As of December 19, 2024, wheat prices are on track for their longest decline in over five months, having fallen for six consecutive days. This downturn is largely driven by expectations of record-high global wheat production for the 2024-25 season, particularly from Australia and Argentina, which are expected to contribute significantly to the ample supply [00eb6285].
The strengthening of the U.S. dollar, attributed to fewer anticipated interest-rate cuts by the Federal Reserve, has also played a role in the declining wheat prices. As the dollar strengthens, it typically makes U.S. exports more expensive for foreign buyers, which can dampen demand [00eb6285]. Chicago wheat futures are currently poised for a second consecutive weekly decline, reflecting these market pressures [00eb6285].
Despite the overall bearish sentiment in the wheat market, there are some mitigating factors that may limit further price drops. Notably, a smaller crop forecast from Russia, the world's largest wheat exporter, could provide some support. SovEcon has recently reduced Russia's 2025 production forecast to its lowest level since 2021, which may help balance the supply-demand equation [00eb6285].
Overall, the wheat market is navigating a complex landscape of supply forecasts and currency fluctuations, with significant implications for global agricultural markets [00eb6285].