For the Quarter Ending December 2024
North America
In the fourth quarter of 2024, U.S. wheat export prices exhibited a mixed trajectory, influenced by a combination of domestic and international factors. While prices initially remained elevated due to tight global supply conditions, driven by adverse weather in key wheat-producing regions and historically low inventory levels, a gradual downward trend emerged by December. Favorable global harvests, particularly in Argentina and Australia, along with competitive export offerings from Russia, exerted downward pressure on U.S. wheat prices.
Geopolitical developments, including the reopening of export routes from Ukraine, further intensified competition, limiting U.S. export competitiveness. Domestic market activity reflected subdued trading sentiments as buyers operated on a need-based approach, exacerbated by sluggish demand from major importing regions such as Asia and Africa. Broader economic headwinds, including persistent inflation, high interest rates, and reduced global wheat consumption, compounded the downward price pressure.
The December 2024 FAO Cereal Price Index showed stability, with U.S. wheat prices largely subdued despite robust export forecasts for the 2024/25 season. Contractionary trends in U.S. manufacturing, evidenced by a PMI drop to 49.4 in December, added to the cautious market outlook, with weaker export orders and lower capacity utilization impacting broader economic activity. Overall, the U.S. wheat market faced significant challenges in maintaining momentum amid global competition, soft demand, and economic constraints throughout quarter four.
Asia Pacific
In Q4 2024, the Indian wheat market experienced dynamic fluctuations shaped by supply constraints, government interventions, and shifting demand patterns. October saw escalating wheat prices driven by reduced domestic availability due to lower-than-expected production caused by adverse weather and a curtailed procurement season earlier in the year. The festive season amplified demand for wheat-based products, exacerbating the supply crunch and inflationary pressures. In response, the government retained export restrictions and explored tariff relaxations for imports, although high global prices and logistical challenges limited their efficacy. By November, wheat prices reached record highs as supply tightened further due to unseasonal rains, decreased acreage, and increased input costs. Robust export demand and speculative trading intensified the scarcity, prompting traders to stockpile and inflate prices. However, by December, prices began to stabilize, showing a marginal decline due to ample domestic stockpiles bolstered by government procurement efforts and weaker export demand. Subdued consumption, influenced by inflationary pressures and declining global wheat prices, contributed to this stabilization. As a result, overall, the market's trajectory highlighted the interplay between domestic supply-demand dynamics, global trade factors, and the impact of government policies on price trends, setting the stage for potential adjustments in early 2025.
Europe
In the fourth quarter of 2024, wheat export dynamics in Russia demonstrated significant volatility due to a combination of restrictive government policies, adverse weather conditions, and global market disruptions. October witnessed a sharp rise in export prices, driven by the implementation of a price floor, increased export duties, and unfavorable weather impacting wheat yields. These measures, coupled with geopolitical tensions in the Black Sea, tightened supply availability and elevated logistical risks, underscoring Russia's critical role in global wheat trade. Conversely, November saw a notable decline in export prices, reflecting increased competition from other major exporters like Argentina and Australia, lower regional and overseas quotations and weekend demand arriving from end-user livestock and other sectors. However, this bearish trend was short-lived as December marked another price hike due to poor winter crop conditions, with 37% of the crop in its worst state in decades, raising concerns over yield and survival rates. Government interventions, including tighter export quotas, higher taxes, and mandated domestic sales, further constrained international supply. While European exporters struggled with high costs and declining export volumes, Russia maintained its competitive edge, sustaining higher prices despite global challenges. The outlook for MY 2025-26 hinges on critical factors such as winter crop survival, spring planting, and overall weather conditions, leaving the market sensitive to production and policy developments.
For the Quarter Ending September 2024
North America:
In Q3 2024, the North American Wheat market witnessed a significant uptrend in prices driven by a combination of factors. Excessive wet conditions in various parts of the United States continued to reduced overall wheat availability, causing demand to outstrip supply and putting upward pressure on prices.
While, on the other side, the International demand for U.S. wheat surged, particularly from countries experiencing domestic shortages or geopolitical tensions, which further drove up prices. Higher input costs, including rising prices of fertilizers, energy, and transportation, increased the production cost for U.S. wheat farmers, and these costs were reflected in the export prices. Additionally, the U.S. dollar weakened against major currencies during this period, making U.S. wheat more competitive in global markets. This spurred increased demand, allowing U.S. exporters to raise prices. Trade policies and tariff shifts in other wheat-exporting countries may have also made U.S. wheat more attractive to global buyers, further fueling demand.
Overall, the USA, experiencing the most substantial price changes, navigated a challenging quarter marked by supply constraints and higher demand from end-user industries. Despite a slight decrease from the previous quarter, the overall trend in Q3 was positive and concluded with Wheat priced at USD 250/MT FOB Chicago, reflecting a consistently rising pricing environment. Disruptions like [Black Sea shipping infrastructure damage] added complexity to the market dynamics.
Asia Pacific
In Q3 2024, the APAC Region witnessed a notable surge in Wheat prices, driven by a confluence of factors. The market experienced heightened volatility due to supply constraints stemming from adverse weather conditions impacting key wheat-producing regions. This led to reduced harvest yields, exacerbating the already tight supply situation. Furthermore, robust demand from various downstream sectors, such as food processing and animal feed industries, sustained upward price momentum. In India, the pricing environment for Wheat saw the most significant fluctuations. The market exhibited a consistent upward trend, reflecting the delicate balance between constrained supply and escalating demand. As a result, traders and buyers have been compelled to accept goods at elevated costs, further cementing the price trend. Looking ahead, price rise in other nations ahead of weather issues also impacts the overall wheat availability across the global market, further supporting the higher prices. Overall, this situation underscores the vulnerability of agricultural markets to climate variability and the cascading effects of policy decisions. While, the overall quarter culminated with a price of USD 300.69/MT Ex Bareilly, signalling a persistent bullish sentiment in the pricing landscape.
Europe
In the third quarter of 2024, the European wheat market experienced a consistent upward price trend, driven by supply constraints and strong demand. Wheat prices surged due to a combination of reduced harvests, adverse climatic conditions, and logistical disruptions, which collectively tightened market availability. Ukraine played a pivotal role, witnessing significant price fluctuations as it emerged as a key wheat exporter, catering to heightened global demand amidst limited supply from alternative regions. The quarter saw active export activity from Ukraine, with increased volumes pushing up domestic prices. Ukrainian wheat, valued for its quality and competitive pricing, became a sought-after commodity, particularly in regions where local production had declined. The supply-side was further strained by weather challenges and geopolitical tensions, making it difficult for farmers to meet delivery schedules, thus tightening supply and raising prices. On the demand side, both domestic and international buyers intensified their procurement efforts due to shortages or elevated wheat prices in other markets. This competition drove prices higher throughout the quarter, despite a notable drop at the start. The quarter ultimately closed with a 4% increase in wheat prices compared to Q2, reaching USD 228/MT FOB Odessa. This price rise reflects the market's sensitivity to supply disruptions and robust demand, marking a strong pricing environment for wheat in Q3 2024.
For the Quarter Ending June 2024
North America
In Q2 2024, the North American wheat market experienced a volatile journey, ultimately trending upward despite fluctuations. The quarter began with a downturn driven by substantial offers from major producers like the USA and Russia, alongside robust global exports. This initial decline was fueled by predictions of surplus wheat from large harvests, reduced consumption in flour mills, and a strong dollar making wheat more expensive for foreign buyers.
Mid-quarter saw a price resurgence due to global production volatility, adverse weather in key regions, and geopolitical tensions. A potential North American rail strike raised supply chain concerns, while increased freight charges and logistical delays, particularly in major shipping routes, added complexity. The transition from winter to spring sowing also contributed to price volatility through speculative trading.
However, as June began, prices dropped again, reflecting seasonal pressure from northern hemisphere harvests. The FAO Cereal Price Index decreased, with global export prices falling across all major cereals. The U.S. market faced high supply due to substantial inventories and reduced end-user quotations. Competition from producers like Canada, along with improved weather conditions, weakened U.S. market dominance.
Throughout the quarter, the market remained in flux, resulting in a supply-demand imbalance. The situation led to narrower profit margins and decreased profitability for wheat and other row crops as output prices declined faster than input costs. This volatility underscored the complex interplay of factors influencing the North American wheat market in Q2 2024.
Asia Pacific
In Q2 2024, the APAC region experienced a notable drop in wheat prices due to several key factors. The quarter began witnessing a downward trajectory with a steady upward in the middle and the end of the quarter. Starting with April 2024, Wheat prices witnessed a pessimistic market outlook, with Indian domestic markets experiencing notable weakness and prices dropping by more than 5 percent as April 2024 commenced. This drop in the purchases so far was largely due to late harvesting in some major growing states and also because of the ongoing elections in north India as traders already possessed more than sufficient stocks. Supporting this further, various market players and farmers were additionally resistant to destocking their stocks, resulting in weakened procurements within the market. This drop in procurement could also be on account of farmers holding on to their produce in anticipation of higher rates later during the year or increased buying by private players who are looking to replenish their inventories by selling them at a higher price. Concerning the supply side, there was sufficient availability of Wheat to meet the demands of end-user industries. Moreover, with the arrival of recent harvesting, the inventories concerning Wheat continued to remain on the upper side concerning the overall demand arriving from the region. Spot market transactions involving Wheat were on a moderate level with market demand majorly based on previous stockpiles held by the traders, driven primarily by immediate necessities. Moving further in May and June the prices rebound yet steadily supporting a modest rise in regional and overseas demand. However, despite of steady upward trend, the overall market sentiments remained subdued marking a pessimistic trend. Factors supporting this modest resurgence in the prices were influenced by improved market transactions, a steady rise in procurements among end-users, and farmers holding onto their wheat instead of selling it to the government which further resulted in a decreasing the overall supply available in the market. Another contributing factor is the continuous depreciation of the INR against the dollar, which has made wheat imports costlier for downstream sectors, leading traders and buyers to grapple with higher prices. Conclusively, the pricing environment in India for Q2 2024 has been on the downward side with the supply side still outspacing the demand side of the market.
Europe
In Q2 2024, the European wheat market, particularly in Ukraine, experienced a significant upward trend in prices, driven by a complex interplay of factors that reshaped market dynamics. The quarter was characterized by adverse weather conditions across Europe, including severe droughts and unseasonable frosts, which had a detrimental impact on crop yields and depleted existing stockpiles. These climatic challenges were particularly acute in Ukraine, where unpredictable weather patterns disrupted critical growth phases, leading to diminished harvest prospects and heightened market uncertainty. Supply chain disruptions further exacerbated the situation. The shutdown of key agricultural processing plants and damage to export infrastructure constricted wheat availability, creating bottlenecks in the distribution network. This logistical strain coincided with an increase in global demand, as import-dependent nations rushed to secure their supplies amidst growing concerns of prolonged shortages. Ukraine emerged as the epicenter of price volatility within the region. The country witnessed the most dramatic price changes, driven by a combination of weather-related yield reductions and escalating production costs. Rising input expenses, particularly for fertilizers and fuel, contributed to the upward pressure on prices. Additionally, heightened export demand further strained the already tight supply, pushing prices higher. Seasonality played a crucial role in price dynamics. The planting and flowering stages of wheat crops were especially vulnerable to the extreme weather events experienced during the quarter, amplifying concerns about future harvests and driving speculative activity in the market. Analyzing the quarter's price trends reveals a notable pattern. The Q2 saw a substantial price increase compared to the first quarter. This upward trajectory is further evidenced by a 6% increase from the previous quarter, underscoring the persistent bullish sentiment in the market. The quarter concluded on an optimistic note, reflecting a positive pricing environment despite the numerous challenges faced. This price point indicates that supply constraints were the primary driver of market dynamics, overshadowing demand fluctuations and consistently pushing prices higher.
For the Quarter Ending March 2024
North America
The Wheat market in North America encountered significant challenges during Q1 2024, marked by substantial price fluctuations driven by various factors. Overall, the pricing trend for Wheat in the region has been adverse, witnessing a decline of over 5% compared to the previous year's last quarter. Canada, experiencing the most notable price changes, faced heightened volatility.
Concerns surrounding China's economic slowdown and weaknesses in local livestock sectors, significant importers of wheat from the APAC region, influenced Wheat prices. Additionally, persistently low prices from other exporting markets like Russia, supported by record exports from the Black Sea, continued to exert downward pressure on global wheat prices, impacting North America as well. A key contributing factor to this trend was further supported by the cancellation of major shipments by Chinese buyers, aimed at securing better prices of products from other countries and enhancing food security.
Moreover, the strengthening of the Canadian dollar against other currencies, particularly the US dollar, along with rising shipping costs, further elevated the relative cost of Canadian Wheat for international buyers, contributing to a pessimistic market trajectory. Overall, despite an ample supply within the Canadian market, subdued trade activities led to an bearish outlook for Wheat prices in the country. In conclusion, the pricing environment for Wheat in North America during Q1 2024 remained predominantly negative, influenced by reduced demand, increased shipping costs, and shifting consumer preferences toward other nations. The quarter-ending prices for Wheat FOB Vancouver in Canada were recorded at USD 237/MT.
Asia Pacific
Within the Apac region in the first quarter of 2024 particularly In India, wheat prices declined throughout the quarter, albeit with a modest rise at the outset driven by increased demand from the downstream food industry. However, this uptick was counterbalanced by ample stock availability among market participants. Concurrently, India's manufacturing sector showed substantial improvement, with factory activity expanding at its fastest pace in four months in January, fueled by robust demand and positive outlooks. However, the momentum shifted as February began, and the market witnessed an opposing trajectory. The decline was driven by merchants accumulating higher wheat inventories ahead of new crop arrivals, prompting them to offer existing stocks at discounted prices. This was further influenced by the INR's appreciation against the dollar during the month. Despite this, overall trader momentum remained subdued due to lower-than-expected regional demand. The market situation in India remained uncertain, with demand remaining low. The supply-demand imbalance pressured prices, prompting traders with higher stockpiles to focus on destocking activities, supported by quarter-end practices which also impacted the market, resulting in weakened downstream demand and abundant inventories, further pressuring pricing. Traders and suppliers encountered these challenges, contending with risks to profitability due to declining wheat prices and subdued consumption in both regional and neighboring markets. Additionally, to prevent the risk of material deterioration and mitigate additional storage expenses. Overall, the wheat pricing environment in the APAC region, particularly in India, remained negative, with March prices recorded at USD 292/MT Ex Bareilly.
Europe
The pricing dynamics of Wheat in the European region during Q1 2024 particularly in Russia demonstrated a negative trend with values falling by an average of 5 percent. Overall the market trading sentiments remained muted with the supply side outspacing the global demand side however with a modest rise witnessed in the beginning. This rise in prices was somewhere supported by a gradual increase in trade activity witnessed from Russia ahead of overseas quotations, particularly from South Africa and the Apac region. However, factors such as severe frosts in central Russia and neighboring regions along with logistical challenges from stormy weather in the Black Sea ports were the cause of this market dynamics, leading to uncertainty in future pricing. Conversely, as February commenced, the market witnessed a sudden downward trend in the exporting prices of Wheat. This decline stemmed from interconnected factors that significantly impacted the market. Subdued demand from key regions like North Africa and Southeast Asia played a pivotal role. Despite expectations of strong demand, these regions showed little interest in wheat imports, disrupting the supply-demand balance. Additionally, the devaluation of the Russian ruble and euro against the dollar, along with a consistent rise in freight cost ahead of the trader disruption, kept the overall purchasing sentiments among the regional market and other nations muted, further intensifying the overall price drop. This trend continued until the final month with competitive pricing trajectories sustained by Russian authorities ahead of the global decline in wheat prices, which further contributed to this weakened market sentiment and reshaped the global wheat market's competitive dynamics. In conclusion, Russia indicated an overall pessimistic trajectory throughout the first quarter supported by lulled demand and muted newer quotations, with heighten stockpiles the latest prices ending the quarter1 in March for Wheat in Russia was recorded at USD 205/MT FOB Novorossiysk,
