Chicago wheat futures rose on Wednesday to their highest levels since last July, as adverse weather led to further downgrades of harvest estimates in Russia, the world’s biggest wheat exporter. This, coupled with concerns over potential crop damage in Ukraine and a decline in crop condition ratings in the United States, has fueled a rally that has pushed wheat prices up 18% so far this month.
The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 1.8% at $7.09-3/4 a bushel, after reaching as high as $7.11-1/4. Corn and soybean futures also rose, as weather events continue to cause increasing price volatility ahead of the northern hemisphere harvests.
Russia’s IKAR agricultural consultancy has cut its forecast for the country’s wheat harvest to 83.5 million metric tons from 86 million tons, the third downgrade this month. This is still an above-average crop, but well below the initial predictions of over 90 million tons before dry weather and bitter frosts hit the region.
In Ukraine, a state weather forecaster said frosts had not significantly damaged crops, but traders remain on edge after consultants APK-Inform warned of potential yield losses. Russia and Ukraine are expected to account for 33% of world wheat exports in the current marketing year, making their production a critical factor in global prices.
Arlan Suderman, an analyst at StoneX, noted that “Russia and Ukraine essentially set the world cash wheat price.” Meanwhile, the U.S. Department of Agriculture (USDA) lowered its U.S. winter wheat crop condition rating to 49% good to excellent, 2% below analysts’ expectations, but still the best for this time of year since 2020.
The combination of supply concerns from major exporters and the potential for further weather-related disruptions has pushed wheat prices to their highest level in 10 months. Analysts expect prices to remain volatile in the coming days as the market continues to assess the impact of these weather events on global wheat supplies.