Wheat Falls from 3-Week High

Wheat futures eased to around $6 per bushel, down from a three-week high of $6.13 on June 17, as crude oil declined and tanker traffic continued through the Strait of Hormuz amid progress in US–Iran talks, reducing war-risk premiums. Weaker oil also points to cheaper ocean freight, which may further pressure delivered wheat values. In the European Union, exporters face a tougher outlook as Morocco is set to import less after a drought recovery, while Black Sea suppliers remain highly competitive. Competition from lower-cost exporters such as Russia and Ukraine continues to cap prices, alongside weakening demand from Algeria and China. Argentina and Australia are expected to produce less, while strong crops in Russia and Ukraine, as well as firmer output in Turkey and Syria, could intensify competition. Meanwhile, Egypt has purchased 4.7 million tons of wheat and is on track to meet its 5 million-ton target, backing its subsidised bread program.

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.