The wheat market in Latam is under scrutiny due to the complex interaction of cross-climatic factors, with both hemispheres playing a key role as main sources. Seasonality is a key factor, while trade, tariff, and monetary policies have a direct impact on supply and demand dynamics. Although the continent's share of global wheat trade is modest, it plays a crucial role in intraregional supply, and in some cycles there are competitive advantages that allow it to easily transcend the continent.
The volatility observed on the world stage and local particularities require careful analysis by producers and consumer industries. In this article, we will explore the main aspects that influence the wheat market in Latin America, from production projections to logistical challenges and emerging opportunities.
In summary, we will address:
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According to Sol Arcidiacono, Head of Latam Grains at Hegepoint, wheat is the crop with the most fragmented production/supply compared to soybeans and corn. Although there is a high concentration of supply in the Northern Hemisphere (80%), it is important to consider that the main exporter, Russia, accounts for 20% of the market. Although it is the most important benchmark and price setter, it does not have the same prominence as the United States in corn (38% of the market) or Brazil in soybeans (60% of the market). In the latter two cases, the performance of these origins is decisive for prices.
Now, focusing on Latin America, there is a surplus of wheat supply, although it is concentrated in the poles, as it is a winter crop. Therefore, the vertical geography of the continent is a challenge for trade flows. The recovery of production in Argentina and the United States favors the idea of comfortable supply for the main regional destinations: Brazil and the Caribbean.
Improved competitiveness this cycle, thanks to good yields that led to good harvests, complemented by weak currencies (USD and ARG$), favors the incursion of North American and South American wheat into Asian and African destinations, in addition to traditional destinations on the continent, gaining ground despite bumper harvests in Australia, Europe, and the Black Sea, says Sol Arcidiacono.
Global production of this cereal influences the LATAM market by defining international price trends and volatility, especially due to the performance of countries such as the United States and Russia.
In our post-September WASDE report, we indicated a neutral outlook for the global wheat market, with additions in production from key exporting countries: Russia, Ukraine, Canada, the European Union, and Australia, reporting more comfortable global ending stocks: 264 million tons vs. 260 million tons in the previous report. However, the market had already assumed this global situation of ample supply, with the harvest well underway and the northern hemisphere reporting yields above projections in all the origins mentioned, while crop conditions in Australia are exceptional.
Finally, on the US side, exports were revised from 23.81 to 24.50 million tons, considering the advanced performance of foreign sales, which are at their highest levels in the last five years. This reinforces the statement that US wheat is once again competitive, reaching multiple origins on five continents.
The comfortable situation in the United States, Canada, and Argentina completely deactivates regional purchasing interest in alternative exporters, while in recent cycles Russia had managed to carve out a space for itself.
Argentina, meanwhile, will begin harvesting between the end of next month and early November. This year will see another bumper crop, reaching historic highs of around 20 million tons. The exportable balance is 12-13 million tons, with Brazil as the main destination for half of that amount. There is enough surplus to reach other Latin American destinations, which are already counting on it. Although export records for 25/26 are nil, official sales reported for tax purposes and to organize shipments, producers' sales to be fixed are high. There will be a logistical need that will drive business dynamics in the coming weeks, with seasonal pressure in the last two months of the year, according to Sol Arcidiacono's review.
Demand for wheat is fairly stable, linked to population growth, as most of it is destined for human consumption, unlike other crops. The established patterns remain: "The United States and Argentina as export hubs, while their respective neighbors, Mexico and Brazil, continue to be large net buyers," says Sol Arcidiacono, a specialist at Hedgepoint. These dynamics are fundamental to understanding the region's trade flow.
The climate risks for the supply of this cereal in the Americas are diversified, considering the double seasonality. The harvest is in July/August for the United States and in November/December for Argentina. According to Sol Arcidiacono, the next challenge is planting and the northern spring of 2026. Although moisture conditions in the Great Plains of the United States are much better than last cycle, much lower prices could continue to discourage planting intentions. Ten years ago, 19 million hectares were planted with wheat in North American fields; last cycle, it was 14.8 million hectares.
In addition to climatic factors and area definition, the wheat market in LATAM faces significant adversities related to logistical issues, trade policies, and exchange rate volatility. These elements can affect the competitiveness and profitability of producers, as well as the region's trade flow.
In the political and economic sphere, the volatility of local currencies, such as the Argentine peso and the Brazilian real, reduces or favors the room for maneuver of producers and industry. Attention is also focused on US monetary policy, with expectations of a more relaxed cycle by the end of 2025 and into 2026.
Finally, structurally, global wheat still faces exposure to the Black Sea conflict. While the Russia/Ukraine war has become chronic and the wheat market remains immune, the same is not true for energy products, which have added volatility this year. Potential sanctions, in addition to events at key supply facilities, could change this situation, adding anxiety and risk premium to a market that has been heavily sold by speculative funds for months, adds Sol Arcidiácono.
Despite the challenges, this market offers opportunities thanks to constant demand and the revaluation of specific products.
Strong demand from Brazil and Mexico, which are net importers, creates a favorable situation for regional exporters such as Argentina, Paraguay, and Uruguay on the one hand, and for the United States and Canada in the other hemisphere on the other. This constant demand provides stability to trade flows.
According to Sol Arcidiacono, although a very comfortable global supply situation has been factored into the price, it is an unusual cycle in which wheat yields have been higher than originally projected in all origins. Looking ahead, the new 26/27 season, which is currently being planted in the Northern Hemisphere, remains to be defined, with fewer incentives for producers and funds sold at highs for this time of year.
Protecting LATAM wheat market participants from the inherent volatility of this market is essential to ensuring the sustainability and profitability of their businesses. Adopting hedging tools and access to robust market intelligence allows them to mitigate their exposure to price and exchange rate risks.
With Hedgepoint Global Markets, you will have access to market intelligence reports and innovative hedging products developed for the needs of the Latin American wheat market. Our analysts constantly monitor the variables that affect this sector and provide you with important information for strategic decision-making.
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