Wheat Market in Asia Undergoing Disruptions Amid Geopolitical Turbulence, Economic Conditions, and Disruptive Weather

The 2024 APAC wheat market have been facing major disruptions from geopolitical issues, economic pressures, and adverse weather. India’s delayed wheat import plans, due to post-election politics, have added uncertainty to demand. Strikes in key exporting regions like the EU, USA, Canada, and Poland are slowing supply chains, while interest rate cuts in major economies are reducing purchasing power across Asia, dampening demand for imported wheat (Interest rate cuts in major economies are making Asian currencies weaker, which increases the cost of imports. This reduces purchasing power in Asia, making imported wheat more expensive. As a result, demand for wheat imports is down, as buyers are more cautious with spending on higher-cost goods.)

Weather conditions are further complicating supply. Brazil’s wheat production has been hit by drought and flooding, and tropical storms in North Asia and the USA have disrupted supply and demand. Australia initially saw a price spike after its 2024 harvest, but increased competition and a shift to hand-to-mouth buying in Southeast Asia pushed prices down by July. The 2024/25 Australian wheat crop may be larger, but heavy rains threaten quality, especially in winter crops, leading to varied crop estimates across regions.

Australia’s wheat quality is uncertain, with heavy rains likely to downgrade grades. Current crop estimates range widely—Western Australia expects 10-10.5 million metric tons (mt), New South Wales between 11-13 million mt. Total estimates are between 30 and 31.8 million mt, with the Australian Bureau of Agricultural and Resource Economics (ABARES) and trade forecasts differing. Australia may benefit from these diverse quality levels, offering a mix of affordable and higher-quality wheat to compete in feed markets. Southeast Asian nations, particularly price-sensitive buyers like the Philippines and Thailand, may find lower-cost Australian wheat attractive, though feed corn remains a strong alternative.

Market sentiment is largely bearish. Typhoons and storms have hurt feed demand, especially in North Asia, with impacts on livestock and aquaculture in Vietnam. China’s absence from the international market, potentially due to import controls, has kept demand weak. Buyers in Southeast Asia are cautious, adopting hand-to-mouth purchases due to the price gap between feed wheat and corn. However, weather challenges in the Southern Hemisphere, geopolitical tensions in the Middle East and Black Sea, and Russia’s wheat price floor could push prices upward.

In the short term, wheat prices are likely to remain bearish due to slow demand and the pressure of the Southern Hemisphere’s harvest. Without unexpected geopolitical or economic disruptions, prices are expected to stabilize at lower levels. Looking ahead, China’s wheat import volume is projected to drop in 2025, which could further depress demand and hold prices down. The Southern Hemisphere’s harvest and related weather patterns will play a critical role in shaping market dynamics.

Australian root-zone soil moisture has improved from 2023 levels, especially in Western Australia and New South Wales, but upcoming rains could disrupt the winter crop harvest. Growers are cautious, with crop estimates still inconsistent and muted selling activity contributing to supply uncertainty.

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Conclusively, 2024 APAC wheat market has been facing disruptions from geopolitical issues, economic pressures, and severe weather. Delays in India’s wheat imports and supply chain disruptions have lowered demand, while weakened purchasing power in Asia adds to the strain. Weather patterns continue to impact supply, with heavy rains threatening Australia’s wheat quality despite potential yield increases. Market sentiment remains cautious, and prices are expected to stay low unless major disruptions occur. China’s projected drop in wheat imports in 2025 could further reduce demand, with the Southern Hemisphere’s harvest and weather conditions playing a key role.