Severe Drought Could Triple Global Wheat Prices Amid Climate Change

A new international study has found that severe drought in major wheat-growing regions could significantly impact global wheat prices as climate change increases the frequency and extent of drought. Researchers combined climate data, crop production areas, and global commodity prices to examine the relationship between drought and wheat markets worldwide.

The study, published in Earth's Future, found that the extent of severe water scarcity could explain about 74% of annual fluctuations in global wheat prices from 2000 to 2021. Among the study's co-authors is Jørgen E. Olesen, professor and head of the Department of Agroecology at Aarhus University.

The researchers developed an indicator called Severe Water Scarcity (SWS), which measures the proportion of global cropland experiencing drought during periods when crops are most sensitive to water shortages. The study found that wheat had a substantially stronger relationship between water scarcity and prices than maize, but did not identify a comparable relationship for rice.

The researchers noted that drought is one of several factors affecting wheat prices, along with energy and fertilizer costs, grain stocks, trade policies, and geopolitical conflicts. However, the study identifies widespread drought as a climate-related factor that can be quantified and linked to global wheat price fluctuations.