Markets eye 2026 wheat amid forecasted global production drop

The record-breaking 2025/26 wheat season is still underway, but markets are already looking ahead to the next crop, with 2026 wheat contracts trading at a notable premium over 2025, highlighting rising concerns about global supply.

Victoria Blazhko, Head of Editorial, Content, and Analytics at ASAP Agri, noted that this market structure is unusual for wheat. “Yet for a new crop, such a structure is more the exception than the rule. Typically, the old crop gains a premium toward the end of the marketing year as physical supply tightens, while the new crop trades at a discount as future volume,” she explained.

As of mid-February, the September 2026 contract on Euronext traded about 4 euros per ton above the May 2026 contract, while on the Chicago Board of Trade, the July 2026 contract held roughly a 3-dollar-per-ton premium over May. While formally a contango pattern—where deferred contracts trade above nearby ones—the premium for the new crop reflects more than technical market mechanics. It indicates that traders are beginning to price in risks for the 2026/27 season, including lower production and a thinner supply buffer among major exporters.

The current 2025/26 season remains comfortable for wheat markets. Global production reached a record 842 million tons, and carryover stocks remain ample. Among the eight key exporters—the United States, Canada, Australia, Argentina, the European Union, Russia, Ukraine, and Kazakhstan—the stock-to-use ratio stands near 18%, providing a meaningful buffer and explaining why old-crop wheat has not gained a premium.

Forward-looking projections, however, are less relaxed. Preliminary forecasts for 2026/27 indicate a 7–8% decline in production across the eight major exporters, equivalent to roughly 32 million tons.

Country-level projections are broadly aligned: Russia may fall from around 90 million tons to 86–87 million tons due to normalized yields and reduced acreage, while Ukraine is expected near 23 million tons. Canada could decline from 40 million tons to 35 million tons, and US production may drop to 50–52 million tons amid low winter wheat acreage and persistent drought risks. In the EU, output may fall from about 144 million tons to 135–138 million tons. Argentina is forecasted at 21–23 million tons, Australia near 32 million tons, and Kazakhstan from roughly 19 million tons to 15 million tons.

Blazhko emphasized that this reduction does not signal a deficit but will likely narrow the global supply cushion and shape market sentiment. “Still, these are early estimates that will be revised, and weather could amplify the production decline,” she said, underscoring the growing uncertainty ahead for wheat markets.

By Vafa Guliyeva