Farmers around the world are gearing up to collect abundant wheat crops in the coming weeks, helping ease a global grain shortfall that's fueled a surge in prices.
Spring rains showered fields in the Black Sea region, the U.S. Plains and the European Union, bolstering prospects for the approaching winter-wheat harvest across major suppliers. The staple is the first major crop collected in the Northern Hemisphere, and hefty harvests will aid in replenishing grain silos drained by surging Chinese demand and poor weather last year.
The outlook for refreshed supplies is contributing to a cooldown in prices after a rally across agricultural markets propelled a gauge of global food costs to near a decade high. Still, weather issues linger in some growing areas, and easing lockdowns are boosting grain demand, tempering the likely retreat.
"It should help some of the food inflation concerns -- bread is such an important part of people's diets," said Jack Scoville, a vice president for Price Futures Group in Chicago. "There's enough of the growing season left that there still could be some issues."
Conditions for soft wheat in France, the EU's top producer, are the best for this time since 2015 with a few weeks left in the growing season. A May crop tour in the U.S. breadbasket state of Kansas pointed to record yields, and a stretch of sunny, warm weather has set early harvests "off to a good start" after showers, according to Justin Gilpin, chief executive officer of the Kansas Wheat Commission.
Russian analysts have been ratcheting wheat estimates higher, and yields in Ukraine could climb near a record. Mykola Gorbachov, president of the Ukrainian Grain Association, likened the country's nonstop showers to a Scottish spring.
"Weather conditions are just perfect," he said at last week's International Grains Council conference. "All fields are green."
Prices are easing as harvests kick off, with most-active futures in Chicago shedding about 13% from an April peak. Hedge funds also turned net-bearish for the first time in almost two months.
That still leaves the contract at a seasonal eight-year high, and analysts caution that a bumper crop of corn is also needed before wheat substantially weakens. Heavy rain just before winter-wheat harvest has risked crop quality in the U.S. and the Black Sea area, and later-planted spring wheat is grappling with drought.
Even with a record wheat haul, the International Grains Council expects global grain stockpiles to fall further next season.
"Wheat is a cog in a big machine," said James Bolesworth, managing director of U.K.-based CRM AgriCommodities. "It's going to take at least a season, if not two, for these supply and demand balances to come back into kilter."
For now, some buyers are holding out for cheaper prices. Top importer Egypt canceled its third tender this year, and Saudi Arabia booked less supply for August and September than expected.
Russian shipments are picking up as government export duties wane, though the taxes could complicate trade during the season.
"Importing countries are rather careful and maybe expecting a correction in prices," said Andree Defois, head of consultant Strategie Grains, who expects "just balanced" global supplies. "We would expect lower prices for wheat, but not dramatically lower."