After Long Unexplainable Softness, Wheat Prices Finally Jumped

Wheat prices hit their highest levels since July last year amid worries about the Black Sea harvest. Many brokers have cut their forecasts as the drought intensifies, but there is no clear path to mitigating the current drought through advanced models. Prices rose by $1 to $4 per ton FOB Russia beginning this Monday, May 27. Ukraine's Grains Association lowered its wheat harvest forecast to 19.1 million grains. The output of both countries is 100 million tons. Meanwhile, U.S. wheat futures hit a 10-month high on Tuesday before giving up gains as cold, dry weather in Russia and the ongoing war in Ukraine heightened supply concerns.

Most forecasters have drastically cut their forecasts for Russia's wheat production, lowering their forecasts to 82.1 million tonnes from 85.7 million tons, citing greater than expected damage to the winter crop after frosts in May. The U.S. Department of Agriculture recently forecast that global wheat stocks will fall to a 9-Yr low next season.

CBOT wheat for July delivery ended up 0.8% higher at 7.02 ¾ a bushel after rising 3.3% on Tuesday.