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 amongst 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 United States 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 metric tonne, up from the 799.7MMT reaped across the world in the current season and 792MMT in the 2023/24 marketing year. Adding the carry-in of 265.2MMT gives a total supply of 1,073.7MMT, 4.9MMT higher year-on-year, with the lower carry-in stocks more than offset by the 1.1 per cent increase in global output.
The most significant production recovery in the USDA numbers goes to the European Union, where wheat output is forecast at 136MMT, an increase of 11.4 per cent, or almost 14MMT compared to 2024/25, and 3 per cent above the five-year average. Harvested area is expected to increase by 6 per cent to 24 million hectares, 1 per cent above the five-year average. The average yield is estimated at 5.67 metric tonne per hectare, 5 per cent above the 2024 harvest and 2 per cent above the five-year average.
The Canadian crop is pencilled in at 36MMT, up from 2024 harvest of 35MMT and 12 per cent higher than the five-year average. The USDA is using a harvested area forecast of 10.9Mha, up 2 per cent from last year and 8 per cent above the five-year average. The national yield is pegged at 3.3MT/ha, 1 per cent 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 83MMT, up from 81.6MMT last year but down 3 per cent from the five-year average. The forecast includes 59MMT of winter wheat and 24MMT of spring wheat. The average yield across both the winter and spring wheat harvests is forecast at 3.05MT/ha, an increase of 4 per cent compared to 2024/25 and 2 per cent higher than the USDA’s average of the past five years. The harvested area is forecast at 27.2Mha, 2 per cent lower than last season and 4 per cent 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 52.28MMT, down from 53.65MMT last harvest but up from 49.1MMT 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 20MMT harvest later in 2025 against 18.5MMT in 2024 and 15.9MMT in 2023. Poor soil moisture has dogged the Ukrainian crop for much of the season, but the USDA has only trimmed production from 23.4MMT last year to 23MMT this year.
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 142MMT forecast. With the harvest well advanced, the USDA has landed on a record 117MMT for Indian wheat output, notably higher than the government’s 115.4MMT estimate, itself on the optimistic side according to many local pundits.
According to the USDA, worldwide wheat consumption will be 808MMT in the 2025/26 marketing year, up from 803.6MMT in 2024/25 and 797.8MMT in 2023/24. Demand among the world’s major importing countries is forecast to rise from 327.9MMT to 329.6MMT 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 108.8MMT in the current marketing year to 112.5MMT next year. The USDA is calling Chinese demand in 2025/26 unchanged at 150MMT.
On the trade front, international exports are expected to increase from 206.1MMT in 2024/25 to 213MMT in 2025/26, with the major exporters accounting for 158.5MMT of the new crop task compared to 149MMT in the current season. Argentina is up 2MMT to 13MMT, Australia is down 2MMT to 23MMT, Canada unchanged at 27MMT, the EU is up from 26.5MMT to 34MMT, Russia is up 1.5MMT to 45MMT, the Ukraine is up 05.MMT to 16.5MMT and the US down from 23.2MMT to 21.8MMT.
Egypt remains atop the importer rankings for 2025/26, moving 0.5MMT higher year-on-year to 13MMT. Indonesia holds down second place on 12MMT, also 0.5MMT higher compared to 2024/25. Third on the list is the EU on 9.5MMT, down from 10.7MMT, ahead of Algeria on 9.2MMT, down from 93.4MMT, and Turkey who is expected to see a significant recovery in imports to 7.5MMT, after trade restrictions held them at just 3.5MMT in the current year.
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Written by Peter McMeekin.
