On March 8, Chinacanceled a shipment of 240,000 metric tons of US soft red winter wheat. On March 15, another batch, this time 264,000 tons, was also canceled. US exporters were left with the option to either hold on to the half a million tons or find alternative buyers.

Australian wheat deliveries were also affected in March, as Chinese importers either canceled or postponed around 1 million tons of Australian wheat shipments to the second quarter.

Andrew Whitelaw, an agricultural consultant with market analysis service Episode 3 in Canberra, Australia, referred to the cancellation of cargoes as "a bearish indicator."

"Whether they are doing it to buy again cheaper or because there's less demand, it is still a bearish view on the market," he told the news agency Bloomberg.

The fact that over half a million tons of US wheat was canceled has sparked much discussion among grain traders.

According to data from the US Department of Agriculture dating back to 1999, it was the largest canceled quantity to date.

"Those cancellations show that China can get wheat cheaper from others," said Ben Buckner, chief grains analyst for Chicago-based AgResource Co, in an interview with Bloomberg.

The days of continuously rising prices for grains and other agricultural commodities seem to be over, at least for now.

According to the latest data from the US Department of Agriculture, as of March 28 corn inventories had risen by 13% and soybean inventories by 9%. Wheat inventories saw the highest increase, at 16%.

Fair weather conditions for wheat

In addition to higher inventories, an improvement in weather conditions has also contributed to lower prices, explained Thorsten Tiedemann, CEO of Grain AG in Hamburg, Germany.

"In most regions, we had more than sufficient water supply and thus good conditions for good harvests," he told DW, adding that the winter weather was quite different from last year when some regions experienced prolonged dry periods and other negative factors such as frost.

Tiedemann thinks the situation is generally more relaxed than it was a year ago. "We have an overall decent corn harvest. We also have an ample supply of soybeans and soybean meal. And Argentina and Brazil will harvest a decent crop in the coming weeks," he said.

Moreover, Russia continues to be capable of exporting millions of tons of wheat and will likely reach a market share of approximately 29% in the global wheat market for the fiscal year 2024/25, according to Tiedemann.

Prospects of bumper harvests

If there are no unexpected adverse weather events, China could achieve a larger and higher-quality wheat harvest this year, according to reports from market watchdog S&P Global Commodity Insights.

The commodity experts have based their assumption on data from the Chinese meteorological agency from early March, which said that snowfall between January and February in the country's key winter wheat-growing regions, Jianghuai and Jiangnan, increased soil moisture and that most plants have safely passed through the winter dormancy.

Additionally, only minimal frost damage is expected in parts of those regions, S&P Global Commodity Insights reported, adding that the crop's growth stage is "largely similar to or better than the same period last year."

But Hamburg grain expert Tiedemann thinks "one must be cautious when looking at the wheat balance for the coming year," and warned against excessive optimism for the global wheat supply.

"I assume that compared to previous years, we will see a reduction in inventories in the exporting countries in 2024/25. This is due in part to smaller crop expectations and a slightly increasing demand due to lower prices," he said.

Tiedemann believes prices could "explosively rise again" if there are crop failures or adverse weather events. As an example, he mentioned a poor harvest in France where, for instance, drought could hit again in May or June.

"Then I believe the market could react extremely nervously again because we would be heading toward lower wheat stocks even with average yield expectations. The situation is still comfortable now, but that may not remain the case," he said.

This article was originally written in German.