Wheat Market Outlook – March 17, 2025

USDA: March World Agriculture Supply and Demand Estimates

Source: Mercantile, based on USDA data

In its March update, the USDA lifted global wheat supply by 5.4 million mt.
Global beginning stocks were 2 million mt higher and production was 3.4 million mt higher.
The increase in production was led by Australia where the USDA raised production by 2.1 million mt to match ABARES’ 34.1 million mt estimate. Production in Ukraine and Russia were raised by a combined 600k mt. Argentina’s crop was lifted by 800k mt.
Consumption was higher by an additional 2.9 million mt.
Global trade was reduced by 920k mt. Exports from Russia were 1 million mt lower at 45 million mt, and EU exports were 500k mt lower.

With supply rising higher than demand, ending stocks were 2.5 million mt higher. Most of the increase in ending stocks were in exporting nations: Argentina, Australia, Russia, and Ukraine. We expected ending stocks in the EU would be higher, but the USDA increased domestic demand by the full 1 million mt decline in EU exports. Global ending stocks of 260.1 million mt are now 3.5 per cent less than last year.

Cash Wheat

Source: Mercantile

Global cash wheat prices were higher across all major wheat origins last week.

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

May ‘25 contract Chicago winter wheat closed at $557-0, down 5-4 cents on Friday, up 5-6 cents on the week.
May ‘25 contract Kansas winter wheat closed at $586-0, down 1-4 cent on Friday, up 21-2 cents on the week.
May ‘25 Minneapolis hard red spring wheat closed at $601-6, down 2-0 cents on Friday, up 9-0 cents on the week.
U.S. wheat futures are currently trading 15-20 cents higher at the time of writing this morning as a cold front descended over the U.S. winter wheat belt over the weekend re-igniting thoughts of winter kill.

Canadian Wheat

Tariff Update

CUSMA compliant goods (excluding steel and aluminum) continue to be allowed into the U.S. tariff free. Meanwhile, many U.S. grains (including wheat and durum) are included in Canada’s retaliatory tariffs that are currently in effect. The U.S. seems committed to implementing its “retaliatory tariffs” on Apr. 2, 2025, so the concern is that Canadian grain will again face tariffs since Canada is currently tariffing U.S. grains.
Stats Canada estimated that Canadian farmers will seed 19.4 million acres of spring wheat in the upcoming year. This reflects a 2.5 per cent increase in spring wheat area. Stats Canada’s estimate is based off a December seeding intensions survey and does not account for the recent tariff action, specifically the hit that Canola values have taken. However, we estimate returns for canola continue to be competitive with spring wheat. So, our current estimate does not diverge significantly form Stats Canada’s.

Source: Mercantile, based on STC and Mercantile data

Week 31 non-durum wheat exports were 100k mt less than the previous week at 393.6k mt. The season total of 12.4 million mt now reflects a 3 per cent decline from last year, down another point from last week. Deliveries continue to be large. Another 557.4k mt of non-durum wheat was added to the elevator system, lifting the visible supply to 2.8 million mt.

Source: Mercantile, based on CGC data

Canadian Durum

Stats Canada is estimating durum area will be unchanged from last year at 6.4 million acres. Given the profitability of durum versus competing crops, we think durum area will rise 2 per cent to 6.5 million mt.

Source: Mercantile, based on STC and Mercantile data

Canadian durum exports in week 31 were 126.4k mt. Total exports of 3.2 million mt remain 72 per cent ahead of last year. Deliveries remain strong at 168.1k mt.

Source: Mercantile, based on CGC data

Durum bids remain fairly strong considering the tariff situation. Bids were $9.00-$9.25/bu last week. We are 80 per cent sold and would finish old crop sales at these levels.

U.S. Wheat

Despite what was perceived to be a bearish USDA report, U.S. wheat futures closed higher on the week as strong export sales, specifically Hard Red Winter (HRW) wheat sales, supported the market.
The USDA raised U.S. wheat stocks last week. The 25-million-bushel increase was due to higher imports (up 10 million bushels) and lower exports (down 15 million bushels). The increase in imports was shared between Hard Red Spring (HRS) and durum wheat (from Canada), and lower exports were shared between HRS, Soft Red Winter (SRW), and Durum. U.S. ending stocks are now estimated to be 819 million bushels, up 18 per cent from last year.

Source: Mercantile, based on USDA data

The USDA added 5 million bushels to the U.S. HRS balance sheet and reduced exports by 5 million bushels. HRS exports are now expected to be 265 million bushels, up 13 per cent from last year. The current HRS export pace is 7 per cent above last year. Ending stocks were raised 10 million bushels, to 207 million bushels, up 9 per cent from last year.

Source: Mercantile, based on USDA data

Like spring wheat, the USDA raised U.S. durum imports by 5 million bushels and reduced exports by 5 million bushels. The result was a 10 million bushel increase in ending stocks to 45 million bushels, up 114 per cent from last year. The USDA now has U.S. durum imports up 11 per cent from last year, and exports down 26 per cent. The current export pace is 29 per cent behind last year.

Source: Mercantile, based on USDA data

Weekly U.S. exports sales were above even the highest trade guess at 783.4k mt. There were large sales (238k mt) to Panama last week. Total commitments are now 21.1 million mt, up 14 per cent (10 per cent last week) from last year compared to the USDA’s fresh estimate for an 18 per cent increase in exports. The pace of exports suggests to us that the USDA may have been premature in lowering its export estimate. The four-week average sales pace is 17.7 million bushels/week compared to the 0.4 million bushels/week that was exported from now until the end of the season last year.
Dry conditions continue to be a concern for the U.S. winter wheat crop. Central and western Kansas and southeastern Colorado continue to have low soil moisture and below-average precipitation. Warm temperatures were experienced from Washington to North Dakota and could further increase the moisture stress on crops.

The condition of the Kansas wheat crop is reported at 52 per cent Gd/Ex, down from 54 per cent last week and 53 per cent last year. The Texas crop is rated as 34 per cent Gd/Ex, compared to 44 per cent at this time last year.
U.S. HRS for Apr. 25 is valued at $266.00mt FOB Pacific Northwest (unchanged from last week) FOB Gulf HRW 12/13.5 pro is valued at $264.00/mt (up $8.00/mt from last week); Gulf HRW 11/12.5 pro is at $256.00/mt (up $8.00/mt from last week).

Australian Wheat

Despite lower U.S. futures prices and a weaker U.S. dollar, Australia’s freight advantage and large crop is keeping them as a strong competitor into the Asian market.
China’s 15 per cent tariffs on U.S. wheat should push what little demand the country has remaining towards Australia and Canada.
FOB values in Australia: Apr. 2025 Australian Premium White Wheat (APW), WA was valued at $248.00/mt (up $1.00/mt from last week).

Argentine Wheat

Wheat values in Argentina appreciated over the week.
FOB Argentine 12 pro wheat upriver for Apr. 2025 is $00/mt (up $11.00/mt from last week).

Indian Wheat

India’s government is forecasting the wheat crop will be 115.4 million mt. A crop this size would not require significant volumes (if any) of imports. Last week we reported the Millers Association is forecasting the crop will be 110 million mt which would require 2-3 million mt of imports.

EU Wheat

French wheat exports are expected to be 3.2 million mt in 2024/25, down 69 per cent from last year.
COCERAL lowered its forecast for EU wheat production to 124.4 million mt. This remains 10 million mt above last year.
The condition of the French soft wheat crop was unchanged from last week at 74 per cent Gd/Ex. This remains above last year, but roughly 10 points below average.
EU FOB prices: 2025 French 11 pro wheat closed at $247.00/mt (up $4.00/mt from last week); Apr. 2025 German 12.5 pro wheat closed at $254.00 (up $4.00/mt from last week); Apr. 2025 Baltic 12.5 pro wheat closed at $253.00/mt (up $4.00/mt from last week).

Black Sea Wheat

SovEcon estimated that Russia’s March wheat exports will be 1.4-1.8 million mt compared to 4.8 million mt last year and the five-year average of 3.3 million mt. The USDA expects Russian wheat exports will be 45 million mt while most think Russian exports will be closer to 42 million mt.
A grain vessel loading in Ukraine’s Odessa destined for Algeria was hit by a Russian missile last week.
We have Russian FOB values for 12.5 per cent protein wheat for Apr. 2025 at $249.00/mt (up $2.00/mt from last week).

Significant Purchases/Trades

Algeria bought 450k mt of May wheat at $268.50/mt.
Tunisia bought 100k mt of Apr-May shipment milling wheat at $268.67-$269.77/mt.
U.S.A export sales were 783.4k mt.
There are rumors Morocco recently purchased 500-600k mt of March wheat.
Jordan seems to have fulfilled its old crop needs and is now starting to tender for new crop.

Significant Events Over the Past Week

The U.S. dollar closed at 1.4, currency markets were more stable last week.
President Trump’s tariffs caused the seventh fastest stock market slump on record on Thursday when the S&P 500 dropped below 10 percent.
Domestic wheat prices have risen 10 per cent since Egypt switched its buying agency from GASC to Mostakbal MISR. Domestic traders say inexperience, an unknown trading reputation, and inefficiency have decreased domestic stocks, pushing up prices. Reserves have declined to just five months of supply compared to seven months in mid-2024. Instead of buying directly in global tenders. MISR has largely sourced from local Egyptian importers, who get most of their supply from Russia.
Friday’s Commitment of Traders report indicated a total of 4,987 contracts trimmed from the spec fund net short in Chicago wheat, to 77,412 contracts as of 3/11. In Kansas City wheat, managed money added back 9,440 contracts to their net short position as of Tuesday at 48,722 contracts.
Domestic and export demand for U.S. corn remains strong and the USDA should have increased its estimate for both. The trade wars have brought uncertainty and has let the steam out of the corn market. The U.S. remains the only major origin until Brazil’s Safrinha crop is ready in July

Mercantile’s Weekly Outlook

Despite some jostling in the price of competing origins, Mercantile says global prices have remained relatively steady despite the volatility experienced in North America. Old crop wheat supply seems to be matching demand, albeit, as per the USDA, stocks in major exporting nations will be higher than originally thought. According to Mercantile, trade tensions will add instability to the spring market which already has higher volatility given its focus on new crop production potential. Mercantile saw “specials” 20+ cents above posted bids last week. They would take advantage of opportunities as they present themselves.