Wheat Futures Rebound From Two-Month Lows

Wheat futures climbed to $6.0 per bushel, recovering from a two-month low hit on June 15, as investors tracked Northern Hemisphere harvesting and awaited US planting data due later this month. While crude oil’s three-month lows, following the outline deal to end the US-Israeli war on Iran, have pressured grain markets, traders are assessing whether the price drop could boost demand from importers. Weather conditions have also played a role, with widespread rain and warm temperatures in the central US benefiting crops and reinforcing expectations of ample global supply. The USDA reported that 55% of the nation’s spring wheat is in good-to-excellent condition, up 3 percentage points from last week but below the same period a year ago. Meanwhile, drought-stressed winter wheat ratings, though near historic lows, saw a slight weekly improvement, with harvest progress advancing faster than anticipated.

Wheat futures fell to around $5.70 per bushel in mid-June, returning to their lowest level since April 10, as the potential reopening of the Strait of Hormuz could improve the availability of key agricultural inputs. The tentative US–Iran peace agreement included the reopening of the strategic waterway, with Iranian Deputy Foreign Minister Kazem Gharibabadi confirming the deal and officials from both sides expected to meet in Switzerland to formalise it. Greater availability of key agricultural inputs in wheat production, such as fertilisers and fuels, allows farmers to produce more efficiently, increasing supply and prompting downward pressure on prices. Meanwhile, the USDA recently cut its winter wheat outlook by 2% from a month earlier, citing drought conditions across the Plains that pushed hard red winter wheat output to its lowest level since 1957. Crop conditions have also weakened further, with just 25% rated good-to-excellent, the lowest level for this time of year on record.

Wheat futures rose above $5.9 per bushel in mid-June, climbing off a recent two-month low, as US supply concerns intensified following a fresh downgrade to the winter wheat crop outlook. The USDA cut its US winter wheat outlook by 2% from a month earlier as a harsh Plains drought pushed hard red winter wheat production to its lowest level since 1957, while crop conditions deteriorated further with just 25% rated good-to-excellent, the weakest for this time of year on record. The decline in US output has tightened supply expectations, even as harvest activity gets underway across key growing states including Kansas, Oklahoma and Texas. El Niño weather risks continued to underpin prices, raising the threat of droughts, floods and temperature extremes across major global growing regions. The drop in output has also added pressure on US farmers already facing higher fuel and fertilizer costs, driven by disruptions in the Strait of Hormuz and trade tensions stemming from US tariff measures.