For months now, the world has been bracing for larger wheat supplies to be produced as part of the 2024/25 wheat marketing year, which is slated to begin on June 1. The world was finally moving on from El Niño, the Black Sea figured out how to continue shipping wheat amidst ongoing turmoil, and South American production had been revived following a multi-year drought.

But throughout April 2024, the markets showed some signs that the “surplus wheat supplies” story that we analysts have been peddling for the better part of the past year has quickly become outdated. U.S. wheat prices shot up to nine-month highs as weather problems revived supply worries for the upcoming 2024 global wheat crop.

Five of the seven largest global wheat exporters are located in the Northern Hemisphere. Each has faced weather turbulence this spring. Russia and Ukraine are coming out of atypical heat for early spring and dry skies. The Canadian Prairie stayed unusually dry throughout the winter and drought worries are creeping back into the Southern Plains through the second half of April 2024.

Producers across the European Union have battled the weather since their crops were planted last fall. Smaller acreages are forecast due to excessive fall showers. Dry weather in Eastern Europe has already caused crop stress. And atypical early spring warmth across the bloc has left wheat crops newly emerged from winter dormancy more susceptible to frost damage.

These five producers (Russia, the E.U., Canada, the U.S. and Ukraine) accounted for 69% of the world’s exportable wheat supplies, so it’s no small wonder that U.S. wheat prices rallied to multi-month highs by the end of April.

All quiet on the home front

While I’d never wish bad weather on anyone, the Northern Hemisphere’s spring weather woes might be just the price break growers in the U.S. need to maintain profit prospects for 2024 crops about to be harvested. Domestic demand has struggled in recent months, so any additional found for the 2024/25 will go along way to maintaining prices. But that’s not an easy ask.

Cheaper corn costs are leading livestock producers to opt away from adding wheat to rations. The smallest cattle herd size since the 1950s also limits the available grain-consuming animal units needed to eat any extra wheat supplies that are harvested in the upcoming months.

On the human side, domestic flour consumption has been trending lower over the past couple years amid a resurgence in low-carb diets and a pullback in pandemic-era baking. Wheat milling through the first half of the 2023/24 marketing year stood at its smallest volume since USDA began tracking data in 2014/15. Historically, January through June milling volumes tend to run 3% smaller on average than June through December rates.

With 2023/24 export volumes slipping to the smallest level since 1971, there is nowhere to go but up for U.S. exports. But exports could turn out to be the biggest challenge U.S. farmers will face in the 2024/25 marketing year as a strong dollar and stiff competition from the Black Sea force U.S. wheat – as well as wheat supplies from Canada and the European Union – into a residual supplier position.

But there is a silver lining. If persistently hot and dry forecasts in Southern Russia during the first few weeks of May continue to stress the crop, markets will likely start to question the stability of global wheat surpluses. At that point, U.S. wheat growers could see more profitable harvest price prospects than what may have been anticipated earlier in 2024.