Wheat Futures Ease from 3-Week High

Wheat futures fell to around $6 per bushel in early June, hitting its lowest level in nearly a month as doubts over a US-China trade agreement weighed on prices. The decline followed China's refusal to endorse the Trump administration’s claim that Beijing would purchase at least $17 billion worth of US agricultural products annually through 2028, with the Commerce Ministry stating that the two countries had only agreed on a "guiding target" to expand agricultural trade. While such an agreement could boost demand for wheat and other commodities, farmers continue to face rising fuel and fertilizer costs amid the Middle East conflict. Meanwhile, Australia’s 2026/27 winter wheat crop is forecast to plunge 26% year-on-year to 26.7 million tons, pressured by dry weather, weak global prices, and rising production costs. While late-May rainfall improved crop prospects, elevated fertilizer costs, particularly for urea, continue to pose risks to yields.

Wheat futures slipped to around $6.60 per bushel in mid-May, as investors took profits following a recent surge driven by China’s expanded commitment to purchasing US agricultural goods. Under the agreement reached after high-level talks between President Donald Trump and President Xi Jinping, China pledged to import at least $17 billion annually in US agricultural products through 2028. The deal builds on existing soybean purchase arrangements and is expected to have spillover effects that could also support demand for other commodities, including wheat. However, farmers continue to face cost pressures, with recent increases in fuel and fertilizer prices, driven by ongoing geopolitical tensions in the Middle East, raising production costs and adding volatility to the broader agricultural outlook.

Wheat futures fell to around $6.5 per bushel, down from a two-year high of $6.8 reached on May 12, as traders took profits and reacted to the lack of new agricultural details from the US-China summit. Markets were disappointed that the first day of talks did not bring any concrete updates on grain trade. Attention also shifted back to fundamentals, including weather and supply concerns in the United States. Drought conditions have worsened in parts of Nebraska and Oklahoma, which is affecting winter wheat and newly planted corn and soybeans, even as some rainfall is expected in other growing areas. Crop scouts in Kansas also reported lower than expected yields for hard red winter wheat, estimating 39.3 bushels per acre compared with 53.3 last year. The USDA has also projected US wheat production at 1.561 billion bushels, the lowest level since 1972, highlighting ongoing supply pressure linked to dry conditions in the Great Plains.