Title: Wheat market 2026: False global serenity in the face of supply shocks from major exporters
Baguette Academy took part in the French (ANMF) and European (European Flour Miller) flour millers’ congress in Marseille on June 5th, where a number of topics were discussed:
– The specific situation of the wheat-flour industry in Ukraine
– Developments in the French artisan bakery sector
– Continued concentration of the BVP and French milling industries
In the current economic and geopolitical context, the intervention of a grain trading expert on the world wheat markets was eagerly awaited to decipher the situation and provide an outlook after a record year.
Although world wheat production for 2026/27 is forecast at 819 Mt (the second-highest ever behind the 2025/26 record), the market is facing a 42 Mt contraction in production in the main exporting countries compared with the previous year.
The conference highlighted macroeconomic forces (the cycle linking energy inflation, central bank tightening and the risk of recession), currency dynamics (the impact of a strong ruble at 72 RUB/$ and a strong dollar), and an impending fertilizer crisis in Europe.
With world imports down 10 Mt year-on-year (particularly in North Africa and the Middle East), the geography of flows is being redrawn. The speaker concluded with strategic purchasing advice (coverage to June 2027) to anticipate the post-harvest rebound at the end of July 2026, while warning of the structural viability of EU farms in the face of land abandonment and the collapse of autumn fertilizer purchases (only 18% realized by June 1).
1. Macroeconomics and the impact of financial markets: from inflation to recession
The global macroeconomic cycle follows a logical feedback loop in 5 key stages presented at the conference:
1. Inflation driven by sharp rise in energy prices.
2. Tightening of financial and monetary policies by central banks (higher interest rates).
3. Negative environment for the economy, reflected in a decline in global GDP growth.
4. Potential flight of capital from risky assets (equities) to safe havens (gold, bonds), leading to a strengthening of the US dollar ($).
5. A slowdown in economic activity and a fall in energy demand, which ultimately puts downward pressure on oil prices.
Currency effect and speculative capital: As wheat is denominated in USD, the dollar’s strength penalizes the competitiveness of exposed origins. Speculative capital (“hot money”)
amplify these movements by buying massively during inflationary surges and cutting their positions during risk-off periods.
2. Long-term outlook and production-consumption balance (2013/14 to 2026/27 campaigns)
– History of world grains (Wheat/Barley/Maize): Over the past 14 years, production and consumption have grown in tandem. There have been phases of stock accumulation (e.g. +104 Mt in 2014/15, +77 Mt in 2016/17) and phases of correction.
– The turning point 2025-2027:
2025/26: A record-breaking year, with a production peak of 844 Mt for wheat alone and an overall surplus of +26 Mt for all grains, temporarily replenishing stocks.
2026/27 (Forecast): Trend reversal. Total world grain consumption should exceed production by 20 Mt, triggering a new phase of falling world stocks.
3. World wheat supply, demand and stock-to-use (S/U) ratios
World wheat balances (in millions of tonnes) reveal an underlying tension despite high volumes:
Campaign Production (Mt) Consumption (Mt) World trade (Mt) Stocks/Utilization Ratio (S/U)
2020/21 773 785 204 36,4 %
2021/22 781 791 204 34,8 %
2022/23 790 791 222 34,7 %
2023/24 792 797 221 33,9 %
2024/25 799 810 210 31.9% (low point)
2025/26,844 (Record) 824,224 33.9 % (Record)
2026/27 (p) 819 823 215 33,4 %
Key note: Although the 2026/27 harvest is estimated to be the “2nd best in history” at 819 Mt (thanks to importing countries), world consumption is stabilizing at a record level (823 Mt), which mechanically contracts the S/U ratio to 33.4%.
4. Analysis by major exporting countries and regional trends (2026)
Production in the main exporting countries is down by a net 42 Mt compared with 2025 (and -10 Mt compared with the five-year average):
– Russia: Still the world’s price maker, accounting for 20% of global trade.
Production forecast at 90.0 Mt (down 1.1 Mt year-on-year, but +0.7 Mt vs. 5-year average).
Winter wheat conditions are very good, but spring wheat sowings are behind schedule (only 28% completed, i.e. 3.2 Mha out of 11.1 Mha, compared with a five-year average of 45%).
Retention risk: The profitability of exporters is severely compromised by the appreciation of the ruble (72 RUB for 1 USD), although the export potential for 2026/27 remains high, at around 45 Mt.
– United States: Extremely difficult growing cycle for durum red winter wheat (US HRW) due to frost episodes and persistent drought (highly variable canopy in Kansas). The total US harvest plunged to 41.1 Mt (-10.6 Mt year-on-year and -6 Mt compared with the 5-year average). This is the lowest level since 1972. At the end of the cycle (weeks 20 to 27), the rate of “good to excellent” conditions fell painfully below 50%.
– Ukraine: Harvest prospects are good at 23.0 Mt (+0.5 Mt year-on-year, but -1 Mt vs. 5-year average), with an export potential of 16 Mt for 2026/27. However, logistics remain a huge question mark, conditioned by the evolution of the conflict with Russia. Stocks on June 30, 2026 are expected to be 3 Mt higher than initially forecast, maintaining high carry-out stocks.
– Canada: Production estimated at 28.0 Mt (-4.8 Mt year-on-year, but +1.0 Mt vs. 5-year average).
– Argentina: Back to normal at 20.6 Mt (-7.4 Mt on last year’s record, but up +1.2 Mt on 5-year average).
– Australia: Down to 30.5 Mt (-6.3 Mt year-on-year, and -4.2 Mt vs. 5-year average) under the latent threat of an El Niño phenomenon.
– European Union (EU-27 + UK): Production stable at 140.0 Mt (stable compared with the 5-year average, but down 8.1 Mt on the previous year).
– Kazakhstan: valued at 15.0 Mt (-4.3 Mt year-on-year).
5. Changing demand and falling world imports
Import requirements for all cereals combined ran out of steam in the current campaign, showing an overall drop of 10.28 Mt year-on-year to 181.49 Mt:
– Middle East & North Africa: Players in the decline. Imports from North Africa fall to 29.0 Mt (-4.0 Mt year-on-year) and from the Middle East to 25.75 Mt (-3.9 Mt year-on-year) due to expected excellent local harvests and large stocks built up in 2025/26 (e.g. rains in Morocco, Algeria).
– Asia: Still the world’s leading import hub at 58.15 Mt, but down 2.94 Mt on 2025/26.
Import requirements for the main regions (in thousands of tonnes – kto):
Region 2023/24 2024/25 2025/26 2026/27 (p) Var 26/27 vs 25/26
North Africa 31,576 31,679 33,000 29,000 -4,000
Middle East 30,285 21,577 29,650 25,750 -3,900
Asia 67,340 51,940 61,090 58,150 -2,940
Total Imports
Worldwide 196 718 175 858 191 767 181 490 -10 277
In conclusion, the points to watch are :
1. [ Macroeconomics] Follow the evolution of the 5-step cycle (Oil > Rates > Growth > Dollar > Declining activity) to identify the tipping point towards lower energy prices in the second half of 2026.
2. [ Currency risk] Integrate the impact of the strong ruble (72 RUB/$) on Russian farmers’ sales retention and monitor the pace of exports (target: 45 Mt).
3. [ Filière Azote/Engrais] Monitor the deficit in fertilizer purchases in France to secure rape and autumn wheat sowings before September.
4. [ Arbitrage Origines] Integrate the historic shortage of US HRW wheat (lowest crop since 1972 at 41.1 Mt) and redirect supplies to Eastern European or Canadian origins (28 Mt).
5. [ Black Sea Logistics] Monthly assessment of Ukraine’s actual export capacity in the face of transport constraints (potential of 16 Mt to be transported despite the conflict).
6. [ Commercial repositioning] Readjust EU export flows to compensate for the loss of 8 Mt of import demand from North Africa / Middle East.
7. [ Logistic hedging] Anticipate the tightening of the world grain balance (consumption > production of 20 Mt) by applying the recommendation to extend purchase hedges until June 2027 before the rally at the end of July.
