Russia, the largest wheat exporter in the world, currently facing a decline in wheat production for the MY 2024-2025. According to the Analysts, the harsh weather conditions along with growing risk of spring drought and frost in western region in Russia are the reason for that.  To manage domestic inflation from lower supply, the Russian government implemented an export quota of 10.6 Mt on wheat, starting from 15 February to 30 June. Meanwhile, a sharp drop in opening stock and a 0.4% decrease in production to 22.9 Mt this season have limited availability in Ukraine (USDA). As a result of which, the USDA projects exports for Russia and Ukraine down by 17% and 14% year-on-year, at around 45.5 Mt and approx. 15.5 Mt, respectively.

Although the production decreased in Russia, the main importer of Russian Wheat, Egypt is expecting a decline in the demand due to due to slower economic growth, as the country's GDP in 2023/24 expanded at a slower pace than the previous year. Despite international wheat prices reaching a four-year low in 2024, the cost of foreign wheat imports has either increased or remained stable, as the Egyptian pound remains near historic lows against the U.S. dollar. According to news reports, State grain buyer Mostakbal Misr secured 1.267 million tons by the end of December, which was sufficient to meet the country's needs until June. However, it added approximately 250,000 tons more in January so there will be demand from there end. Previously, Egypt's former state buyer, the General Authority for Supply Commodities, typically purchased between 4 million and 5 million tons annually which gradually decreased for this coming year.

Additionally, one of the top importers of the world, China expected to decrease the import of wheat in the first six months of 2025 as China’s wheat production till June 2025 will be high by 2.6% from previous year stated by USDA. China has recently postponed imports of as much as 600,000 metric tons, with traders anticipating a decrease in purchases in the months ahead. Moreover, according to China National Grains and Oils Information Center the import will be decreased by 37% YOY to 8 Mn metric tons.  As China’s import shows a potential decline phase, the top exporter of wheat in China, Australia will get impacted, who have just completed harvesting a near-record crop and have grown increasingly dependent on China's demand in recent years.

Also, another importer of Australian wheat, Indonesia expected a decline in demand too. According to USDA, Indonesia's wheat imports for 2024/25 are expected to drop by 8% compared to 2023/24, when imports reached record highs due to increased demand from feed mills, major events boosting wheat flour-based food consumption, and the search for other cheaper alternatives such as rice alternatives. Recently, the government projected rice output will rise to 32.8 million tons this year, up from 30.62 million tons in 2024, following last year's crop losses due to El Niño. This increase in local rice production is encouraging food processors to switch back to using domestically produced rice flour instead of imported wheat. Additionally, the weak rupiah is further hindering wheat purchases.

In conclusion, the global wheat supply chain is facing challenges due to a combination of reduced production and shifting demand. Russia, the world’s largest exporter, is seeing a decline in wheat output due to adverse weather conditions. Major importers like Egypt, China, and Indonesia are also adjusting their consumption patterns. Egypt's demand is expected to drop due to slower economic growth and a weak currency. Similarly, China’s wheat imports are set to decline due to increased domestic production, while Indonesia’s demand is decreasing because of higher rice output and currency issues. These shifts in both supply and demand are likely to impact global wheat trade, with lower consumption and rising costs, reshaping the dynamics of the wheat market.