Worldwide Wheat Crop and Exports Prospects Deteriorated Markedly since February

European wheat prices have jumped 74% since January, and there is no end of this story in sight. Worsening harvest prospects in China and, especially, prospects of Russian/Ukrainian exports due to the military operations (we already wrote before that these two countries provide up to 30% of world’s wheat exports combined), followed by an export ban by a major wheat producer, India, have significantly tightened stocks and exacerbated global food supply concerns. As a result, according to Reuters, the cost of life-saving treatment for the most severely malnourished children in the world is set to jump by up to 16%. The United Nations has recently warned that the impact of the war on grains, oils, fuel and fertilizer could throw millions of people into famine and take years to resolve.

Washington has been calling on U.S. farmers to seed more winter wheat this autumn, and the government said it would allow planting on some non-agricultural lands beginning this fall. But the drought and costly farm inputs are set to limit production gains.

After some farmers in North Dakota raised concerns about a crop shortage earlier this week, another portion of negative news came saying the U.S. winter wheat harvest potential in Kansas dipped by more than 25% because of severe drought, and farmers in that state could leave thousands of acres of wheat in fields this year instead of paying to harvest the grain hit by the dry winter. The Texas Agriculture Commission complained things are really slipping out of control creating an uncharacteristically tough grain farming environment.

The U.S. is the world's 4th-largest wheat exporter and benchmark Chicago Board of Trade wheat prices surged 50% to more than $13.60 a bushel since February 24 as Russia halted shipments of nearly a third of the world's wheat exports, and little has gone right for wheat since then. The severe situation has been developing at a rapid pace.