Amid rising geopolitical uncertainty, global wheat and feed grain markets are entering a period of heightened volatility, driven not only by traditional supply-demand factors but increasingly by external shocks. Industry leaders, traders, and analysts gathered in Jakarta on April 13 to exchange insights on price trends, shifting trade flows, and emerging risks.
Forces once dominated by weather patterns and harvest cycles are now closely tied to energy price movements, logistical disruptions, and shifting policy frameworks.
Hosted by S&P Global Energy, the forum highlighted how market dynamics are becoming more complex and interconnected.
Set against escalating tensions in key energy and shipping corridors, discussions pointed to a market environment where instability is no longer temporary. Forces once dominated by weather patterns and harvest cycles are now closely tied to energy price movements, logistical disruptions, and shifting policy frameworks. As a result, volatility in wheat trade is becoming more structural, requiring market participants to rethink strategies in an increasingly unpredictable landscape.
Freight and geopolitics reshape costs
Priyabata ‘Jimmy’ Padhi, manager, price reporting, Shipping and Freight at S&P Global Energy, underscored that freight markets have emerged as a primary channel through which geopolitical shocks are transmitted.
“Marine fuel prices surged nearly threefold within weeks of the conflict, fundamentally altering freight economics,” he said.
Rather than significantly disrupting physical trade flows, the impact has been more pronounced through energy markets. Higher bunker fuel prices have driven up dry bulk shipping costs, meaning end users are absorbing increased expenses even as vessel earnings fluctuate.
Padhi noted that demand for dry bulk commodities remains robust, growing around 3.5% year-on-year, but inefficiencies on the supply side are amplifying volatility. Port congestion, particularly among smaller vessels such as Supramax and Panamax, has reduced effective shipping capacity.
“More vessels are waiting outside ports, which effectively tightens supply and adds to price volatility,” he explained.
Wheat market pressures intensify
Vivien Tang, senior price editor for APAC Agriculture & Food, highlighted that while global wheat supply remains relatively comfortable, pricing is increasingly shaped by cost pressures and shifting trade flows.
“Australian wheat prices initially softened after a strong harvest but rebounded due to currency strength and weather concerns,” she said.
Australia continues to play a critical role as a supplier to Asia, though fertiliser and diesel constraints may affect future output and quality. At the same time, Argentina’s record harvest has intensified competition in Southeast Asia, while Canada has gained market share due to competitive pricing despite logistical challenges.
Tang emphasised that logistics and input costs are now central to price formation. “Logistics and bunker availability will remain key price drivers for wheat delivered into Asia,” she noted.
Feed demand and corn price impact
Demand dynamics are also evolving. High energy costs and currency depreciation in parts of Asia may weigh on import growth, while abundant rice supplies could encourage substitution.
Crucially, she pointed to the growing influence of corn markets on wheat demand. Firm corn prices, driven by volatility in the US corn markets and ethanol sector demand in Brazil, have encouraged feed producers in Southeast Asia, including Vietnam, to increase wheat usage in feed formulations.
This shift reflects relative pricing rather than absolute demand changes. As corn becomes less competitive, wheat becomes a viable alternative despite its own volatility. Strong export activity from origins such as Argentina has further intensified competition across feed grains.
The result is a more interconnected market, where movements in corn prices are indirectly supporting wheat demand, adding complexity to procurement strategies across the region.
Wheat supply outlook: Weather key
Vladimir Zinkovski, senior principal analyst and head of APAC Crops, noted that the market is entering a critical phase where weather and input availability will determine production outcomes.
“The wheat market will be driven by weather over the next 2 months,” he said, citing drought risks across the US Upper Plains, Canadian Prairies, and Australia’s East Coast, alongside more favourable conditions in Russia.
While global stocks remain stable, regional disparities are widening. Canada faces potential output declines due to dryness, while reduced fertiliser use in Australia could affect grain quality.
“Top dressing decisions later in the season will be critical, especially in regions facing input shortages,” he explained.
These factors are expected to widen the global protein spread, tightening supply of high-quality wheat while increasing availability of lower-grade material.
Energy prices drive market shifts
Beyond wheat, cross-commodity linkages are becoming increasingly influential. Pierro Carello, Global Pricing Director for Agriculture & Food, highlighted the growing role of energy markets.
“It’s incredible how a chicken farmer in Brazil or ethanol production can influence wheat demand elsewhere,” he said.
Higher oil prices are supporting biofuel production, particularly in Brazil, where more corn is being diverted to ethanol. This reduces corn availability for feed, potentially boosting demand for alternatives such as wheat, while also influencing planting decisions across crops.
The market is not facing a shortage of feed grains, but the challenge lies in how these commodities are being delivered.” – Liz Thang, associate editorial director for APAC Agriculture & Food
Delivery disruptions shape market behaviour
Adding a perspective, Liz Thang, associate editorial director for APAC Agriculture & Food, emphasised that current volatility is less about supply shortages and more about disruptions along the value chain.
“The market is not facing a shortage of feed grains, but the challenge lies in how these commodities are being delivered,” she told All About Feed. “Logistics disruptions and rising freight costs are creating uncertainty, even when overall supply for now remains comfortable.”
She noted that surging bunker fuel prices have driven freight costs higher, shaping both pricing and availability across importing regions.
Price volatility impacts feed margins
“As a result, market behaviour has become more reactive. Sellers are shortening offer validity, while buyers are adjusting more quickly to price movements,” she said.
Thang added that some feed millers in producing countries may increasingly turn to domestic alternatives if economical, such as locally sourced corn or broken rice, to reduce reliance on imports. India, in particular, has emerged as a competitive corn supplier to Asia due to its proximity.
Meanwhile, procurement strategies remain cautious. Although sourcing has become more diversified since the COVID-19 pandemic, many buyers continue to rely on short-term purchasing, keeping inventories low despite rising import costs.
This tightening environment is reflected in benchmark prices, with Platts data showing corn delivered to Northeast Asia rising to around US$275 per tonne in mid-March, up roughly US$30 per tonne, or more than 12%, compared to pre-conflict levels, underscoring how external pressures are increasingly shaping market outcomes. The price of corn is 50% of the farmer’s costs and the increase in corn price will hurt margins unless the cost can be passed to consumers. Platts track imported chicken leg prices to North Asia which reflects the nation’s demand compared with domestic production. Chicken leg CFR North Asia price assessment is at a record US$3,400/tonne, doubled since October 2024.
