Insight Focus
Wheat harvests advance across the Northern Hemisphere. Production and quality look promising, but prices remain near contract lows. With funds heavily short and farmers facing tight margins, further downside may be limited.
Harvest Debate Heats Up
As combines reap this year’s wheat harvests across the Northern Hemisphere, the great annual debate continues to heat up: where are the good yields, the bad yields, the good quality, the poor quality—and what will the final picture look like on a global scale?
In the US, an estimated 73% of the harvest is complete, compared to the five-year average of 72%. Yields are good, and exports are surpassing expectations, sitting well above last year and the average for this time of the season.
The Black Sea region shows mixed signals. Bulgaria and Romania, on the western side, are predicting large harvests, while Ukraine and parts of Russia are facing challenges, with final forecasts still hotly debated. What is evident is that Russian farmers are reluctant to sell large quantities, even though the government has cut wheat export taxes to zero (compared to RUB 1,540.40 last year). Shipments remain well behind last year’s aggressive pace.
In Western and Northern Europe, harvest predictions have significantly improved from last year’s disaster. In France, the harvest is nearing completion unusually early. Quality and yields are reported to be good, but with prices below the cost of production, farmers are unenthused to sell more than they need to.
Reports from China are mixed, and the difference between a 136 million tonne and a 142 million tonne crop will have a meaningful impact on global ending stocks. In the US, prices are hovering near contract lows, while in Paris they have risen marginally off the bottom. Russian port prices have edged higher in recent weeks as farmers hold back sales. Algeria’s purchase of a reported one million tonnes from Bulgaria, Russia, and Ukraine did little to stir the market.
Funds continue to hold large short positions in US markets and maintain significant shorts in Paris wheat futures.
The Weeks Ahead
The reluctance of farmers to sell at current levels shows that profit margins are precarious. Funds may look for further downside in prices to justify holding their short positions. Higher-than-expected production or sluggish demand could be the trigger.
Nonetheless, farmers typically sell either because they need storage space or require cash. Once the harvest is safely stored, one of these factors disappears.
When the 2025 winter wheat harvest wraps up, farmers’ attention will shift to seedbeds and planting.
At that point, the dynamic between buyer needs and fund short positions could become the main story.
History has taught us that when multiple buyers emerge, prices rise—prompting funds to buy back their shorts. Meanwhile, with farmers focused on drilling the next crop, they may not be eager to sell.
