Chicago wheat futures rose nearly 3% on Tuesday, reaching their highest level since last July, due to concerns over adverse weather impacting the harvest in top exporter Russia and tightening global supply.
The most-active wheat contract on the Chicago Board of Trade (CBOT) climbed 2.9% to $7.17-1/4 per bushel, after earlier touching $7.20. Prices have jumped more than 35% from a 3-1/2-year low of $5.24 a bushel in March, when Russia was shipping record amounts of grain and appeared set for another bumper harvest this year.
However, dry weather and bitter frosts have now hit cropping regions in Russia’s south, while excessive rain in Siberia has waterlogged the soil. Consultants IKAR have slashed their estimate for Russian wheat production to 81.5 million metric tons and exports to 44 million tons, down from their previous forecasts of 93 million tons and 52 million tons, respectively.
Additionally, reports suggest that around 1.5 million hectares of Russian crops have been damaged by frosts, with the total figure potentially rising to 2 million hectares, according to the head of Russia’s Grain Union.
The weather issues have also crept into neighboring Ukraine, where traders union UGA has downgraded its forecast for the country’s 2024 combined grain and oilseed harvest.
The downgrades in Russia’s production will likely take cheap wheat out of the market, forcing other major suppliers like the United States to increase exports to compensate. However, Rod Baker at Australian Crop Forecasters noted that production in the U.S. and other major wheat growers is looking solid, saying “the supply will be there.”
In addition to wheat, soybean and corn futures also gained on Tuesday, with CBOT soybeans up 0.2% and corn climbing 1.2%.