Wheat extends July rally as war risks stoke fears over supply

Wheat resumed its rally after a brief bout of profit-taking, as escalating geopolitical tensions and worsening weather in key producing regions continued to stoke supply concerns.

Most-active futures in Chicago climbed as much as 0.8%. The grain surged 4.1% on Wednesday to near a three-year high, before easing as traders locked in profits. Prices are up 19% this month, buoyed by the conflicts in both Ukraine and the Middle East.

“Russian shipping restrictions, continued attacks on port infrastructure, and efforts to reroute grain exports have reinforced uncertainty surrounding near-term export availability,” Futures International LLC said in a note Thursday.


In the Red Sea, Iran-backed Houthis struck two Saudi oil tankers, after which US President Donald Trump threatened “major military punishment” in the event of more attacks.

Weather is adding further support. Scorching temperatures have dented production prospects in major producers France and Germany, while grain output in the European Union is projected to fall by more than 9% this year, the steepest annual drop in more than two decades. In the key US wheat-growing state of North Dakota, searing heat is stressing spring crops and threatening yields.“The wheat market highlights just how significantly geopolitical changes can alter market fortunes, especially when backed by some fundamental tailwinds,” said CRM AgriCommodities in a note on Thursday, which highlighted “the shift of grain supply chains into the front line of the Russia-Ukraine war.”

Bloomberg’s Agriculture Spot Index, which tracks 10 major farm products, reached its highest level since July 2023 on Wednesday, raising the prospect of higher costs for staples ranging from bread and cooking oil to meat and dairy.