Wheat Market Surges Amid Conflict, Drought, and El Niño

The wheat market has entered its first bull run in years, driven by several factors. One of the main contributors is the ongoing conflict in the Middle East and Ukraine, which has reduced exports from these regions.

According to data, during moderate or strong El Niño events, wheat prices have rallied 70% of the time, with an average increase of 14%. Currently, the market is experiencing a moderate El Niño event.

The severe drought in western Europe and parts of the US Midwest has also led to higher prices. Additionally, extreme heat in Europe and the northern Plains spring wheat areas has resulted in crop losses and further reduced supply.

As a result of these factors, the US wheat crop is expected to be at its lowest level since the early 1960s. Millers and food processors are scrambling to secure supplies, contributing to higher prices.