Euronext milling wheat futures extended losses over the past week, with the March contract (Expana Code: WHT2) settling at €190.75/mt on 16 January, down 0.52% week-on-week. The decline mirrors broader weakness across the grains complex and reflects a firmly bearish market reaction to the latest USDA WASDE update, which reinforced perceptions of ample global supply and limited near-term upside.
Market participants were largely caught off guard by the USDA’s decision to leave several 2025 supply-side assumptions broadly unchanged while revising on-farm stock estimates higher. This, combined with upward production revisions in key exporting regions, shifted sentiment decisively towards a supply-heavy outlook.
The USDA raised global wheat production for the 2025/26 season by 4.4 million mt to a record 842.2 million mt, driven primarily by higher estimates for Argentina and Russia. Global ending stocks were also lifted to 278.3 million mt, almost 18 million mt above the previous season. From a market standpoint, the combination of record output and rising inventories reduces buying urgency and caps price recovery potential, particularly in the absence of a fresh demand-led catalyst.
Russia continues to anchor the bearish narrative. The USDA increased its estimate for Russian wheat production by 2.0 million mt to 89.5 million mt (excluding Crimea), citing stronger early yield indications. While weather risks remain on the radar, with forecasts pointing to harsher winter conditions including heavy snowfall, ice formation and temperatures potentially falling below -25°C, the market has so far been unwilling to price in a meaningful risk premium, given current adequate snow cover.
In the Americas, CBOT wheat prices have faced additional headwinds from sharply higher Argentine production estimates. With more than 90% of the harvest completed, the USDA raised its forecast by 3.5 million mt to a record 27.5 million mt, nearly 50% above last season. This sizeable recovery significantly boosts export potential and strengthens expectations that global wheat markets will remain comfortably supplied in the months ahead.
European fundamentals have offered little support. The USDA trimmed EU wheat export projections by just 0.5 million mt to 32.5 million mt, a cut widely viewed as modest given the sluggish export pace so far this season. A similar situation is evident in Ukraine, where lower exports were offset by higher domestic consumption, leaving ending stocks unchanged. In both regions, traders increasingly expect further downward revisions to export forecasts should current shipment trends persist.