Spring seeding in Canada. Photo: Premium Ag

THE UNITED States Department of Agriculture’s first peek at the global wheat outlook for the 2025-26 season points to higher production, both worldwide and among the major exporters, increased domestic consumption and increased international trade compared to the current season.

Released early last week, the May edition of the USDA’s World Agricultural Supply and Demand Estimates is traditionally a big event, providing the international market with the first official look at global supply and demand projections for the new crop marketing year.

The report was bearish from a wheat perspective, with the funds continuing to sell futures on the back of a higher carry-out for both the US and the major global exporters and a hand-to-mouth international consumer that sees no reason to buy too far out the curve under current market conditions.

However, dryness continues to hamper crop progress in many regions, suggesting the May numbers could ultimately be the season’s high mark unless the weather outlook in the affected areas improves. Much of northern Europe is dry, as are parts of the Hard Red Winter belt in the US, while large areas in the Ukraine and Russia have suffered moisture deficits for much of the growing season. There are persistent reports of issues in India and China but both governments keep telling the market there is nothing to see, and the outlook is poor in parts of Australia.

The USDA has pegged global wheat production for 2025-26 at a record 808.5 million tonnes (Mt), up from the 799.7Mt reaped across the world in the current season and 792Mt in the 2023-24 marketing year. Adding the carry-in of 265.2Mt gives a total supply of 1073.7Mt, 4.9Mt higher year on year, with the lower carry-in stocks more than offset by the 1.1 percent increase in global output.

Production outlooks mixed

The most significant production recovery in the USDA numbers goes to the European Union, where wheat output is forecast at 136Mt, an increase of 11.4pc, or almost 14Mt compared to 2024-25, and 3pc
above the five-year average. Harvested area is expected to increase by 6pc to 24 million hectares, 1pc above the five-year average. The average yield is estimated at 5.67t/ha, 5pc above the 2024 harvest and 2pc above the five-year average.

The Canadian crop is pencilled in at 36Mt, up from 2024 harvest of 35Mt and 12pc higher than the five-year average. The USDA is using a harvested area forecast of 10.9Mha, up 2pc from last year and 8pc above the five-year average. The national yield is pegged at 3.3t/ha, 1pc higher season on season and five percentage points above the five-year average. With soil-moisture conditions reported as
favourable across most of the cropping area and the spring planting program well advanced, the current
production estimate could easily be on the conservative side come harvest if conditions remain sympathetic to crop development.

The USDA has the Russian wheat crop at 83Mt, up from 81.6Mt last year but down 3pc from the five-year average. The forecast includes 59Mt of winter wheat and 24Mt of spring wheat. The average yield across both the winter and spring wheat harvests is forecast at 3.05t/ha, an increase of 4pc compared to 2024-25 and 2pc higher than the USDA’s average of the past five years. The harvested area is forecast at 27.2Mha, 2pc lower than last season and 4pc below the five-year average. However, Black Sea commentator Andrey Sizov believes “many analysts, including the USDA, may be too optimistic about Russia’s new wheat crop”.

The Australian production outlook of 31MMt seems fair at this juncture, with the autumn planting campaign finished in some areas but delayed in others due to extremely dry conditions. Planting in most of Queensland and northern New South Wales is winding down with the crop lying in a very propitious seedbed. Planting in Western Australia is well advanced with the moisture profile generally good in the southern and central areas but less than ideal in the northern reaches of the cropping belt.

However, the cropping areas of South Australia, Victoria and southern New South Wales are parched.  Dry planting has slowed markedly as rigs park up waiting for the autumn break to descend.

Of the other major exporters, US wheat production is estimated at 52.28Mt, down from 53.65Mt last harvest but up from 49.1Mt in 2023-24. Recent rainfall has boosted confidence, with the average yield expected to be the best in four years. Argentina is in for a 20Mt harvest later in 2025 against 18.5Mt in 2024 and 15.9Mt in 2023. Poor soil-moisture has dogged the Ukrainian crop for much of the season, but the USDA has only trimmed production from 23.4Mt last year to 23Mt this year.

Eyes on China, India

The state of play in China and India, the world’s two biggest producers and consumers is never easy to accurately ascertain. Nonetheless, authorities in China’s key wheat producing province of Henan province issued a warning two weeks ago of risks to grain fill due to extremely hot and dry winds this month, potentially jeopardising the 142Mt forecast. With the harvest well advanced, the USDA has landed on a record 117Mt for Indian wheat output, notably higher than the government’s 115.4Mt estimate, itself on the optimistic side according to many local pundits.

According to the USDA, worldwide wheat consumption will be 808Mt in the 2025-26 marketing year, up from 803.6Mt in 2024-25 and 797.8Mt in 2023-24. Demand among the world’s major importing countries is forecast to rise from 327.9Mt to 329.6Mt with most of the increase residing in Asian and Middle Eastern homes. While not a major importer, domestic demand in India is expected to rise from 108.8Mt in the current marketing year to 112.5Mt next year. The USDA is calling Chinese demand in 2025-26 unchanged at 150Mt.

On the trade front, international exports are expected to increase from 206.1Mt in 2024-25 to 213Mt in 2025-26, with the major exporters accounting for 158.5Mt of the new crop task compared to 149Mt in the current season. Argentina is up 2Mt to 13Mt, Australia is down 2Mt to 23Mt, Canada unchanged at
27Mt, the EU is up from 26.5Mt to 34Mt, Russia is up 1.5Mt to 45Mt, the Ukraine is up 500,000t to 16.5Mt and the US is down from 23.2Mt to 21.8Mt.

Egypt remains atop the importer rankings for 2025-26, moving 500,000t higher year on year to 13Mt.

Indonesia holds down second place on 12Mt, also 500,000t higher compared to 2024-25.

Third on the list is the EU on 9.5Mt, down from 10.7Mt, ahead of Algeria on 9.2Mt, down from 93.4Mt, and Turkey who is expected to see a significant recovery in imports to 7.5Mt after trade restrictions held them at just 3.5Mt in the current year.