Wheat Markets Feel the Strain

The UK wheat market continues to wrestle with the consequences of one of the driest springs in decades. According to the Met Office, March and April saw the lowest rainfall since 1974—and possibly since records began in 1852. The effects on cereal crops are becoming clear.

Recent data from AHDB and RSK ADAS reveals that by late May, only 36% of winter wheat crops were rated in good or excellent condition—down from 60% just a month prior. Poor nitrogen uptake, limited tillering, and thinner canopies are widespread, particularly on lighter soils.

“There’s no question that yield potential has taken a hit,” said Helen Plant, Senior Analyst for Cereals at AHDB. “But heavy rainfall in the final week of May brought much-needed relief and renewed optimism for many.”

Despite this late rainfall, the damage from a dry spring appears baked in. In some regions, crops are developing up to two weeks earlier than normal—raising concerns about grain quality and protein levels. Future rainfall through June is now seen as the deciding factor for both yield and quality.

Prices reflect this uncertainty. The LIFFE Nov-25 futures contract dropped to £178.20/tonne, while milling and low-protein wheat contracts also fell by £5 each. In contrast, Canadian Western Red Spring (CWRS) wheat spot prices jumped £11—pointing to stronger short-term demand.

Sterling’s strength is compounding matters. The pound has climbed against both the euro and the dollar, making UK wheat less competitive for export and cheaper to replace with imports. This puts further downward pressure on domestic values.

One key signal: LIFFE feed wheat is now priced at parity with MATIF milling wheat—a rare occurrence that underscores the divergence between UK price resistance and softer sentiment elsewhere in Europe. In many cases, UK farmers are holding stock or rolling contracts into the new season rather than sell at a perceived discount.

Regional Contrast

While crops in the South East and Scotland are under acute pressure, Northern Ireland has fared better, with more favourable weather and crops generally in good condition.

Dry conditions have also helped suppress disease and weed pressure so far. But with soil moisture now rising, concerns are growing about yellow rust, especially in vulnerable winter wheat varieties in the North East and East Midlands. Pest pressure remains low for now.

Global: Droughts, Disruptions, and Realignments

Production Up, Confidence Down

Globally, wheat production is forecast to exceed 806 million tonnes for the 2025/26 season—on paper, a record. Yet underlying demand remains strong, and stocks are projected to tighten. The market tone is uneasy, and regional stress points are emerging fast.

In Ukraine, wheat production may fall by 10%. Late sowing, inconsistent moisture, and the continued disruption from war have left farmers braced for a reduced harvest, with forecasts between 20–22 million tonnes. The recent reintroduction of EU wheat and barley quotas has added another layer of complexity, limiting Ukraine’s access to European buyers—but encouraging a pivot toward Asia and North Africa.

China: Scorched Fields, Silent Imports

China’s drought-hit wheat belt is also drawing attention. Farmers in Shaanxi and Henan report yield reductions of up to 50%, with emergency harvesting and heat stress affecting ripening. While irrigated farms in parts of Henan have fared better, the overall crop quality remains uncertain.

So far, this hasn’t yet led to increased imports—but any shortfall could create new demand for Australian and Canadian wheat, especially as both countries sit on large end-of-season stocks.

Australia’s Surplus Grows

Australia is a key example of abundance becoming a burden. With Chinese demand sharply down, the country may carry over up to 8 million tonnes of wheat—well above the five-year average. Analysts warn this could lead to a “fire sale” to clear space for the new harvest, weighing heavily on global prices.

Meanwhile, Canadian CWRS wheat spot prices rose by £11/tonne to £276, suggesting export interest remains stronger there—for now.

Egypt’s Quiet Pivot

Egypt’s new state grain buyer, Mostakbal Misr, has quietly secured 180,000 tonnes of French wheat in private deals with top EU traders. Though the new agency is still navigating logistical teething issues, the agreement signals growing international confidence in alternative buying routes. It also reveals how soft demand in France is fuelling flexible deals, especially amid ongoing tensions with Algeria.

Conclusion: A Market of Contradictions

In the UK, the outlook is finely balanced. Crop prospects hinge on June’s rainfall, and while prices remain under pressure, supply concerns are quietly building. A stronger pound continues to undermine competitiveness just as growers face higher production risk.

Globally, wheat markets are fractured. Record production clashes with poor harvests in key regions. New trade routes are forming, while old alliances shift. The result is a wheat market where weather and geopolitics are now as important as tonnage—and every week counts.