As discussed in last issue of “Wheat Letter,” determinations from the office of the U.S. Trade Representative (USTR) on the Section 301 actions against the Chinese shipbuilding industry have helped alleviate immediate impediments to exports. As the effects of this ruling subside, U.S. wheat has become increasingly competitive. As marketing year 2025/26 begins, a combination of a weaker dollar, more relaxed balance sheet, and timely moisture through much of the U.S. wheat growing area has helped make U.S. wheat a more competitive option for importers worldwide.
Since early March 2025, U.S. soft red winter (SRW) wheat has maintained its position as the most competitively priced global origin. This marks the longest period of competitiveness since before the Russian invasion of Ukraine. Although new crop Russian and Ukrainian wheat prices have decreased aggressively in recent weeks, U.S. SRW remains within a close range of Black Sea supplies.
U.S. Gulf HRW also had a competitive moment. During its peak weeks, HRW traded within $3/MT of Argentinean wheat, at parity with French wheat, and $5 per metric ton (MT) to $11/MT below Russian, Baltic, German, and Polish wheat on a Free on Board (FOB) basis.
U.S. soft red winter (SRW) has been the most competitive global origin since early March 2025, the longest competitive window since before the Russian invasion of Ukraine. Gulf HRW also had competitive opportunity, trading within $3/MT of Argentinean wheat, at parity with French wheat, and $5/MT to $11/MT below competing wheat classes from Russia, the Baltic Sea, Germany, and Poland on a Free on Board (FOB) basis. Source: USW Price Report and Fastmarkets Data.
Buyers Respond to Competitive Prices
In response to the competitive prices, new crop wheat sales have skyrocketed. Since April 17, sales have increased 170%, moving from 18% below the 2024/25 pace on April 17 to 60% ahead as of May 22, with 3.1 MMT of sales booked in just 5 weeks.
Since April 17, sales have increased 170%, moving from 18% below the 2024/25 pace on April 17 to 60% ahead as of May 22, with 3.1 MMT of sales booked in just 5 weeks. Source: USDA Export Sales Data.
Many importers have increased their sales relative to last year, with key buyers such as Mexico, the Philippines, and Japan increasing their year-over-year purchases. Sales in swing markets such as Nigeria, Colombia, and Indonesia have seen significant growth, with increases exceeding 100%. Wheat has also been traded into non-traditional destinations such as Mauritius, a small set of Islands in the Indian Ocean. According to records from the Federal Grain Inspection Service, Mauritius had not purchased wheat from the U.S. since 2008. For delivery in 2025/26, total sales as of June 4 reached 4.9 MMT, the strongest sales pace since 2013.
New crop sales were not the only beneficiary of the competitive prices. In April, old crop sales to Mexico reached a record 472,000 MT for the month, raising total exports to Mexico over 4.0 MMT, an all time high.
What to Watch
Looking ahead, seasonal harvest influences can still exude downward pressure on wheat markets, although the U.S. farmer remains under-sold, and commercials under-bought in many regions of the United States. Meanwhile, the speculative funds remain at near record short levels, which can add volatility, an important factor to keep in mind especially as tensions re-escalate after Ukraine’s high profile drone strike in Russia.
Recent rain in U.S. Central and Southern growing regions support crop development and boost yield potential. Some areas may face delayed harvests, and more mature stands may be negatively impacted, but overall, the rain has been a positive development in the U.S. wheat crop. Source: NOAA Weather Prediction Center
Moreover, weather is still key in U.S. and world wheat markets. Warm, dry weather persists in the Black Sea and the EU, while rains have increased in U.S. Central and Southern growing regions, generally aiding crop development and boosting yield potential. Some areas may face delayed harvests, and more mature stands may be negatively impacted, but overall, the rain has been a positive development in the U.S. wheat crop. With current USDA production estimates sitting around 52.3 MMT, along with strong beginning stocks at 22.9 MMT, the forecast for U.S. wheat supplies remains strong and the outlook is generally positive as the 2025/26 marketing year begins.
(Article courtesy of USWheat.org)
