Grain Snippet: Wheat Market Under Weight of Northern Hemisphere Harvests
SA and VIC wheat markets have continued to fall in recent months, pressured by weakness in US wheat futures, coupled with improving optimism for spring weather. Port Adelaide and Portland wheat bids are circa $330/MT and $337/MT, respectively, down about $20/MT since early July. This extends the broader decline from the May highs of $375/MT in Port Adelaide and $365/MT in Portland.
The decline in US wheat futures has been driven by a strong global corn and wheat production outlook, with a new contract low reached in late August at levels last seen pre-COVID. The US winter wheat harvest is now effectively complete, with further new crop supply from the spring crops hitting the global pipeline in the near term. While US futures slumped, SA basis held firm between $50 and $60/MT, close to the 10-year average, supported by limited grower selling as many remain cautious about production after last year’s drought.
SA and VIC cropping regions faced a dry start in the 25/26 season, but timely rainfall in late June and July has since improved wheat yield prospects. By August, BOM data continued to show average root-zone soil moisture across much of southeastern Australia, suggesting a recovery from the locally dry 24/25 season. If conditions hold through Sep/Oct, ABARES’ SA and VIC wheat production forecasts of 4.1 MMT and 3.8 MMT are likely to be revised higher. At the national level, private forecasts place 25/26 Australian wheat production in the 31 to 33 MMT range, down 1-3 MMT from the bumper 24/25 season but still well above the 10-year average of 27.59 MMT.
Globally, the USDA forecast major wheat exporters’ production at a record 397.4 MMT, which will continue to exert pressure on the global wheat market. The largest contribution comes from the EU, where production is estimated at 138.25 MMT, a significant rebound of 16.1 MMT from the excessively wet 2024/25 season. Meanwhile, Russia has also added to the rise in production, with the USDA pegging its wheat crop at 83.5 MMT, up 1.9 MMT from last season. Some forecasts for Russia’s wheat production are higher again, ranging between 85.5 MMT and 87.5 MMT, reflecting improved winter wheat yields and better-than-expected spring wheat yields. Additional revisions higher as more yield information comes to light would further pressure the global wheat market.
Despite the strong harvest outlook, major exporters’ ending stocks remain moderately tight compared with the 5- and 10-year averages due to lower carry-in stocks and stronger domestic use. This suggests the global wheat market could turn volatile with any surprise fundamental shift, although the market remains comfortable with the current production outlook for now.
China has been the dominant buyer of Australian wheat. However, over the past three years, rising domestic production and larger carry-in stocks have reshaped its demand profile, with imports falling since September 2024. In strong buying years, China’s demand can reach above 13 MMT (like in 23/24), but only 4 MMT was imported for 24/25; meanwhile, 2025/26 forecasts point to just a slight lift in imports to 6 MMT, offering modest support for Aussie wheat prices.
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