The world is losing wheat. Will Ukraine really benefit? — ASAP Agri
The wheat market has slipped back into weather-market mode. Futures are climbing as traders price in the risk of a sharp production decline among major exporters in the 2026/27 season, with weather concerns and yield uncertainty once again driving sentiment.
But does a smaller crop automatically mean a tighter market — and better export prospects for Ukraine?
For now, the answer is less straightforward than the rally suggests, says Victoria Blazhko, Head of Editorial, Content and Analytics at ASAP Agri.
It is also important to remember that the market is still reacting to the first balance-sheet projections for the new season. Most estimates remain highly sensitive to weather, crop conditions, and harvest results, meaning the current narrative could still shift significantly in the months ahead.
Stocks cushion the blow
On May 12, the U.S. Department of Agriculture released its first global wheat balance projections for the 2026/27 season — and the headline numbers immediately caught the market’s attention.
Wheat production across the eight key exporters — Argentina, Australia, Canada, the EU, Kazakhstan, russia, Ukraine, and the U.S. — is projected to fall by nearly 48 MMT y/y.
At first glance, the decline looks dramatic. It is also the main factor currently fueling bullish sentiment across wheat futures markets.
But the balance sheet looks less alarming once stocks are taken into account.
Despite the sharp production decline, exportable supply among the major exporters — meaning volumes available for export after accounting for beginning stocks and domestic consumption — is projected to fall by only 24 MMT, roughly half the production decline.
The reason is simple: the market is entering the new season with unusually large carry-in stocks, which cushion much of the production shock.
According to USDA estimates, the eight largest exporters are set to finish the 2025/26 season with near-record ending stocks of 74.6 MMT. In 2026/27, stocks could decline to 65.8 MMT, but that would still remain broadly in line with the five-year average.
The same applies to the stocks-to-use ratio. For the key exporters, the indicator is projected at 16% in 2026/27 — almost unchanged from the five-year average of 15.9%.
In other words, the global wheat market is moving away from the exceptionally comfortable balance of 2025/26 and becoming far more sensitive to weather risks. However, it still does not look genuinely deficit-driven.
Which brings the market to the next key question: where exactly is the world losing production? For Ukraine, that distinction matters enormously.
Not where the main competition is
The largest production losses are expected in the U.S. (-12 MMT), the EU (-9 MMT), Argentina (-7 MMT), and Australia (-6 MMT). The Black Sea region, however, looks far more stable: Ukraine could maintain wheat production at around 23 MMT, while russia may still harvest close to 86 MMT.
And this is the key point for the Ukrainian market. The world is indeed losing wheat — just not in the region that creates the strongest competition for Ukrainian exports.
At the same time, Ukraine’s main export destinations — MENA (Middle East and North Africa) and Southeast Asia — could also reduce imports in the new season. According to USDA projections, wheat demand from Southeast Asia could decline by around 2 MMT y/y in 2026/27, while MENA countries together with Turkey may cut imports by roughly 8 MMT as domestic production recovers.
After a weak season, Turkey is expected to sharply increase wheat production to 21 MMT (+4.2 MMT y/y), while some local analysts see the crop potential as high as 22–23 MMT. Iran is also projected to significantly increase output to 16 MMT from 13.5 MMT a season earlier.
Although Turkey and Iran are not major buyers of Ukrainian wheat, they remain key destinations for russian exports. That means volumes russia may no longer ship to those markets due to weaker import demand could instead be redirected elsewhere, intensifying competition with Ukrainian wheat across other destinations.
At the same time, production is also expected to increase in Egypt and Algeria — two of the largest buyers of Ukrainian wheat in the region. According to USDA estimates, Egypt’s wheat crop could rise to 10 MMT from 9.2 MMT last season, while Algeria’s production may increase to 4.1 MMT from 3.2 MMT.
This is where the main risk for Ukraine begins to emerge.
In the current season, around 46% of Ukrainian wheat exports were shipped to MENA countries, while another 13% went to Southeast Asia. In other words, nearly 60% of Ukraine’s wheat exports currently depend on regions where demand may start weakening in the new season.
That means that even under a tighter global balance, competition among exporters — particularly between Ukraine and russia — is likely to intensify further, while traditional importers may gain even greater leverage in price negotiations.
For Ukraine, the situation looks particularly complicated because the country enters the new season with relatively large carry-in stocks. With production expected to remain broadly stable at around 23 MMT, total export availability could rise to 16–17 MMT.
The problem is that Ukraine has already struggled to fully realize its export potential this season. According to ASAP Agri estimates, wheat exports in 2025/26 are unlikely to exceed 13 MMT.
This brings the market back to the key question for 2026/27: if global competition remains intense, exportable supplies stay comfortable, and import demand across key destinations weakens, will it really become easier for Ukraine to sell wheat?
So far, the market suggests otherwise.
Moreover, the issue of large carry-over stocks in Ukraine is unlikely to disappear — and could even become more pronounced in 2026/27. Which means the new season for Ukraine may once again be less about a global wheat shortage and more about an increasingly fierce battle for buyers in a market where those buyers are becoming more selective.
Further market breakdowns, balance-sheet analysis, trade signals, and forecasts are available through ASAP Premium analytics.