent over that time.

Source: Mercantile

We would target sales up to 55 per cent sold at $9.50-$10.00/bu depending on your location.

U.S. Wheat

U.S. wheat futures were lower last week. The strong U.S. dollar and cheap supplies from the southern hemisphere pressured prices.
Weekly U.S. wheat sales were within expectations at 457.9k mt (16.8 million bushels). Total commitments of 594 million bushels are 9 per cent ahead of last year compared to the USDA’s estimate for a 20 per cent improvement in exports.
The decline in wheat values has made it comparatively cheap to corn and will make it more competitive in feed markets. Wheat holds just an 89-cent premium over corn compared to the average $1.44 premium it has commanded since October.

Source: Barchart

U.S. HRS for Jan. 2025 is valued at $284.00mt FOB PNW (down $5.00/mt from last week). FOB Gulf HRW 12/13.5 pro is valued at $254.00/mt (down $7.00/mt from last week); Gulf HRW 11/12.5 pro is at $246.00/mt (down $7.00/mt from last week).

Australian Wheat

Australian wheat futures were pressured along with the rest of the wheat complex to 4-month lows. The weakening Australian dollar help stabilize some of the losses.
FOB values in Australia: Jan. 2025 APW, WA was valued at $259.00/mt (up $6.00/mt from last week).

Argentine Wheat

Wheat harvest in Argentina is now 76 per cent complete. The average yield rose from 2.7 tph to 2.9 tph over the week. BAGE left its production forecast at 18.6 million mt.
FOB Argentine 12 pro wheat upriver for Jan. ’25 is $200/mt (up $2.00/mt from last week).

EU Wheat

EU wheat exports are 30 per cent behind last year at 11 million mt.
FranceAgriMer cut its 2024/25 wheat export estimate by 10 per cent to 3.5 million mt. This is now 66 per cent below last year’s volume.
Coceral estimates the 2025/26 EU wheat area will be 21.5 million hectares and production will be 126 million mt. This is essentially the starting point of their estimates for the last season.
French winter wheat area for 2025/26 is expected to expand by 9 per cent to 4.5 million hectares. Larger abandoned area however means that harvested area is expected to decline by 1 per cent year-over-year.
German farmers are said to have seeded more winter wheat this fall. The winter wheat area in the country is expected to grow by 12 per cent from last year to 2.8 million hectares.
EU FOB prices: 2025 French 11 pro wheat closed at $239.00/mt (down $2.00/mt from last week); Jan. 2025 German 12.5 pro wheat closed at $246.00 (down $2.00/mt from last week); Jan. 2025 Baltic 12.5 pro wheat closed at $247.00/mt (down $2.00/mt from last week).

Black Sea Wheat

Russia cut is wheat Feb-June export quota by an additional 400k mt to 10.6 million mt. This is now 62 per cent less than last year’s 29 million mt quota. The cut was made due to the continued rapid export pace, and the smaller than expected harvest.
SovEcon lowered its estimate for Russia’s 2025/26 wheat crop from 81.9 million mt to 78.7 million mt. The decrease was due to poor crop conditions and below average precipitation. Estimates for Russia’s upcoming crop now range form 78.7 million mt to 84.9 million mt.
We have Russian FOB values for 12.5 per cent protein wheat for Jan. 2025 at $237.00/mt (up $1.00/mt from last week).

Significant Purchases/Trades

- Saudi Arabia bought 804k mt of Feb-Apr milling wheat at $262.52-$280/mt.
- Algeria bought an unknown volume of Mar-Apr durum wheat at $340-352/mt. The tender is thought to have included upwards of 300k mt of Canadian durum.
- Tunisia bought 100k mt of milling wheat at $255.39-$257.37/mt and 100k mt of durum wheat at $339.46-$340.69/mt. The price of Tunisia’s durum tender indicates it was likely EU or Turkish durum.
- Jordan passed on its tender.

Significant Events Over the Past Week

China imported just 70k mt of wheat in November, down 68 per cent from the October volume and 89 per cent less than last November.
Morocco extended its wheat import subsidy until the end of April. The subsidy has been in effect for almost the entirety of the 2024/25 season. Morocco suffered another crop failure last harvest and dryness persists over the majority of Northern Africa.
Egypt’s government approved another $500 million for GASC to use for wheat procurement over the next five years.
The U.S. dollar index reached a two-year high of 108.5. Comments from the Federal Reserve last week indicated a more hawkish monetary policy for 2025.

Mercantile’s Weekly Outlook

Mercantile expects the reduced Russian export quota (now 10.6 million mt for Feb. 15 – June. 30, 2025 vs. 29 million mt last year) will be supportive to other wheat export origins and push more demand elsewhere. Mercantile also thinks wheat has become cheap relative to corn, and there will be correction for wheat futures, especially if corn remains in good demand. Mercantile would hold additional sales for now.