Wheat Market Signals: Trading the US Ending Stocks Surge

The wheat market is sending mixed signals in April, according to the latest WASDE report. The report, released on April 10, projects US wheat ending stocks at 846 million bushels, up 27 million bushels from the previous estimate, marking a 22% increase year-over-year. Despite this supply increase, the season-average farm price remains steady at $5.50 per bushel. These dynamics may offer some pretty good opportunities to capitalize on short-term price movements in wheat futures.
US Wheat Market: A Supply Surge with Stable Prices
The WASDE report details a notable shift in the US wheat market for the 2024/25 season. Ending stocks are now projected at 846 million bushels, a 27 million bushel increase from the prior estimate, driven by higher imports and reduced exports. Imports are up 10 million bushels to 150 million, the highest since 2017/18, with increases across Hard Red Spring (HRS), Durum, White, and Hard Red Winter (HRW) classes. Meanwhile, exports are lowered by 15 million bushels to 820 million, reflecting reductions in HRS and HRW shipments due to weaker global demand.
Despite this supply buildup, the season-average farm price for wheat remains unchanged at $5.50 per bushel. This price stability suggests a market in balance, but the increased ending stocks—now 22% above last year’s 696 million bushels—introduce bearish pressure. Domestic consumption is slightly down, with seed use reduced by 2 million bushels based on the March NASS Prospective Plantings report, while feed and residual use holds steady at 120 million bushels.
Global Context: A Tightening Supply Picture
Globally, the wheat market tells a different story. The WASDE report projects 2024/25 world ending stocks at 260.7 million tons, up 0.6 million tons from the prior estimate but still 3% below last year’s 269.06 million tons and the lowest since 2015/16. This decline is driven by reduced production in Saudi Arabia (down 0.3 million tons) and the EU (down 0.2 million tons), as well as lower beginning stocks in Uzbekistan and Israel. Global trade is also down, with exports cut by 1.3 million tons to 206.8 million, primarily due to lower shipments from Russia (down 0.5 million tons), Australia (down 0.4 million tons), and the EU (down 0.3 million tons), only partially offset by increases from Canada and Ukraine.
The contrast between rising US stocks and declining global stocks creates a nuanced trading environment. While US oversupply may weigh on prices domestically, the global tightness—especially with stocks at a 9-year low—could provide a bullish counterforce if demand picks up or supply disruptions occur in key exporting regions.
Trading Signals and Strategies
With US ending stocks surging to 846 million bushels—a 22% year-over-year increase—the immediate outlook leans bearish, as this increased supply typically exerts downward pressure on prices, yet the stable season-average price of $5.50 per bushel indicates a potential support level, reflecting the market’s ability to absorb the supply growth without a price decline. On the global stage, the 260.7 million ton ending stock level, the lowest since 2015/16, introduces a bullish undercurrent, particularly if export demand strengthens in regions like Sub-Saharan Africa or Southeast Asia. Chicago Board of Trade Wheat Futures ZW1! are currently trading at $5.476 per bushel, down from a recent high of $5.675, aligning with the bearish setup. A bearish MACD crossover (MACD at 0.32, signal at 0.44) confirms downward momentum as prices have broken below the 50-day moving average resistance at $5.65. A break below $5.45—a level could signal a drop to $5.40, offering a 1% downside. Conversely, for a bullish reversal, holding above $5.45 and breaking through $5.50 with strong volume and a MACD crossover above the signal line could propel prices to $5.675, a 3-4% gain, particularly if export demand rises or weather issues impact key producers. Alternatively, with the recent price action, wheat futures may trade in a range between $5.40 and $5.50 in the near term, allowing traders to buy near $5.40 with a stop-loss below $5.35 and sell near $5.50 with a take-profit at $5.55.
Risks to Watch
Trading wheat futures carries risks, particularly given the mixed supply signals. On the bearish side, the US ending stock surge to 846 million bushels could lead to further price weakness if domestic demand doesn’t absorb the excess, especially with exports down to 820 million bushels. Looking from the other side of a hand, the global stock tightness at 260.7 million tons introduces upside risk if supply disruptions occur—note the WASDE’s historical data showing a 3.1% root mean square error for world ending stocks, meaning projections can vary by up to 14.5 million tons. Broader market volatility from the US-China trade war could impact commodity prices if recession fears intensify.

So, the wheat market in April, as detailed in the WASDE report, presents a dual-natured trading opportunity. US ending stocks surging to 846 million bushels signal bearish pressure, but the global stock decline to a 9-year low of 260.7 million tons offers a bullish counterpoint. With ZW futures at $5.476 per bushel, traders can pursue a bearish setup targeting $5.40 for a 1% downside, a bullish reversal to $5.675 for a 3-4% gain, or a range-bound trade between $5.40 and $5.50.