The global wheat market is facing a potential supply crunch in the 2025-26 season due to declining harvests in the Black Sea region. While current stocks show some improvement, the situation remains precarious, especially considering the critical role of Russian and Ukrainian wheat exports.
Current Market Dynamics
The global wheat stocks-to-use (SU) ratio among major exporting countries has shown a recent uptick:
- Initial projection for 2024-25: 14.56% (17-year low)
- Current estimate: 15.89% (second highest of the last six years)
- Long-term average (late 2010s): Above 18%
Black Sea Region Concerns
Russia and Ukraine, accounting for approximately 30% of global wheat exports, are expected to have meager harvests in the upcoming season. This raises serious concerns about the sustainability of global wheat supplies, especially considering the following factors:
- Declining export capacity from key regions
- Geopolitical tensions impacting agricultural production
- Logistical challenges in the Black Sea region
Market Adjustments
The recent improvement in global SU ratio is largely due to revised downward estimates of Chinese wheat imports over the past three months. However, this adjustment does not address the fundamental issue of declining production in major exporting regions.
Historical Context
The 2020-21 SU ratio of 14.74% remains the lowest since the 2007-08 season. This benchmark is particularly significant as the market heads into the 2025-26 season, with concerns mounting over the ability of major exporters to maintain supply levels.
Potential Impact on Farmers
- Possible price volatility in global markets
- Increased competition for available supplies
- Need for diversification of supply sources
- Potential adjustments in planting strategies
