Grain Snippet: Australian Wheat Takes a Breath, Eyes on the Skies
October saw the wheat market regain some strength, with Adelaide APW1 prices edging up by around $5/MT for the month to-date, while Portland APW1 gained about $10/MT. The market has been mainly supported by a weaker Australian dollar and increasingly dry conditions since September. However, upward momentum has been partly capped by abundant global wheat and corn production.
The AUD/USD pair has retraced from its previous high of 0.67 USD to 0.65 USD since late September, providing support for the SA and VIC wheat markets. The recent weakness has occurred amid a widening interest rate differential, as markets anticipate RBA easing while the US maintains a more hawkish stance. The currency’s decline has been further supported by renewed US–China trade tensions in recent weeks, driving investors toward the US dollar as a safe haven amid rising economic uncertainty.
The SA and VIC wheat markets have been weighed down in 2025 by higher year-on-year production. According to ABARES, SA and VIC wheat production are forecast at 4.2 MMT and 4.0 MMT respectively, up 1.5 MMT and 0.5 MMT year-on-year. The revision reflects better seasonal conditions compared to last season. Nevertheless, since September, southeastern Australia has experienced increasing dryness, supporting both local basis levels and the local wheat cash market. The Adelaide basis has increased by 32 USc/bu to a historically strong 70 USc/bu since late September, while the Portland basis has risen by 37.5 USc/bu to 88 USc/bu. Looking at weather forecasts for the latter half of October, above-average rainfall is anticipated across most of southeastern Australia, providing a timely moisture boost ahead of harvest.
Globally, abundant wheat production has been pressuring both global wheat futures and the Australian wheat market, indicating no significant supply shocks are on the horizon, despite the below-average season locally. The International Grains Council (IGC) expects major wheat exporters to maintain ample production, estimated at 409 MMT, an 8.6 MMT increase from the previous projection. This brings total production to 22 MMT higher than last season and 20 MMT above the five-year average. With higher production, ending stocks for wheat exporters are forecast at 68 MMT, up 4.2 MMT year-on-year and 4 MMT above the five-year average.
On the demand side, major wheat importers continue to lag behind their normal import pace, which is also putting pressure on the global wheat market. From June to September, Morocco’s wheat imports were 7% lower year-on-year, while Egypt’s 2025 imports to date are 34% lower than last year. China was a major wheat importer in previous seasons (such as 13.6 MMT of wheat imports in 2023/24). However, with ample domestic wheat production in both the 2024/25 and 2025/26 seasons, China’s wheat import demand has dropped significantly. In the current 2025/26 season, China is expected to import a modest 6.2 MMT of wheat.
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