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Trade4go
Jul 18th, 2025
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The European Union (EU) has reinstated tariffs and quotas on Ukrainian agricultural products, ending the temporary tariff-free access granted since 2022. This significantly impacts Ukraine’s wheat exports, with a newly imposed annual quota of 1.3 million metric tons (mmt), a sharp reduction from a range of 4 mmt to 6 mmt exported to the EU in recent years. The decision follows political pressure from EU farmers, particularly in Poland and Hungary, who view Ukrainian wheat as a competitive threat due to its lower production costs. Although Ukraine and the EU reached an agreement in principle to modernize their trade framework, offering limited new access and aligning with EU standards, the rollback is expected to reduce Ukraine’s wheat export revenues and strain its economy. In response, Ukraine plans to focus on exporting value-added products and boosting domestic processing. Meanwhile, EU wheat production is projected to rise 15% year-on-year (YoY) in 2025/26, led by Romania, Bulgaria, and Spain. EU wheat exports have declined sharply, affected by Black Sea competition and logistical challenges.
Brazil’s wheat sector faces mounting challenges as the 2025/26 season begins under pressure from high input costs, tighter credit, and geopolitical instability. Wheat producers are especially affected by a stronger real, increased competition from Argentine imports, and adverse weather, including frost in Paraná. This has led to a projected harvest of just 6.9 mmt, the smallest since 2020. Despite firm domestic prices, a smaller planted area and declining seed sales signal contraction. In Jun-25 alone, Brazil imported 487 thousand metric tons (mt) of wheat, mostly from Argentina. With demand strong and local supply tight, mills are turning to imports and being highly selective in purchases. While producer profits remain marginally positive, the outlook points to continued reliance on foreign wheat and narrowing profit margins.
According to one of China’s intelligence consulting firm Sitonia, China’s feed demand for wheat is expected to surpass the United States Department of Agriculture's (USDA) current 2025/26 forecast of 33 mmt, driven by tight corn supplies and rising corn prices. In key regions like Henan, wheat has become more cost-effective for feed use, with price differences narrowing to under USD 13.95/mt. Corn imports have also declined to less than 500 thousand mt per month, down from 1.9 mmt, further boosting wheat's role in feed. Unlike the 2023/24 season, where poor-quality crops drove wheat feed use, current demand is purely market-driven. Meanwhile, China has completed a highly efficient wheat harvest, supported by over 800,000 combine harvesters and smart farming technologies such as Beidou-guided planters and drones. Supported by subsidies, these innovations have improved harvesting speed, planting accuracy, and overall productivity. The integration of modern equipment and timely crop management is laying a strong foundation for sustained grain output and food security.
According to the Moroccan National Federation of Mill Owners, Morocco is ramping up its soft wheat imports to ensure a stable supply for the next three to five months, capitalizing on declining international prices. With global wheat prices falling since May-25, current import prices range between USD 277.7/mt and USD 283.3/mt, falling below the government subsidy threshold of USD 298.60/mt. This price gap has prompted continued government support to bridge the difference between import and domestic market prices. Meanwhile, the Agriculture Minister has projected a 41% YoY rise in grain production this year, reaching 4.4 mmt, attributed to abundant rainfall in Mar-25 and Apr-25. Despite this improvement, Morocco remains vulnerable to ongoing drought conditions, which are now in their sixth consecutive year. To counteract the impact of climate-related challenges and declining wheat reserves, the government is extending import subsidies through year-end, aiming to bolster food security.
In the 2024/25 season, Russia exported approximately 42.2 mmt of wheat, a notable decline from the previous year's 55.5 mmt but still among its top three annual performances. Early-season shipments were strong, but export volumes dropped significantly in the second half due to lower domestic stocks, an appreciating ruble, and unfavorable price dynamics. Key importers like Egypt maintained stable demand, while others, including Turkey and Algeria, reduced purchases. Climatic challenges, especially droughts in southern regions like Krasnodar and Rostov, have sharply reduced wheat yields and strained supplies. Despite this, Russia remains a leading exporter. Looking ahead, export volumes are expected to remain pressured by heightened global competition, particularly from an abundant EU harvest, and fluctuating prices. In response to declining exports, Russia temporarily eliminated its wheat export duty starting July 9, 2025, aiming to stimulate shipments and stabilize domestic markets.
Turkey’s wheat production for 2025/26 is projected at 16.3 mmt, down 15% from the previous year due to ongoing drought and low rainfall in key growing regions. Yields may fall further if dry conditions persist, especially as most wheat is rain-fed. Wheat consumption is forecast at 19.4 mmt, with imports estimated at 10.3 mmt, 3.2 mmt lower than the previous season due to import restrictions. Most imports will support flour and pasta exports, while wheat exports are expected to remain stable at 7 mmt.
Ukraine’s wheat harvest for the 2025/26 season beginning July 1 is expected to reach between 20 mmt and 22 mmt. This is slightly below last year’s 22.5 mmt estimate, but still sufficient to meet domestic consumption needs, which remain under 6 mmt. While the harvest is delayed by two to three weeks due to atypical weather conditions and further impacted by ongoing military operations, particularly in conflict zones where losses from fires have occurred, the country’s food security is not at risk. Despite these challenges, wheat exports are projected to reach 16.5 mmt.
In early Jul-25, the United States (US) winter wheat harvest gained momentum, with 16% of the area threshed in a week, bringing the total to 53% by July 6, just 1% below the five-year average. While spring wheat is developing ahead of schedule, its condition declined slightly, with only 50% rated good to excellent, down from 53% the previous week and 25% lower than last year. Wheat prices on the Chicago Board of Trade (CBT) remained stable, with contracts trading at USD 5.50 per bushel on July 10. US wheat exports reached 1.8 mmt since the start of the marketing year on June 1, a 2% YoY increase. Meanwhile, Indonesia is securing a wheat supply through a USD 1.25 billion deal with the US Wheat Associates to import at least 1 mmt annually from 2026 to 2030. The agreement aims to preemptively address potential tariff hikes under US trade policy shifts.
In W28, Russia's wheat prices remained stable at USD 0.23 per kilogram (kg) for the third consecutive week, reflecting balanced market conditions ahead of the arrival of new-crop wheat. Despite this stability, prices were up 4.55% month-on-month (MoM) and YoY. Facing challenges such as low global prices, a strong rouble, and tight margins, farmers have been withholding supplies in hopes of higher returns. While the grain export tax dropped to zero starting July 9, potentially supporting exports, wheat shipments have been slow to reach Black Sea terminals. Russia projects a 4% YoY rise in its grain harvest to 135 mmt in 2025 and expects wheat exports to reach 45 mmt this season, up from 44 mmt last year. However, Jul-25 exports are forecast at just between 2 mmt and 2.5 mmt, down from 3.67 mmt in Jul-24. Responding to the lowest wheat export volumes since 2008, the Russian government has ordered new measures to accelerate agricultural exports and ensure positive momentum in the months ahead.
In W28, US wheat prices declined to USD 0.25/kg, marking a 3.85% week-on-week (WoW) drop and a 7.41% MoM decline, though still 4.17% higher YoY. The weekly decline reflects harvest pressure and subdued demand, with futures falling across major contracts as of July 9. Strong stocks and a favorable production outlook continue to weigh on basis levels, though concerns over inconsistent grain quality from harvest rains may provide some support. According to the USDA’s Crop Progress report, 48% of the winter wheat crop was rated good to excellent, unchanged from the previous week and 3 points below last year. Harvest pace accelerated, with 53% completed, up 16 points WoW and just 1 point behind the five-year average. Spring wheat heading reached 61%, up 23 points from the previous week and 3 points above the five-year norm. However, only 50% of the spring crop is rated good to excellent, down 3 points WoW and 25 points below last year, as conditions diverge between the eastern and western Hard Red Spring (HRS) regions. Weather continues to play a critical role, heavy rainfall has caused flooding in Texas, and persistent showers across the Central Plains are slowing harvest progress, although grain quality has held up better than expected. In contrast, record-high temperatures in the Northern Plains may be stressing crops, while the Pacific Northwest remains dry.
In W28, France's wheat prices remained steady at USD 0.23/kg, unchanged WoW and MoM but up 4.17% YoY, reflecting stable market conditions. However, harvest delays due to early Jul-25 rains and localized flooding have raised concerns over grain quality. The French Ministry of Agriculture estimates 2025 soft wheat production at 32.6 mmt, up 27% from 2024’s poor harvest, which was severely impacted by heavy rains. The average yield is projected at 7.26 mt per hectare (ha), compared to 6.09 mt/ha last year, with wheat area rising to 4.49 million ha from 4.21 million ha. The gross harvest is expected to exceed the five-year average by 2.4%, though the ministry notes this average includes two weak production years and that expansion is limited by modest sown areas.
In W28, Ukraine's wheat prices held steady at USD 0.23/kg for the fourth consecutive week, unchanged WoW and MoM but 4.55% higher YoY, reflecting balanced market conditions. However, prices are expected to rise in the coming weeks as farmers delay sales due to low yields reported in the South region. This upward pressure may be short-lived, as reports of better yields in central and western regions and low global prices could cap gains. Export prices are trending upward due to harvest delays and limited supply, prompting increased purchasing activity at Black Sea ports. As of July 11, 2025, Ukraine harvested 1.24 mmt of wheat from 434.8 thousand ha, averaging 2.85 mt/ha. In central regions, where harvesting is just starting, yields are much higher, ranging from 5mt/ha to 6 mt/ha, with good grain quality, supporting higher feed wheat prices. Meanwhile, wheat exports remain sluggish, with only 172 thousand mt shipped in the first 14 days of the 2025/26 season, four times less than the 732 thousand mt exported during the same period last year.
To mitigate the revenue shortfall from reduced EU wheat access, Ukraine should accelerate investment in domestic grain processing and value-added production. This includes expanding facilities for flour milling, pasta manufacturing, and wheat-based industrial goods. By fostering local agrifood industries and improving compliance with EU standards, Ukraine can enhance the competitiveness of its processed exports, reduce raw grain dependency, and tap into alternative high-margin markets in the Middle East, Africa, and Asia. Strategic public-private partnerships, targeted subsidies for processing infrastructure, and World Trade Organization (WTO)-aligned export promotion will be essential to sustain growth under new EU trade restrictions.
To capitalize on wheat's increasing role in feed, Chinese authorities should formalize dual-use grain pricing models to stabilize demand and avoid over-reliance on any single crop. Support should be extended to feed manufacturers adopting wheat in balanced rations, while enhancing logistics for regional grain substitution. At the same time, China should continue investing in smart farming technologies, such as artificial intelligence (AI)-based crop monitoring, drone seeding, and smart irrigation, to optimize wheat yields. Government grants and public research and development (R&D) in precision agriculture should be scaled up to ensure sustained productivity and secure food supply amidst changing feed patterns.
Aiming to reduce reliance on imports and buffer against yield loss in dryland farming, Turkey should prioritize improving wheat productivity through mechanization, soil health management, and broader irrigation access. Government incentives for rainwater harvesting and micro-irrigation in wheat-dominant regions could enhance resilience. Supporting crop insurance programs and diversifying income sources for rain-fed wheat farmers will also mitigate risk. Strengthening local wheat breeding programs to develop drought-tolerant varieties will yield long-term gains in self-sufficiency and production stability.
Sources: Tridge, Agroinvestor, Agrolink, Agropolit, Agrosektor, Kamu3, Sinor, UkrAgroConsult
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