Grain Snippet: Wheat Market Continues to Ease on Improved Supply Prospects
25/26 SA and VIC wheat prices have remained under pressure, mainly due to a softer local basis, weighed down by recent rainfall and an improved precipitation outlook, each of which have offered improved production prospects. Since July, new crop APW1 prices have fallen by $10/MT and $8/MT across the Port Adelaide and Portland zones, respectively. Over the same period, basis in these port zones has eased by 10-14 USc/bu (roughly $6-9/MT), bringing local basis levels nearer to the 10-year average for this time of year.
Global wheat price indications have been pressured through July, subsequently weighing on SA/Vic port bids from exporters. December SRW futures continue their downward trend amid Northern Hemisphere harvest pressure. Prices found some support from slowing Russian exports, driven by limited grower selling as export bids drifted lower. This slowdown was reflected in global markets through an uptick in Matif (EU) wheat futures. Nevertheless, those gains have since been reversed, and the market remains in a medium-term downward trend. Meanwhile, US Hard Red Spring and MGEX spring wheat futures have erased their previous drought premiums and are trending lower, as crop conditions have returned to average or near-average levels, supported by improved precipitation forecasts through mid-August.
The USDA offered no surprises to CloudBreak in its July WASDE report. Global wheat markets were pressured on its release as total production among major wheat exporters was reported at an ample 396.74 MMT for 2024/25, which is 9.79 MMT (2.5%) higher y/y and 8.7 MMT (2.2%) above the 5-year average. The y/y increase is largely driven by a strong recovery in the EU production forecast at 137.3 MMT, up 15.1 MMT (12.3%) from last year’s poor season. Russia has also contributed to the rise, with the USDA revising its 2025/26 forecast to 83.5 MMT, an increase of 1.9 MMT y/y (2.3%). Increases to export and consumption forecasts have mostly offset the anticipated rise in production for the major wheat exporters. Nonetheless, compared to the 5-year average, wheat ending stocks are 1.15 MMT (1.8%) higher, suggesting adequate supply for this 25/26 season.
Turning to SA and Vic conditions, helpful rainfall since early July has boosted production confidence across much of southeastern Australia, leading to increased grower engagement in the market. That said, rainfall has been patchy, and some areas are still missing out and remain in need of further moisture to support crop development. With a few months left until harvest, Southeast Australian wheat production potential remains highly sensitive to conditions through August and early spring. Moving forward, the BoM three-month forecast remains reasonable through to October, providing cautious optimism for the remainder of the growing season.
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