Thanks to expectations of dryness, wheat prices rallied by 1.2% early morning October 10, 2024 at the Chicago Board of Trade (CBOT).
At half past midnight October 10, the key contract in Chicago brought in $6.06 a bushel, the highest since October 3’s $6.03. The posting was however lower than October 2’s high of $615.25 a bushel.
The gain marks the fourth price improvement in a row, and could continue as weather weighs in on trade mood.
Such price strength underlines current worries on lack of rain in some wheat-producing world regions. This despite ample supplies trickling in from the grain harvest in the U.S. Midwest which began to pressure prices in July 2024.
The climate threat is mostly international rather than American, especially Australia, whose fields face dryness in combination with frost.
In its part, eastern Europe is coping with low rainfall around the Black Sea, hence keeping back winter wheat plantings.
Futures markets are taking weather bullishly, especially CBOT, where wheat has traded above $5.655 a bushel since September 19.
U.S. Production Hits 2 Billion Bushels
Meanwhile, the U.S. wheat production estimate for the 2024-25 market year is 2 billion bushels, per the USDA’s Economic Research Service (ERS).
In its September 2024 Wheat Outlook report, ERS projected the ongoing harvest to produce 1.982 million bushels, 9% above 2023/24’s.
The amount comes from 37.9 million acres, the third highest for field crops but lower than the past two-decade average.
American wheat export projections for the 2024-25 year of 825 million bushels will likely buoy global production. In September, ERS pegged international wheat production for the 2024-25 season at 796.9 million tonnes.
In short, even with a strong American harvest, weather conditions in key international sources are buoying the wheat price outlook. And as the following statistics show, weather has had an historical effect on the prices of this grain in the past.
United States Wheat Prices Versus Weather Statistics
In times of drought, wheat prices in the United States usually tend to rise and reflect global trends. In the 2022-23 season for example, the U.S. Department of Agriculture (USDA) projected a record wholesale price of $10.75 a bushel. The agency attributed the season’s drought that impacted hard red spring and durum crops as a major price contributor.
Below is a historical performance of American prices between August 2020 and May 2022, per USDA and other sources:
August to October 2020: U.S. hard red winter wheat cost below $6 a bushel, as fair weather in the Americas and southern Africa favored winter wheat. By October 2020, however, the price had rallied to over $6 a bushel. International weather factors that contributed to this rise included a harsh heatwave on the UK wheat crop. It brought the yield rate down to 7.3 tonnes a hectare versus the five-year average of 8.4 tonnes per hectare.
February to May 2022: from February 2022, the U.S. price began its steady climb from $10 a bushel and culminated in May 2022 at $11.72. This was only natural since the preceding year, 2021, had ranked as one of the hottest on record, per the United Nations. The heat could have contributed to fewer grain stocks due to drought and hence the price hike.