Wheat Prices Surge Amid Adverse Weather Conditions and Supply Chain Disruptions

Wheat Prices Set for Biggest Weekly Gain in Almost Two Months

Wheat prices were poised to experience their largest weekly increase in nearly two months, driven by persistent weather concerns and tighter fertilizer supplies linked to the ongoing Iran war. The most active wheat contracts on the Chicago Board of Trade were on track to climb nearly 5% on the week, their biggest such jump since February. The hard red winter variety had extended gains to reach its highest level since June 2024.

The supply outlook for wheat was being impacted by drought conditions in key areas of the US Great Plains, as well as a shortage of farm inputs and persistent dryness in Australia, a major producer and exporter of wheat. Dry weather continued to affect parts of the Black Sea growing region and some areas of Europe, according to the latest forecasts from Vaisala XWeather. These conditions were expected to linger, weighing on wheat supply prospects in some of the world's top producing regions.

Fertilizer supply worries, particularly in southern winter crops like those in Australia, and an impending El Nino had also contributed to the price surge. However, the bullish run could have limits given ample global supplies, according to Tobin Gorey, a strategist at Cornucopia Agri Analytics. Any potential crop issues in Australia and Argentina could provide a catalyst for further price gains later, Gorey added.

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Planting acreage for the 2026/27 wheat crop in Australia was expected to fall to a seven-year low, according to a Bloomberg survey, due to weak prices and fertilizer and fuel shortages. US President Donald Trump's statement on a possible permanent ceasefire between the US and Iran could provide a positive tone for an end to the conflict, now in its seventh week. However, the Strait of Hormuz remained largely closed, prolonging an energy and fertilizer crisis and threatening production of key crops worldwide.

Palm oil futures traded on Bursa Malaysia Derivatives were down, due to weak demand from India and a closed Middle East market continuing to weigh on prices.