(April 24): The US’s major variety of wheat jumped to the highest in almost two years on deepening concerns over crop conditions, with about 70% of the production area now under drought.
Hard red winter wheat, used to make bread, rose as much as 1.1% on Friday, taking its gain this week to almost 6% and the highest since June 2024. The variety is mainly grown in the US Plains region, and there’s a growing consensus that much damage has already been done to the crop as a result of prolonged dryness.
The price rise comes as food inflation threatens to pick up globally, caused by adverse weather in parts of the world and soaring fertiliser and fuel costs sparked by the war in Iran. The Bloomberg Agriculture Spot Index — which tracks 10 farm products, including hard red wheat — is at a one-year high.
“Traders may be finally understanding that the crop damage is unlikely to be reversed and yield declines are inevitable, despite the potential for precipitation,” the Hightower Report said in a note.
The most recent winter wheat crop conditions released by the US Department of Agriculture for the week ending April 19 showed the area in good or excellent condition had declined to 30%, from 34% a week earlier and 45% a year ago. The National Drought Mitigation Center raised the percentage of winter wheat affected by the drought to 70% on April 21, compared with 50% on Feb 24.
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Kansas Wheat said the March and April period was crucial to wheat development, and without additional moisture some crops were accelerating growth — potentially further reducing production. “That process shortens the grain fill period and can reduce yield potential, resulting in smaller kernels, lighter test weights and, in more severe cases, blank heads,” the industry association said in a note on Thursday.
Hard red wheat’s premium over the soft red variety, used more for baked goods like muffins, is at 62 cents a bushel, the widest in two and a half years. Soft red wheat is mainly planted in the eastern US, which is less affected by dryness.
Prices:
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- Hard red winter wheat rose 0.3% to US$6.815 (RM27.07) a bushel as of 11.13am in Singapore
- The benchmark soft red wheat dipped 0.1% to US$6.195 a bushel
- Corn prices were little changed, while soybeans edged lower
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