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Trade4go
Aug 8th, 2025
Original content
While favorable weather supports strong harvests in major wheat producers like the United States (US), the European Union (EU), Canada, and Australia, drought persists in parts of Ukraine, Russia, and China, limiting output. In the US, excellent conditions for spring wheat are boosting production but putting pressure on global prices. Meanwhile, heavy rains in parts of Europe and Ukraine are delaying harvests and affecting grain quality. The United States Department of Agriculture (USDA) forecasts US wheat production at 52.5 million metric tons (mmt) and EU output at 137.3 mmt, significantly higher than last year. However, Russia’s forecast has been revised downward to 83.5 mmt. Despite ample supply, global wheat stocks remain tight at around 60 mmt, with the US holding a growing share.
The European Commission (EC) confirmed it will not amend the newly agreed trade agreement with Ukraine. This is despite objections from five EU member states, Poland, Slovakia, Hungary, Bulgaria, and Romania, that fear that increased Ukrainian agricultural imports could destabilize EU markets. Set to replace the temporary trade visa-free regime that ended on June 5, 2025, the deal is built on the updated Deep and Comprehensive Free Trade Area (DCFTA). While the agreement includes safeguards against market disruptions and sets a gradual alignment of Ukrainian agricultural standards with EU regulations by 2028, concerns remain over sensitive goods like wheat, poultry, eggs, and sugar, for which limited quota expansions are planned. The EC maintains that the finalized text will proceed to a vote in the EU Council without further revisions.
In the first half of 2025, Argentina’s agro-industrial exports reached 48.4 mmt, a 5% year-on-year (YoY) increase and 18% above the three-year average, driven by strong wheat, corn, and soybean pellet shipments. Wheat exports rose 46% YoY following a 39% YoY production recovery, supported by favorable weather, record planted area, and temporary tariff reductions. Argentina’s wheat sector continues to show strength, with 98.3% of the projected 6.7 million hectares (ha) already planted for the 2025/26 season. Recent rains have improved soil moisture, with nearly 79% of crops in optimal condition and 97% in normal to excellent health. Wheat is already entering the reproductive phase in northern regions. Despite some weather-related challenges, Argentina maintains its position as a key global grain exporter, with 48% of shipments going to Asia and Vietnam as the top destination.
Iraq’s wheat production is expected to significantly drop in 2025, estimated at 5.12 mmt, down from 5.4 mmt in 2024. This pessimistic forecast is primarily due to a severe lack of rainfall and worsening water shortages. Already identified by the United Nations (UN) as the fifth most climate-vulnerable country, Iraq has been further impacted by upstream dam constructions in Turkey and Iran, with no formal water-sharing agreements in place. Despite these challenges, the Iraqi Ministry of Agriculture announced continued self-sufficiency in wheat for the third consecutive year, attributing this to government support measures such as the provision of agricultural inputs, adoption of modern irrigation methods, and distribution of improved seeds and fertilizers. Nevertheless, ongoing water scarcity and desertification have constrained wheat output, compelling the government to rely on imports to bridge supply gaps.
Russia’s wheat sector faces mixed prospects as SovEcon, a Russian agricultural consultancy firm, lowered its 2025 harvest forecast by 0.3 mmt to 83.3 mmt. The downward revision is mainly attributed to poor yields in southern regions like Rostov and Krasnodar Krai, which recorded their lowest output in over a decade. In contrast, better-than-expected performance in central and Siberian regions helped partially offset these losses. While the forecast for the Volga region was slightly reduced, overall yields there remain stable, with some areas even achieving record results. Although localized heavy rains hit parts of European Russia, overall production is not expected to be significantly affected, though grain quality, particularly for winter wheat, could deteriorate.
Ukraine is working to expand wheat export opportunities to China through high-level discussions between its State Service for Food and Consumer Protection and Chinese authorities. A recent online meeting focused on aligning veterinary and phytosanitary standards, particularly for wheat flour, to facilitate access to the Chinese market. Ukrainian officials also initiated talks to open Chinese markets for additional products, including wheat grain and soybean meal. Despite the ongoing war and severe challenges facing its agricultural sector, such as reduced harvests, financing issues, and workforce shortages, Ukraine remains one of the world’s key wheat exporters. Expectations for 2025 include increased exports to Asia and Africa, with hopes pinned on the full restoration of seaport operations. However, Ukraine faces stiff global competition from major producers like Brazil, Argentina, the US, and the EU, making quality improvements and adherence to international standards essential for sustaining market share.
Bangladesh has approved the purchase of 220 thousand metric tons (mt) of US wheat at USD 302.75/mt. This is part of a broader strategy to ease trade tensions with the US and reduce its USD 6 billion trade imbalance. This follows a recent memorandum of understanding to import 700 thousand mt of US wheat annually over the next five years, marking a shift from Bangladesh’s traditional reliance on cheaper Black Sea wheat. The move comes amid threats from the US administration to impose 35% tariffs on Bangladeshi exports unless trade imbalances are addressed. Meanwhile, Indonesia has also strengthened wheat trade ties with the US, committing to buy 1 mmt annually from 2026–2030 under a new trade agreement that eliminates non-tariff barriers and lowers US tariffs on Indonesian goods. These developments indicate a growing trend among Asian nations to diversify wheat sourcing from traditional suppliers like Australia and Canada toward the US, driven by both geopolitical and supply security considerations.
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In W31, Russia’s wheat prices remained steady week-on-week (WoW) at USD 0.24 per kilogram (kg) for the third consecutive week, reflecting stable demand. However, prices increased by 4.35% month-on-month (MoM) and 9.09% YoY. Despite the weekly stability, the Russian Ministry of Agriculture announced that beginning August 6, the wheat export duty, previously set at zero, will be reinstated at USD 0.24/mt (RUB 19.4/mt) under revised rate calculations. As one of the world’s top wheat producers, this policy shift is expected to impact global wheat trade. The new duty could temporarily depress export prices during the week of its implementation, as exporters and farmers may withhold supplies, mirroring recent behavior driven by a strong rouble and tight margins in anticipation of better returns.
In W31, US wheat prices dropped by 4.17% WoW to USD 0.23/kg, marking an 8.00% MoM and 4.17% YoY decline. The fall was driven by a stronger dollar, global competition, and harvest pressure across the Northern Hemisphere. Despite the decline, base levels held steady or firmed, with strong Hard Red Winter (HRW) wheat demand from the Gulf but weaker interest in the Pacific Northwest (PNW). Meanwhile, according to the USDA, 80% of winter wheat has been harvested, just below the five-year average. Spring wheat heading reached 92%, with 49% rated good to excellent, down 3 points WoW. Scattered showers in the Plains have raised concerns over test weights and quality, while dry conditions in the PNW and Montana continue to stress spring wheat as harvest nears completion in northern areas like Montana, Washington, Oregon, and Idaho.
In W31, France’s wheat prices remained flat WoW and MoM at USD 0.23/kg, though 4.17% lower YoY, signaling a stable but subdued market. As the EU’s top wheat producer, France faces mounting challenges in marketing a larger 2025 crop due to shrinking export demand and intense competition from cheaper Black Sea grain. Key buyers like Algeria and China have reduced purchases, with exports outside the EU projected at just 7.5 mmt for 2025/26, contributing to what could be a 21-year high in ending stocks. Last year’s smaller crop was absorbed by Morocco, West Africa, and limited sales to Egypt and Thailand, but this may not be enough in the current season. Diplomatic tensions with Algeria, weaker Chinese imports, and a strong euro further complicate exports. As Russia, Ukraine, Romania, and Bulgaria dominate key markets, France may have to offload surplus wheat into feed markets. However, even that is uncertain given competition from maize and a strong Spanish harvest.
In W31, Ukraine’s wheat prices held steady WoW at USD 0.24/kg but registered a 4.35% MoM increase and a 9.09% YoY rise. This combination of price stability and upward trend can be linked to persistent heavy rainfall in western regions, which has delayed harvesting and made wheat quality deteriorate. As a result of these delays, Ukraine exported only 408 thousand mt of wheat during the first 28 days of Jul-28, 3.5 times less than the 1.44 mmt exported during the same period last year. By July 24, 2025, a total of 7.09 mmt of wheat had been harvested from 2.18 million ha, 44% of the planned area, with an average yield of 3.25 mt/ha. In contrast, by July 25, 2024, 14.72 mmt had been harvested from 3.5 million ha, yielding 4.2 mt/ha. The weather outlook remains unfavorable, with further rainfall expected, which could further reduce wheat quality. Additionally, early signs of fungal infections, such as sooty mold and alternaria, have already been reported in some wheat batches.
The EC should move to operationalize the safeguard clauses within the updated DCFTA agreement more transparently and proactively. While maintaining free trade objectives, the EU should provide mechanisms for real-time market monitoring and rapid response in the event of import surges, particularly for sensitive commodities like wheat. Simultaneously, financial and technical support should be extended to vulnerable EU farmers to maintain competitiveness during the transition period.
To sustain wheat self-sufficiency, Iraq should urgently prioritize transboundary water negotiations with Turkey and Iran to secure minimum water flows. Also, investment in modern irrigation techniques, such as drip and sprinkler systems, should be expanded across more regions. A national fund to support smallholder farmers facing desertification and water stress is also needed to prevent farm abandonment and rural economic collapse.
As Ukraine seeks to expand into the Chinese wheat market, it should prioritize rapid harmonization of its food safety and phytosanitary standards with international norms, particularly those required by Asian markets. Government-led initiatives should focus on certifying exporters, training producers, and modernizing quality assurance systems. Restoring full seaport operations and ensuring secure export corridors will be essential to scaling volumes, particularly as Ukraine competes against well-established exporters like Brazil and the US.
The US should deepen strategic agricultural partnerships with Bangladesh, Indonesia, and other emerging Asian markets through multi-year trade frameworks that offer stable pricing, technical support, and supply guarantees. Facilitating access to high-quality wheat varieties tailored to local food industries, along with development aid linked to agrifood infrastructure, can strengthen long-term demand while offsetting geopolitical tensions.
Sources: Tridge, Agravery, AgroInvestor, Agrolink, UkrAgroConsult, 3tres3
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