Hard red winter wheat futures rallied a second straight day as severe weather across key growers intensified concerns about smaller global food reserves.
Heat has hurt the crop in India, spurring the country to mull export restrictions, Bloomberg reported Wednesday. That’s adding to worry about supplies, especially since Indian grain shipments have been booming in the wake of Russia’s invasion of Ukraine.
Further, hard red winter wheat grown in Kansas and nearby U.S. states is at risk because of harsh drought. Harvests of the grain used for bread flour are set to begin in June, meaning adequate rains will be crucial over the next few weeks if yields have any chance of improving.
“It’s going to be a short crop no matter what at this point,” Joe Nussmeier, a broker at Frontier Futures in Minneapolis, said in a phone interview on Thursday. Damage from dryness in places like Texas and Oklahoma is “already too far gone,” while Kansas and parts of Colorado can still benefit from showers, he said.
In Europe, some wheat areas are also shy of rain, further stoking concerns as a global hunger crisis worsens.
“If less wheat now reaches the global market from India, we risk seeing supply tighten again,” Commerzbank AG analyst Carsten Fritsch said in a note. “The uncertainty about this is likely to continue preoccupying the wheat market and could lead to further price rises.”
Wheat futures that track hard red winter grains have been trading at a premium over the global benchmark in Chicago, which is tied to soft red winter wheat used to make cookies and cakes. The spread indicates expectations that supplies of the former will decline in the upcoming 2022-23 marketing year.
The most-active hard red winter wheat contract climbed as much as 3.3% to $11.6025 a bushel in Chicago. Benchmark futures rose as much as 2.7% to $11.06 a bushel.
For spring wheat, which is prized for its high protein content, soggy fields are delaying plantings in the U.S. northern Plains and Canada. July futures rose as much as 2% to $12.01 a bushel in Minneapolis.