Wheat futures prices hit their highest level in more than nine months on Tuesday. Extreme arid weather in major producers and the growing geopolitical conflict between Russia and Ukraine, two major wheat exporters, heightened supply concerns. Chicago Board Futures (CBOT) wheat futures prices rose 3.3% during the Asian morning trading session.

From a global perspective, farmland farmers are facing major setbacks, from the humid fields of Western Europe to the arid soil in Australia, to the escalation of the Russian-Ukrainian conflict, which has drastically limited the scale of supply of critical crops such as fertilizer and wheat to the international market. Following the sharp rise in cocoa futures prices to new highs, wheat futures may take over the “baton” and continue to rise under supply pressure.

This is a worrying sign for consumers who are finally relieving themselves from rising food prices. Any continued rise could increase the raw materials and production costs of bread and pasta, and reignite inflationary pressure on central banks around the world. In addition, futures prices for other major crops, such as cocoa and coffee beans, are also rising this year. Cocoa has repeatedly reached new highs some time ago. Recently, it has entered a downward trend, and seems to have returned to rational trading.

In recent weeks, financial institutions' futures analysts have continued to cut wheat production expectations for Russia, the largest wheat exporter, while Ukraine, another wheat exporter, is about to enter the driest May on record.

Global high temperatures and arid climates have greatly affected wheat production in large regions of Ukraine, an important wheat exporter. In addition, geopolitical conflict factors have also caused other problems. Attacks on agricultural infrastructure threaten Ukrainian food exports, and the country's agricultural workforce has almost dried up due to male enlistment in the military.

The lowest rainfall in Western Australia's history has also heightened market concerns about the supply level of wheat. Too dry and hot summers in parts of Australia have dried up the soil, causing farmers to face difficulties when growing crops. Although recent rainfall has provided some relief in some parts of Western Australia, growers remain cautious.

Compared to Russia, Australia, and Southeast Asia, which are facing droughts, an overly humid spring affects the growth of crops such as wheat throughout northwestern Europe. The quality of winter crops — which determines whether supplies are used for human food grade or animal feed — may also be affected.

According to information, in French crop-growing regions, the share of wheat and barley harvested under optimal conditions lags far behind the same period last year. Massive rainfall has also slowed the pace of spring planting in the UK, Germany, and France.

The arid climate is also threatening US wheat production. Since the beginning of April, an arid climate has swept through a larger proportion of winter wheat farmland in the US, an important wheat exporter. Despite recent weather forecasts showing showers, the likely severe arid climate is still a cause of concern for spring planting in US farmland.

In terms of forecast data, the US Department of Agriculture predicts that next season's global wheat inventory level may fall to its lowest point in 9 years. The forecast was made after wheat futures prices rose to their highest level since March 2023 on the Euronext Exchange in Paris. In the US futures trading market, hedge funds have recently been drastically reducing net bearish positions on CBOT wheat contracts.