Global Wheat Crisis: Harsh Weather and Geopolitical Tensions Disrupt Supply Chains

Harsh weather conditions in major wheat-exporting countries, including Russia and Argentina, are reducing production and causing prices to surge. Geopolitical tensions, particularly Russian attacks on Ukrainian ports, further threaten supply chains. Analysts predict tighter markets as inventories fall to a nine-year low, prompting farmers to withhold sales.

Global wheat production is under threat as harsh weather conditions continue to impact major exporting nations. Prolonged dryness in countries like Russia, the largest supplier, and Argentina is exacerbating concerns over food security and pushing wheat prices higher. Recent Russian missile attacks on Ukraine's port infrastructure have further heightened supply chain risks.

Production losses in southern-hemisphere exporters such as Argentina and Australia are significant, with analysts noting the severe impact of drought and frost. The moisture deficit is already affecting plantings for the 2025 season in crucial regions like Russia, Ukraine, and the U.S. In a related development, Russia has revised its 2024 wheat crop forecast downward.

Market analysts warn of an increasingly tight wheat market, with world inventories dropping 14% from their peak five years ago. Farmers, particularly in Australia and Canada, are reluctant to sell, anticipating further price increases. Meanwhile, the U.S. Department of Agriculture estimates world wheat ending stocks at their lowest in nine years, compounded by reduced yields in the EU and Argentina.

(With inputs from agencies.)