May Wheat Price Forecasts - Glimpse of 2026/27 puts higher prices in focus
• First USDA 2026/27 forecasts show marked drop in exporters’ output
• High fertiliser prices enhance output concerns
• Nonetheless, exporter stocks not seen tightening severely
• China reportedly commits to big purchases of US ags
The narrative of the wheat market has certainly changed, encouraged by the drought which has devastated the US crop. Additionally, prospects of renewed demand from, albeit unconfirmed, would put further pressure on major exporter stocks.
If 2025/26 has been characterised by unexpectedly strong harvests, backed by record yields in most major exporters, market have turned their attention to what level of reversal should be expected in 2026/27.
The 2026/27 season was always likely to see a production dip. Besides the improbability of the stars aligning again on yields, sowings have been deterred by weak prices – a factor especially relevant since the Iran war pushed up input costs such as fertiliser and fuel too.
The USDA in last week’s Wasde report, issuing its first full crop forecasts for 2026/27, forecast global area shrinking by 1.8Mha, or 0.8%, to a seven-year low, building on a trend the IGC outlined in January.
However, on world production, the USDA forecast a much more marked decline than the IGC, of nearly 3%.
Signally for prices, the USDA believes the shrinkage will be centred on the major exporters, whose stock levels are particularly influential on values. Their output will tumble by 43.9Mt year on year – suffering, at 10.5%, the biggest percentage drop in 20 years.
The market has turned from pondering the 2025/26 question of how weak prices will go – the answer being five-year lows, reached in October in Chicago and Paris and December in London – to how high the tighter supply dynamics will now lift values.
Certainly, vital signs for prices look more supportive. A key one being the availability of major exporters’ supplies.
The USDA’s newly-unveiled forecasts see major exporters’ stocks, as a proportion of world use, ending 2026/27 at 7.8% of world use, down 1.3 points year on year – representing the most significant tightening since 2012/13.
That said, there are factors that still limit the upside case for wheat prices, at least without further supply setbacks. A stocks-to-use ratio at that level would not be that far below the 10-year average of 8.2%, and above levels witnessed in 2023/24 and 2024/25, when prices were not, overall, that far from today’s.
In fact, Chicago futures averaged $6.10/Bu in 2023/24, and $5.60/Bu last season, below current levels. Paris average prices, at €228/t and €221/t respectively, were not far above the spot value of €213/t, albeit that they neared €270/t at times.
Sure, current prices face upside risks, not least from geopolitics. Events such as the Iran war, for instance, not only boost the case for importer stockpiling of grains but, in boosting fuel and fertiliser bills, lift production costs.
That is overshadowing sowings prospects. In the southern hemisphere, where 2026/27 winter wheat is being sown, Argentine plantings will shrink by 500Kha, or 7%, more than the USDA has forecast, thanks to a “major challenge - the current price of nitrogen”, the Rosario exchange said, citing the prospect of a hit to yields too from fertiliser scrimping.
For high nutrient prices to stick around for another few weeks would start constraining 2027/28 plantings in the northern hemisphere too.
On the demand side, China’s agreement - according to the White House - to purchase at least $17bn annually in US ags, besides soybeans, in 2026, 2027 and 2028 is supportive too, assuming wheat is part of the mix as is expected. China’s total wheat imports slumped by nearly two-thirds to 3.9Mt in volume terms.
Still, it’s not all bullish. Many regional analysts see USDA harvest-26 forecasts for Canada, the EU and, especially, Russia as too low.
Even if they aren’t, with the EU and Russia expected to end 2025/26 with relatively large carryout stocks, and demand from the key North African markets shrunk by larger domestic crops, the quest for export markets further afield may curtail price buoyancy in both origins.
It is US prices which should attract most support, thanks to the dire prospects for its 2026 harvest – a sharp contrast to a year ago, when the US quest for exports drove its prices below even Russian ones for months on end.
Certainly, wheat price prospects worldwide look more bullish. But there are still many unanswered questions with yields still unknown, China’s purchases unconfirmed, and an ongoing war that presents different implications for wheat based on the numerous potential scenarios.
