Wheat prices jumped by the most in almost a month on Monday, after India and Egypt considered a deal to swap grain for fertilizer and as the US government predicted a poor harvest that could put global supply under even more pressure.
Chicago wheat futures rose by as much as 5.4% to $10.95 per bushel, up from $10.45 at Friday’s close. It was last trading up 5% at $10.92 by 09:40 a.m. ET. The United States Department of Agriculture (USDA) recently forecast wheat would reach $10.75 per bushel due to tight supply.
The price of wheat has risen by 40% so far this year, down to a number of factors. The first is Russia’s invasion of Ukraine in late February. Both are major producers of wheat and the conflict has disrupted both exports of existing grain supplies as well as the planting of next year’s harvest, meaning any shortfalls won’t be limited to this year.
Another is adverse weather conditions, which is making for dismal harvests in the United States, as well as India, where heatwaves have devastated crops. According to the USDA, US wheat production is forecast to fall to 1.729 billion bushels this year, down 4% from the 5-year average of 1.806 billion bushels.
“For 2022/23, slightly larger production is projected compared to the previous year but this would still be the second lowest in the last 20 years based on pervasive drought in major hard red winter growing areas,” the USDA said in its May 2022 outlook.
A tightened global wheat supply was only exacerbated by India’s banning of grain exports to protect its own food security after a heatwave dramatically impacted domestic crop production. Russia’s invasion of Ukraine also caused a blockage of nearly 4.5 million tons of wheat at Ukraine ports adding to a grain shortage and surge in its prices.
Soaring wheat prices also come on the back of a potential wheat-for-fertilizer trade deal to ease mounting food supply shortages between India and Egypt. Under the terms of a potential agreement, India would export wheat to Egypt and would get fertilizer and other products in return, Egyptian Supply Minister Aly El-Moselhy told Bloomberg.
The trade deal would see 500,000 tons of wheat shipped to Egypt from India, which typically does not export much production, despite being one of the world’s biggest growers.
Other commodities from beef to palm oil have faced inflationary pressures as a result of export bans triggered by poor harvests and disruption from Russia’s war in Ukraine. Industry experts told Insider to brace for a potential impact in the corn market. [BI]
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Why in the hell are farmers relying on single crops?
Corn sorghum millet oats riceThis drought isn’t new.
Ukraine is another story.They don’t have choice at this point.
Another is adverse weather conditions,
Yu have it half right.
We are in a Solar Minima which means Earth is getting colder and cold kills plants/humans.