Wheat futures prices languished near $6.30 per bushel in late December, poised to end 2023 roughly 15% lower year-over-year. Abundant global supplies from major producers like Russia and South America outweighed supply disruption risks stemming from the ongoing war in Ukraine. The latest USDA forecasts showed Russia’s 2023/2024 wheat crop could reach 90 million metric tons, approaching last season’s record 92 million. This would propel Russia’s exportable wheat surplus to an all-time high of 50 million tons, the world’s largest by far. Bumper crops in South America further bolstered global inventories, magnifying the decline in wheat futures to a three-year low in September. However, damaged infrastructure in Ukraine from Russian military strikes, combined with the cessation of the Black Sea grain export corridor earlier this year, constrained Ukrainian exports, limiting further price declines. 

Looking into the future, the prospects for 2024 are uncertain. Should the conflict in Ukraine intensify, causing disruptions in the production or exportation of wheat by major producers, prices may surge despite sufficient stockpiles. Furthermore, unfavorable weather conditions such as droughts or floods in crucial growing areas could hamper crop yields. Alternatively, negotiated ceasefires and expanded export capacity may enable Ukraine to resume normal harvests and shipments. This potential resumption of Ukrainian exports combined with ideal weather and another year of record Russian output could spark a further slide in wheat futures. Much depends on geopolitical and crop developments in early 2024. Additionally, the strength of global wheat demand plays a pivotal role, with any slowdown in consumption growth potentially exacerbating the glut in inventories. In particular, a recession in Europe or Asia dampening food demand would inflict further downside on wheat futures. 

(Wheat USd/Bu，Five-year Chart) 

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