Wheat Markets Respond to Global Supply Dynamics and Policy Moves

The Chicago Board of Trade (CBOT) saw its March wheat contract rise to $5.42 per bushel on Thursday, 29 January 2026, trading close to the year‑high of $6.30 observed on 18 February 2025. The 52‑week low of $1.39, recorded on 3 July 2025, has been surpassed by more than a factor of three, reflecting a significant tightening in the supply‑demand balance that has persisted throughout the 2025/26 marketing year.

1. Export Surges from Central and South America

  • Kazakhstan reported a record‑high export volume for December, discharging 4.12 million tonnes of soft and durum wheat. This figure is 1.5 times greater than the same period in the previous marketing year, underscoring a robust export push from the Central Asian producer.
  • In Argentina, advanced agronomic techniques and favorable weather conditions have led to an unprecedented harvest in MY 2025/26, with projected production and export volumes hitting new records. The country’s export forecast for the period has been revised upward, signalling a stronger global supply that may moderate price pressure over the medium term.

These export surges contribute to a tighter global wheat market, particularly as the United States, the world’s largest producer, has faced weather‑related yield penalties in key growing regions.

2. Domestic Policy Decisions in Pakistan

The Economic Coordination Committee (ECC) of the Pakistani Cabinet approved the offloading of 800,000 tonnes of wheat to mitigate mounting storage costs and curb perceived wastage. The decision follows concerns that storage expenses were inflating domestic prices and that the country’s grain reserves were not being optimally utilized.

The move has been welcomed by some exporters, yet the Federation of Pakistan Chamber of Commerce & Industry (FPCCI) has disputed the ECC’s assessment of the “power circular debt” report that underpinned the offloading decision. FPCCI’s stance highlights the tension between fiscal prudence and market stability within Pakistan’s agricultural sector.

3. Market‑Making Activity and Currency Impact

Several market participants have capitalised on the weaker U.S. dollar and the prevailing short‑squeeze in the wheat contract.

  • Fund buying has accelerated, as highlighted by Marketscreener.com, with long positions swelling in anticipation of further price appreciation.
  • The European wheat market also rebounded on the back of a softer euro, strengthening the link between currency movements and grain prices.
  • The U.S. biofuel policy under President Trump has bolstered demand for wheat, as more feedstock is diverted to ethanol production, a factor noted by Seeking Alpha and Barchart analyses.

The confluence of a depreciated dollar, robust institutional buying, and supportive biofuel demand has driven the March contract’s upward trajectory, as seen in the $5.35 + 2.3 % rise reported by Morningstar and the $5.42 close at the CME.

4. Regional Trade Developments

On 28 January, Pakistani officials engaged with Azerbaijan’s Economy Minister to explore enhanced trade and investment ties. While the discussion focused on broad economic cooperation, it is likely to influence regional grain trade flows, potentially affecting supply availability and price dynamics in the future.

Takeaway

Wheat futures have surged on a backdrop of record exports from Kazakhstan and Argentina, domestic policy measures in Pakistan aimed at reducing storage costs, and a favorable macro‑environment driven by a weaker dollar and institutional demand. The market appears to be balancing short‑term supply tightness with medium‑term global production gains, resulting in a price corridor that remains near the upper quartile of the 52‑week range.