Wheat Prices Tied to Severe Water Scarcity in Global Production Regions

An international team of scientists has linked global wheat prices to severe water scarcity in major production regions. The researchers used climate observations, crop geography, and global commodity prices to develop a model that explains 74% of year-to-year variation in wheat prices between 2000 and 2021.

The study focused on wheat because it is a staple food for much of the world's population and is particularly vulnerable to water shortages. The researchers used simulations of 31 global climate models to explore how future droughts affect wheat prices, finding that as warming increases, severe water scarcity becomes more widespread and estimated wheat prices rise.

The study acknowledges that other factors such as energy and fertilizer costs, grain stocks, exchange rates, trade policies, market expectations, pests and diseases, and geopolitical conflicts also influence food markets. However, the research identifies a climate-related signal that has been difficult to capture and quantify.