Harsh weather strains global wheat production, sparks price surge
Severe weather conditions are threatening wheat production in major global exporting countries, leading to sharply reduced inventories projected to reach nine-year lows. This situation has intensified concerns about food supply amid a surge in wheat prices.
Dryness affecting suppliers from Russia—the world’s largest wheat exporter—to Argentina has raised alarm over food production vulnerabilities. Recent Russian attacks on grain ships in the Black Sea have further exacerbated fears that ongoing conflict could limit supply availability.
Top southern hemisphere exporters like Argentina and Australia have reported losses of millions of tons due to drought and frost. Additionally, insufficient moisture is hindering wheat plantings for the 2025 crop in key regions, including Russia, Ukraine, and the United States.
“The wheat market is getting tighter and it is going to get worse,” warned Ole Houe, head of advisory services at IKON Commodities in Sydney.
Global wheat inventories have declined from record highs five years ago, impacted by poor weather and disruptions stemming from Russia’s invasion of Ukraine, which previously caused grain prices to spike. Last week, Ukraine reported damage to two grain ships due to Russian attacks.
Russian crops have suffered from late frosts followed by prolonged drought, with Agriculture Minister Oksana Lut noting, “In some regions, there hasn’t been any rain since April.” She expressed concern over the unprecedented nature of the current climatic conditions.
In Southeast Asia, Black Sea wheat is currently priced around $280 per metric ton, up from $265 just a month ago. Chicago wheat futures also saw a significant jump last week, reaching their highest levels in four months after hitting a low not seen since 2020 in July.
As prices rise, farmers in exporting nations such as Australia and Canada are increasingly reluctant to sell their wheat, anticipating even higher prices. “Farmers are not selling, and this is becoming a problem for traders who have committed sales to millers,” remarked a Singapore-based grains trader.
U.S. farmer Doug Keesling, from Chase, Kansas, expressed his desperation for rain after planting 1,200 acres of wheat amid a third consecutive year of drought. “I can dig down three to four inches and there’s not a single drop of moisture in this soil,” he lamented. “If it rains, it’ll come up. If it doesn’t rain, it’s going to be tough.”
The outlook for wheat production in Oklahoma is also grim, with lower prospects for 2025 attributed to planting delays caused by dryness, according to Mike Schulte, executive director of the Oklahoma Wheat Commission.
The U.S. Department of Agriculture projects world wheat ending stocks will fall to a nine-year low of 257.22 million metric tons for 2024-25, despite a forecast for record global production at 796.88 million tons. Analysts expect this forecast may be further reduced in an upcoming report.
“There’s a lot of room to the upside (in prices) if USDA decides to cut production globally by 3.5 million to 4 million tons,” stated Terry Reilly, senior agricultural strategist for Marex.
In Argentina, the Rosario grains exchange has lowered its wheat harvest estimate from 20.5 million tons to 19.5 million tons, while Australian production is anticipated to reach 32-33 million metric tons, down by about 2-3 million from earlier projections.
“It is quite dry and there has been frost damage as well,” noted Dennis Voznesenski, an analyst at Commonwealth Bank, during a recent tour of South Australian wheat farms. “Crops are not looking good.”
As the global wheat market faces these challenges, farmers and traders alike brace for continued volatility and rising prices.
