Global Wheat Market Notable Items
Global
- Wheat markets soften on Monday after a sharp rally last week, futures are giving back some of those gains this morning. Last week, Chicago, Kansas City and Minneapolis wheat all strengthened considerably as Black Sea shipping disruptions added a larger risk premium to the market. Monday’s trade started lower as reports that Turkey is working on a possible new Black Sea grain corridor have encouraged some profit taking. For now, however, there is no agreement between Russia and Ukraine, and physical export disruptions remain significant.
- Black Sea logistics remain the main driving news story in wheat markets. Russia continues attempting to redirect grain toward Baltic and land routes as Black Sea and Sea of Azov shipping capacity remains constrained, while Ukraine is increasingly needing to be reliant on Danube, (low water levels) and western export corridors. Ukrainian railway data indicate August grain exports are down roughly 60 per cent month-over-month, while congestion around Danube ports remains elevated. A successful Turkish-brokered shipping agreement could quickly remove some risk premium, but until actual vessel movement normalizes the disruption remains supportive for wheat markets in general.
- The broader global wheat balance also remains relatively supportive. The latest IGC outlook places world wheat production near 817 MMT against consumption around 826 MMT, implying another inventory drawdown. More importantly, stocks held by the major exporters are expected to decline year-over-year. The world is not exactly facing a shortage of wheat but supplies available to the international market are becoming tighter and more concentrated and logistics risk is significantly larger than it was a few months ago.
- Stronger crops in several importing regions continue to offset some of this tightening. Stronger crops in Turkey, North Africa and other key regions will help importers hold back import necessities a little while longer than usual.
- Europe has a significantly smaller wheat crop, but French milling quality continues to look favourable. The European Commission lowered 2026/27 EU common-wheat production to 124.2 MMT from 135.3 MMT last year while projected ending stocks were reduced to 11.3 MMT. EU wheat exports through August 23 totaled only 2.5 MMT, 35 per cent behind last year. FranceAgriMer reports 89 per cent of tested French wheat at 11 per cent protein or higher versus an 80 per cent five-year average, with 61 per cent reaching at least 11.5 per cent.
- Europe’s sharply smaller corn crop could also provide additional domestic support for wheat demand. The European Commission reduced its EU maize estimate to 50.1 MMT compared with 60.2 MMT last year and increased projected corn imports to 25.0 MMT. Wheat consumption was simultaneously increased to 104.0 MMT, suggesting additional wheat could move into feed channels this season.
- Ukraine has harvested a respectable wheat crop, but export logistics remain the larger issue. Wheat production had reached 24.6 MMT from 5.0 million hectares, or 97 per cent of intended area, as of August 25, compared with 21.0 MMT at the same point last year. EU MARS estimates common wheat yields at 4.7 t/ha, 14 per cent above last year and 10 per cent above the five-year average. Despite the larger crop, Ukrainian wheat exports were only 1.4 MMT through August 21, 31 per cent behind last year. Drought is also beginning to create concern around establishment of the 2027/28 winter wheat and rapeseed crops.
- Russian wheat production remains large, but export availability is becoming the more important issue. USDA’s August WASDE estimates 2026/27 Russian wheat production at 88.5 MMT, down from 90.3 MMT last year. USDA also reduced its Russian wheat export forecast by 1.5 MMT to 46.0 MMT due to logistical disruptions in the Black Sea and Sea of Azov. The reduction pushes projected Russian ending stocks higher to 13.6 MMT, highlighting that the issue is increasingly getting wheat to international buyers instead of a lack of crop size.
- Australia has become a potentially important bearish offset. Private wheat forecasts increasingly moving into the 30–32 MMT range compared with ABARES’ June estimate of 26.7 MMT. The September ABARES report, due September 1, will be closely watched and North American readers will likely have access to it later Monday afternoon.
Canada
- Canadian harvest remains one of the most important developing stories entering September. Harvest has been running behind normal across much of the Prairies, leaving relatively little representative HRS or durum yield and quality information available so far. Progress should accelerate quickly under favourable weather, and actual yields, protein, test weight and grade distribution will increasingly replace crop-condition estimates over the next one to two weeks. Rain fell in large regions of Saskatchewan and western Manitoba over the weekend. Upwards of 4 inches east of Regina and very damaging hail north of Grenfell and towards Melville region of Saskatchewan on this past Saturday devastatingly wiped-out pockets of crop just ready to be harvested.
- Canadian wheat exports have started the new crop year strong. Canadian Grain Commission shipments for the week ending August 23 included approximately 512,000 tonnes of all wheat. Durum exports totaled 58,800 tonnes for the week and approximately 233,700 tonnes year-to-date. Canada enters the 2026/27 marketing season following another record export campaign with less production expected to be available for the marketing year ahead.
- Durum remains a different story from spring wheat, with improved production in importing regions limiting demand despite smaller North American crops. North American acreage and production expected to be lower vs last year. However, substantially larger crops in North Africa and Turkey are reducing import requirements.
- For durum, Canadian quality will become more important. World durum stocks remain relatively comfortable, but inventories held by the major exporters are considerably tighter. If Western Canada produces adequate supplies of No. 1 and No. 2 durum with strong protein and test weight, prices could remain relatively contained. Significant grade or quality problems would have a much larger impact.
U.S.
- The U.S. spring wheat harvest continues to advance with generally respectable results. Yield reports remain variable but have broadly avoided a major production disappointment, while protein has generally been favourable. Some areas are reporting lighter test weights and smaller kernels following late-season heat and dryness. These results have limited further upside in Minneapolis despite a more supportive global exporter balance.
- U.S. wheat demand remains comparatively weak to last year’s rapid pace. Weekly export sales for the week ending August 27 totaled cumulatively landed for the marketing year so far at 8.3 MMT which is roughly 32 per cent behind last year. Stronger futures therefore continue to reflect global supply and logistics risk more than aggressive U.S. export demand.
- U.S. biofuel policy has become an important source of volatility for vegetable-oil markets. The EPA is expected to approve more than 1.8 billion Renewable Identification Numbers (RINs) worth of small-refinery exemptions, roughly double what had initially been anticipated, which could reduce effective biofuel blending demand and has already pressured RIN values. Biomass-based diesel RINs recently fell to their lowest level since April. The administration is considering adding roughly 500 million RINs back into the 2027 mandate to offset some of the lost demand, but until that is confirmed the SRE decision represents some volatility risk for soybean oil and, by extension, canola oil values. A decision is expected later Monday afternoon.
Market Outlook – Wheat
Wheat markets enter the week with a firmer underlying tone after another strong move higher, although some of the recent geopolitical premium is being tested by reports that Turkey is working on a possible Black Sea grain corridor. Physical shipping disruptions through the Black Sea and Sea of Azov remain significant, while the broader global balance continues to tighten as major-exporter stocks decline. This is being partly offset by stronger crops in Turkey and North Africa and improving Australian production prospects. In North America, U.S. spring wheat harvest results have generally remained respectable, while Canadian harvest is beginning to accelerate after a slower-than-normal start. HRS wheat and durum yield, protein and grade results should become increasingly representative over the next one to two weeks, making western Canadian harvest results a major source of direction. Near-term upside will depend on whether Black Sea disruptions persist, while improving Canadian harvest progress and any meaningful improvement in export logistics could return some pressure to futures.
Market Outlook – Durum
Durum markets remain largely rangebound, with smaller North American crops continuing to be offset by improved production and weaker import requirements across North Africa and Turkey. IGC forecasts global durum production at 38.9 MMT, including approximately 6.3 MMT in Canada and 1.8 MMT in the U.S., both below last year, but stronger crops in Morocco, Algeria and Turkey are expected to push world trade to a five-year low. Western Canadian harvest is beginning to advance after a slow start, and durum yield, protein, test weight and grade results should become increasingly representative over the next one to two weeks. With major exporter stocks still relatively tight, disappointing Canadian quality or yields could strengthen premiums, but a solid Prairie harvest combined with subdued importer demand would likely keep values contained in the near term.
(SaskWheat news release)
