Wheat Market Outlook

Mar 10, 2025

Mercantile says, indiscriminate tariffs would be terrible for Canadian agriculture. While both Canadian durum and non-durum wheat markets are exposed to the U.S., Mercantile says non-durum wheat should face less of an impact. According to Mercantile, the U.S. will need to continue importing durum wheat, but likely in heavily rationed volumes. Meanwhile, a lower Canadian dollar should allow Canada to be more competitive to other destination markets and take some additional market share from the U.S. as well. Mercantile is concerned about the tariffs but would not sell anything until we know for sure if the tariffs are on or not.

According to Mercantile, Russian exports have slowed dramatically which is supportive to global prices. Mercantile notes cold conditions likely hurt the Black Sea and U.S. crops, but it will be difficult to determine the impact until condition ratings are released. If conditions are reported to be poor, Mercantile assumes the market could react accordingly and give some pricing opportunities for both old and new crop. Outside of a major issue in the U.S. or Black Sea, the market seems comfortable with the current volume of supply.

According to Mercantile, the USDA report was supportive for old crop wheat. Some tender business last week was also good to see in an otherwise demand-deficient market. Mercantile says dry conditions and winter-kill concerns in the U.S., Russia and Ukraine, and marginal conditions in France have the bears on edge.

According to Mercantile, wheat markets remain supported. Mercantile says wheat continues to be cheap compared to corn and attention is increasingly turning to the new crop. There are several areas of concern  for the 2025/26 winter wheat crop according to Mercantile, including Russia, Ukraine, France, and parts of the U.S. The next USDA report is out on Feb. 11, 2025.

Outside of the looming trade wars, Mercantile says the wheat market is well supported: conditions in many of the key growing areas are not ideal, the funds continue to hold a large short position in wheat, and buyers (Egypt) are showing more demand. Also, Mercantile believes the corn market is very strong so long as the U.S. and Mexico continue to trade. According to Mercantile, the strong U.S. dollar and trade tensions are providing headwinds. They are 50 per cent sold spring wheat and would hold sales for now.

According to Mercantile, wheat demand remains sluggish, and wheat continues to have little independent strength. Strong corn markets are propping up wheat values, the premium wheat holds over corn is narrow in both the futures and cash markets. Mercantile says the spread between the fund’s short in wheat and long position in corn is a record and could provide an opportunity should the funds decide to rebalance. In Mercantile’s opinion, U.S. wheat is expensive compared to most other origins but is cheap compared to corn.

The trade remains focused on the general lack of demand in the global markets. There are some potentially problematic production spots in Europe, but right now, all the major origins have wheat to sell, and demand is lack-luster. In Canada, the trade is watching for the announcement (or lack thereof) of tariffs on Canadian products following the U.S. Presidential Inauguration. Mercantile suggests growers hold sales for now.

According to Mercantile, the strong U.S. dollar is proving to be a challenge for U.S. wheat prices, but strong corn and soybean markets will drag wheat along to a degree. Mercantile says importers will increasingly shift their attention to Southern Hemisphere wheat as stocks dwindle in the Black Sea and the strong U.S. dollar elevates U.S. prices. Global prices are significantly lower than last year having already built in the slow demand and the large crops in the Southern Hemisphere. So, despite the struggling futures, Mercantile expects cash prices to be steady.