Wheat prices will likely increase this year as consumption is expected to rise and supplies are expected to tighten, analysts have said.
“We expect prices to rise higher from current levels through the course of 2025 due to a tightening of supplies going into the 2025-26 season,” said BMI, a unit of Fitch Solutions.
The International Grains Council (IGC) said global wheat stocks are forecast to drop to a multi-year low in 2025-26, amid tightening main exporters’ inventories and continued drawdowns from earlier elevated levels in some Asian countries.
IGC, in its latest estimate, has forecast that carryover stocks could drop to 259 million tonnes (mt) compared with 264 mt in 2024-25. This is despite production being estimated higher at 807 mt. The organisation has pegged consumption at 813 mt and trade at 201 mt.
Price forecast
The US Department of Agriculture (USDA) said while it raised its forecast for global production in March with the rise mainly coming in from Australia, consumption will likely be higher because of larger feed and residual use.
BMI said, “We are making a slight upward revision to our CBOT-listed second-month wheat price forecast for 2025 from an annual average of 580 cents per bushel to 585 cents. We expect prices to rise higher from current levels through the course of 2025 due to a tightening of supplies going into the 2025-26 season.”
Wheat May futures on CBOT are currently ruling at 528 cents a bushel. Traders said crop conditions were good in Europe, the US and the Black Sea region, keeping prices in check. Harvests underway in India and China are also keeping the rates on leash. However, USDA said the US season-average farm price has been lowered by 5 cents to 550 cents.
BMI said as of March 25, 2025, the year-to-date average of wheat was 570.2 cents, below the 2024 average of 588.7 cents. The closing price on March 25 is equivalent to a 3.8 per cent week-on-week decrease, a 4.8 per cent month-on-month decrease and a 1.9 per cent year-on-year decrease. In the year-to-date up to March 25, wheat prices have increased by 0.4 per cent.
Low Indian yield
The Food and Agriculture Organisation’s Agricultural Marketing Information System (AMIS) said its preliminary forecast for global wheat production in 2025, released in March, also indicates a modest year-on-year increase, with the world output projected at 796 mt.
This growth would be largely driven by expected production gains in the European Union, following a decline in 2024. Increased sowings, primarily for soft wheat, are anticipated, with most expansion centred in France and Germany, it said.
AMIS said winter wheat acreage in the Russian Federation is seen smaller for a third consecutive year. Ukraine’s 2025 wheat area remains below average due to the ongoing war. In India, yields, however, are forecast to decline slightly, which would keep production unchanged year-on-year at 113 million tonnes.
In China, mid-February field assessments indicate favourable wheat crop conditions, with production expected to remain stable year-on-year at 140 million tonnes. In Pakistan, wheat production is forecast to decline to a near-average level in 2025, primarily due to lower yields from dry conditions and irrigation water shortages, the FAO’s arm said.
Money managers short
BMI said data from the Commodity Futures Trading Commission’s Commitment of Traders Report revealed that managed money market participants held a net short position of 80,668 contracts as of March 18, 2025, in wheat.
This is a larger position than that held on March 11 of 77,412 contracts. However, it was smaller than the 2025-year-to-date high of 110,782 contracts from January 28. This reveals a continued bearish stance. “Throughout 2024 and into 2025, money market participants have constantly held a net short position and we flag that this market positioning creates susceptibility to short-term upward movements due to short covering,” the research agency said.
BMI sees US and reciprocal tariffs, the potential strengthening of the dollar and the de-escalation of the Russia-Ukraine conflict as downside risks to prices.
