Wheat Market Update - 2nd June 2025

Please note the dash is now based off of the Nov-25 Futures

Welcome to this week’s extended market update, as it has been a little while since the last update was published. This update will review the entire month of May 2025.

The May-25 LIFFE Futures contract is no longer being used for pricing.

I. Executive Summary

May 2025 was a complex "game of two halves" for the wheat market. Global futures reacted sharply to weather premiums, while a strong Pound pressured UK domestic prices. Our 2025 crop shows some recovery, yet a historically dry spring raises concerns about real yield and quality. Even so, the LIFFE Nov-25 price slipped, held down by a strong pound and heavy world supply. We saw a good dose of rain last week, which was more than needed, but time will tell what damage the lack of it has done. Compared to our nearest other market (MATIF), UK wheat is overpriced; MATIF Milling wheat is at the same price as LIFFE Feedwheat. This is a reflection on market sentiment and an example of farmer resistance to the current low pricing. Where it is possible, farmers are holding onto the wheat, or trading it into the new season.

II. Global Focus

Supply & Demand Fundamentals (2025/26 Outlook)

Global 2025/26 wheat production is projected robust, with IGC and USDA forecasting a record 806+ million metric tonnes (mt). However, IGC projects consumption to outpace this, tightening global ending stocks. This suggests underlying demand strength.

International Trade Flows & Geopolitical Influences

Global wheat exports are expanding, led by Russia, the EU, and Canada. US exports face stiff competition. Ukraine's strategic shift towards Asia and the Middle East, establishing new direct supply corridors, represents a significant geopolitical realignment. Robust import tenders from major buyers like China (now buying Australian/Canadian wheat due to domestic crop threats) highlight strong, diversified demand.

Global Weather & Crop Conditions

Weather conditions globally remain a mixed picture. Persistent dryness continues to curtail crop prospects in Southern Russia, parts of Ukraine, Northern Europe, Canada, and China. Conversely, the United States has seen improved moisture, with winter wheat ratings recovering to their highest since 2020. Argentina and parts of Europe also show favourable forecasts. This localised risk means global impacts are uneven, driving regional price disparities.  

International Price Trends

International wheat prices exhibited considerable volatility in May. CBOT wheat futures saw rallies from weather-related risk premiums and fund activity , but despite these, the expiring May '25 contract still dropped over 7% since April 14th. Soft Red Winter (SRW) wheat remains the world's cheapest, with funds holding record short positions – a risky bet that could trigger sharp short-covering rallies if fundamental conditions shift. FOB cash values varied, underscoring clear quality and origin premiums.  

III. UK Focus

2025 UK Crop Outlook

The UK's 2025 wheat crop projects a recovery to 12.5 million tonnes (Mt), up 12% from 2024, but remains below the five-year average of 13.9 Mt. This necessitates continued reliance on imported grain, particularly for higher protein milling quality.  

Domestic Weather Impacts & Crop Development

Our spring has been exceptionally dry. March and April 2025 recorded the lowest rainfall for those months since 1974, with the Met Office suggesting this might be the driest and sunniest spring since 1852. This severely stressed crops; only 36% of UK winter wheat was rated good/excellent by late May, down from 60% a month prior. While late May rains brought relief, the damage may persist, and June's weather is paramount for final yields and protein levels. Some commentators speculate cereal yields could be 25-40% down, and an early harvest is indicated.  

Sterling's Influence on Competitiveness

A strengthening British Pound (GBP) has significantly influenced UK wheat prices. Sterling has notably strengthened against both the US dollar and the euro, reaching multi-year highs. A firmer pound makes UK wheat less competitive for export and, crucially, makes imported wheat cheaper in local currency terms, effectively putting a ceiling on domestic values.