FX.co ★ Wheat Tumble at Year-End

Wheat futures have declined to approximately $5.10 per bushel, hovering close to the nearly two-month low of $5.04 recorded on December 17. This drop is a result of an ample supply environment, reversing earlier gains and leading to a more than 7.5% decrease in prices for the year. The Northern Hemisphere has witnessed abundant harvests, and alongside a record global crop and a substantial Argentine yield, exportable supplies have significantly increased. This surge occurs as concerns about extended disruptions in the Black Sea have diminished, eliminating a critical risk premium and dampening demand. Adding to the downward pressure, Brazil, as reported by Cepea, has experienced improved yields and larger carryover stocks, increasing availability despite a significantly reduced planted area projected for 2025. Demand has not kept up, with industrial and feed usage proving insufficient to absorb the surplus. Additionally, reports from the USDA and IGC predict higher global output and increased ending stocks for 2025 and 2026, indicating a lack of structural tightness to sustain prices.