While improved from previous years, drought continues to impact winter wheat conditions. Prices are softening as Russia floods the export market with cheap wheat. Producers will face headwinds from wheat prices declining faster than production costs and pressure from higher interest expenses.

U.S. Wheat Associates (USW) Market Analyst Tyllor Ledford compiles a comprehensive “World Wheat Supply and Demand” summary for three USW Board of Directors meetings each year. Using the USDA World Agricultural Supply and Demand Estimates (WASDE) report as her primary source. The World Agricultural Supply and Demand Estimates (WASDE) had a bearish impact on the market, as the estimates quantified the sustained record export flows from the Black Sea and increased ending stock levels.

The European Commission is looking into ways of allowing eastern EU member states to restrict farm imports from Ukraine as it extends trade liberalisation with Kyiv for a further year to June 2025. The EU has suspended import duties, quotas and trade defence measures for imports from Ukraine since June 2022 to support its economy after Russia's invasion. However, cheap Ukrainian grain exports have sparked protests by governments, farmers and truckers in neighbouring countries such as Poland and Hungary.

Shipping disruptions in the Red Sea due to attacks from Houthi rebels and the ongoing, drought-induced slowdown of goods through the Panama Canal are driving up freight costs and putting a focus on the vulnerabilities of key chokepoints in agricultural shipping lanes. Freight costs haven’t reached the levels seen during the worst of the pandemic-related supply chain snarls in 2021 and 2022, but the disruptions have forced the diversion of shipping to longer, slower routes or through alternate ports.

Argentina's Ministry of Agriculture, Livestock, and Fisheries announced Friday the country had taken the first steps towards paving the way for future wheat exports to China. "In an important step for Argentine exports, the General Administration of Customs of the People's Republic of China (GACC) included Argentine companies authorized to export wheat in the Online Quarantine Registration System of Establishments authorized to export vegetables, animals, and their products that enter China," a press release from the ministry read.

With US agriculture exports facing strong trade headwinds, including the strength of the US dollar and increased competition, market diversification is a priority, said Alexis Taylor, US Department of Agriculture undersecretary for trade and foreign agricultural affairs.“Diversification is an important tool as we think about maximizing growth opportunities as well as a way to hedge risk of market contraction and general volatility in the global marketplace that we have seen now for several years,” she said. Taylor noted that 60% of US agricultural exports are going to just four markets: China, Canada, Mexico and the EU.

Locks and dams on the Lower Snake River and the Columbia River provide essential infrastructure for moving U.S.-grown wheat to high-value markets around the world. We cannot overstate the positive value they create for U.S. farms, as well as the industrial economy of the Pacific Northwest and far beyond. U.S. Wheat Associates appreciates the opportunity to share this information and restate our unwavering support for the Columbia Snake River System.