Early signs point to increased wheat market competition
Canadian wheat exports are strong this year, well ahead of the pace of the past two years and on track to reach the forecast for 23.2 million tonnes over crop year.
The top five buyers are China with 1.45 million tonnes in the August to December period, followed by Bangladesh at 1.02 million, Japan at 900,000, Indonesia at 850,000 and Colombia at 490,000. China and Bangladesh are both taking much more than last year.
Durum exports are also solid, running slightly behind last year’s pace but still on track to meet the forecast for full year exports of 5.35 million tonnes.
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In the last two years, the export pace in the second half of the year was stronger than in the first, and if that is repeated this year, then there is a chance to exceed the record, which was 29.2 million tonnes of wheat and durum.
That is good news because there is a record large wheat crop to move.
All that grain means that even with a strong export pace, Agriculture and Agri-Food Canada expects burdensome ending stocks of six million tonnes of wheat and 1.5 million tonnes of durum, for a combined all-wheat total of 7.5 million.
That would be the most since the record 10.4 million tonnes all-wheat carry-over in 2013-14, which was also a year with a massive wheat crop.
I think it will be good to sell as much of the 2025-26 crop as possible within this crop year because global competition could heat up in 2026-27.
Around the world
On the geopolitical front, if negotiations to end the war in Ukraine are successful, it would put downward pressure on wheat prices.
On the fundamental supply and demand side, it is early to make heavy bets on crops that are months from harvest, but signs point toward a good global crop in 2026.
On Feb. 13, the IKAR consultancy that monitors Russian grain crops increased its forecast for 2026-27 wheat production to 91 million tonnes, up from 88 million previously.
The new forecast is close to what was produced last season, according to the official Russian estimate of 91.4 million tonnes.
This IKAR forecast is higher than SovEcon’s outlook, but the latter recently increased its number by 2.1 million tonnes to 85.9 million on favourable weather.
IKAR forecasts that 2026-27 wheat exports could reach 47.5 million tonnes, up from a projected 46 million in the current year.
The winter wheat crop in the United States is still in dormancy but is in fairly good shape.
The estimate of combined seedings of hard and soft winter wheat is 32.99 million acres, down less than one percent from the previous year’s 33.15 million.
Kansas, the largest American hard red winter wheat producer. reported in early February its crop was 61 per cent good to excellent, 29 per cent fair and 10 per cent poor to very poor.
That is better than last year when it was 50 per cent good to excellent, 36 per cent fair and 14 per cent poor to very poor and 2024-25 when the numbers were 54 per cent, 31 per cent and 15 per cent.
This year, the U.S. Drought Monitor map shows almost no drought in Kansas, which is rare.
Oklahoma and Texas, two other important hard red winter wheat states, are drier than they were last year at this time. Those states will start reporting crop conditions in March.
Spring wheat seeding is more than a month away, but U.S. producers in the northern Plains are happy that most of the spring wheat areas in the Dakotas, eastern Montana and western Minnesota are drought free.
The USDA forecasts that American wheat stocks at the end of the current year will rise, as they are expected to do in Canada. The department sees ending stocks at 25.34 million tonnes, close to two million tonnes more than last year and the most since 2019-20.
France’s winter crops are doing well. FranceAgriMer says conditions are the best in three years with 91 per cent of soft wheat and 87 per cent of durum rated good to excellent.
The Mediterranean Sea area has seen more rain than normal this season. Spain has seen some flooding but generally moisture is good for crops. Italy also has ample moisture.
North Africa, an important destination for Canadian durum, has also had much better rain this season.
Morocco expects its wheat and durum crops will total eight to nine million tonnes, about double last year’s production.
This signals that durum demand in 2026-27 might be weaker.
India is expecting a record winter crop thanks to good moisture from the monsoon and increased seeded area. The country is ending its ban on wheat exports, which was instituted after the poor crop of 2022.
Source: producer.com