Wheat prices are at their lowest level since 2020, driven down primarily by burgeoning production from the Black Sea region, a wheat market analyst says.

“The question is, ‘Have we hit bottom?’” Tyllor Ledford, market analyst for U.S. Wheat Associates, said. “The answer is, ‘I don’t know.’ … The whole world is waiting with bated breath for the bottom to be found.”

Since Russia’s invasion of Ukraine in the spring of 2022, global wheat prices have steadily declined. Prices stabilized “a bit” in the fall of 2023 and early 2024, but have since drifted lower.

Soft white wheat ranged from $5.35 to $5.60 per bushel on the Portland market on March 18.

Ledford gave a global market outlook during the Washington Grain Commission board meeting March 14.

Black Sea

Russia had two years of record production and exports.

In early estimates, private analysts project Russia’s production to be more than 87 million metric tons, while government analysts say it could be as much as 93 million metric tons for 2024-2025.

“What we can go into this new crop year expecting is probably another strong Russian production, and likely another strong year of Russian wheat exports,” Ledford said.

Russian and Ukrainian wheat production have increased 55% over the last decade, Ledford said.

Before the war began, they exported 55.9 million metric tons, about 27% of the global market share. Today, their exports have increased by 11 million metric tons, and the region has more than 30% of the world market share.

Ukraine had a stronger export program than expected, but much of the trend is driven by Russia’s “ample” supplies and exports, Ledford said.

It’s not known how much of Russia’s wheat is stolen from Ukraine, she said.

The U.S. share of the global market was about 11% before the war, and has dropped to 9%.

“We know U.S. wheat production is down while Russia’s production is way up,” said Steve Mercer, vice president of communications for U.S. Wheat. “Yet, using USDA data, we note that the ratio of average annual exports compared to annual production for Russia and the United States is almost exactly the same at just over 46.5%.”

The war in the Middle East doesn’t directly influence wheat, but adds “a lot of instability and uncertainty to the global economy as a whole”, potentially impacting currencies and oil prices, Ledford said.

U.S. wheat productionUSDA projects 47 million planted acres, down 5% from last year, but still just above the five-year average. Winter wheat acreage declined 6%, spring wheat may be slightly lower, but could remain steady or go even higher if planting conditions are favorable.

USDA projects U.S. wheat production will increase with “much more normalized” weather, Ledford said.

Production in other competing wheat exporters — Canada, the European Union, Australia and Argentina — also impacts wheat prices, particularly as the La Nina weather pattern takes hold, bringing more rain to Australia and less rain to the Southern Plains of the U.S., she said.

Global ending stocksIn the last four years, world demand has outpaced global wheat production. Right now, there’s an 11.3 million metric ton deficit, Ledford said.

“This is not the first time we’ve had a gap like this, but it is the largest gap we’ve had since 2012-2013,” she said.

Ending stocks in major exporting countries have decreased in the last eight years, down from 72.8 million metric tons in 2017 to 58.9 million metric tons in 2023, about a 19% decrease. Stocks are expected to drop further, to 57 million metric tons, Ledford said.

U.S. exportsU.S. exports are 6% ahead of last year, due to an increase in exports for hard red spring wheat, soft red winter wheat and durum wheat.

However, USDA has dropped its export projections from 19.7 million metric tons to 19.3 million metric tons.

“Overall, our export pace is a bit ahead of our norm, but we’re still sitting at one of our lowest export levels since 1971,” Ledford said. “Although we’re ahead in some classes, unfortunately, we’re still not sitting in a very strong export position.”