Global wheat traders are breathing a big sigh as the supply outlook has been upgraded. However, recent speculation-fueled price increases have kept them on their toes.
Commerzbank AG recently released a report that highlighted some of the factors that are influencing commodities.
A German bank predicts that wheat prices will rise by 2026 due to a shortage.
In its World Agricultural Supply and Demand Estimates report (WASDE), the US Department of Agriculture delivered a big surprise, drastically revising their global wheat production estimate for 2025/26.
USDA revises forecast
Commerzbank reported that the US Department of Agriculture has increased its global wheat production forecast in 2025/26 by nearly 13 million tonnes, to 829 millions tons.
This was primarily attributed to stronger-than-expected harvests across nearly all major exporting nations.
The market is now in a surplus of 10 million tonnes, as the demand increase was much smaller than production.
The abundance of wheat means that global stocks will rise to 271.4 millions tons at the end of this crop year. This is a 7-million-ton increase over the previous estimates.
Stocks held by major exporting nations are expected to increase by nearly 10% over the previous forecast, reaching 72.4 millions tons.
Carsten Fritsch is a commodity analyst with Commerzbank. He stated that the supply situation was much less tight than it had been two months earlier when the WASDE report published.
The International Grains Council had foreshadowed the upward trend in October. He said that it was not a great surprise.
It is possible that this pre-emption explains why the wheat price remained unchanged instead of reacting to news of an excess.
Prices reach multi-month highs as a result of speculative price rally
Wheat prices have risen significantly this week despite the obvious signs of an abundant supply. They reached multi-month records on major exchanges.
The most active futures contract on the Chicago Board of Trade has risen to 560 US dollars per bushel. This is its highest value since July.
Euronext, the European benchmark in Paris, also followed suit and reached a high of EUR 196.5 / ton after three months.
It appears that the trigger of the price increase on the CBOT is not the wheat market.
Reports of China’s major purchase of US soybeans triggered the rally.
Fritsch stated that “the price hike on the CBOT is a result of reports about Chinese soybean purchases, which also led to expectations for Chinese wheat purchases.”
In spite of this, there is no hard evidence that China has shown any interest in US Wheat. Sensing that there was no imminent export boom, the USDA left its estimates for US wheat imports unchanged.
Carsten Fritsch has warned of the possibility for a reverse.
The price of US wheat is expected to fall if China doesn’t buy it, given its abundance.
The International Grains Council recently revised its forecast of the global wheat crop for 2025/26 up by an additional 3 million tonnes, but this update didn’t impact on end-of year stock projections.
Commerzbank forecasts mixed price outlook
Commerzbank predicts that the US wheat market will correct in the near term, but then recover more by 2026. The European market, however, remains tight.
The German bank predicts that “the wheat price at CBOT will likely decline in the near term, and be at 540 US dollars per bushel by the end of first quarter 2026.”
By the end of this year, however, it is anticipated that prices will rebound up to 580 US Cents. The longer-term outlook is based on the possibility of supply restrictions in the future, as prices at both CBOT (the CBOT exchange) and Euronext fell to their lowest levels for five years last October.
Fritsch explained that the low prices – CBOT wheat and Euronext wheat fell to their lowest levels in five years in October — may have caused a decrease in winter wheat sown area, suggesting that future harvests might be smaller.
Euronext Wheat’s outlook is less rosy. The CBOT wheat price hasn’t tracked as closely because EU Wheat is not expected benefit from Chinese purchases and faces fierce competition in the Black Sea Region.
Commerzbank only sees limited scope for immediate correction on the European markets.
The price is expected to remain at the current level for now, and then increase to EUR 220 a ton by 2026.
The post Commerzbank expects wheat prices to recover by the end of 2026 due to supply constraints can be updated as new information is revealed.
