Wheat Supplies Tightening Amid Iran Conflict and El Niño

Global wheat production is expected to decline by 23 million tonnes in the 2026-27 season due to various factors. Analysts warn that the situation could worsen in 2027-28 if El Niño persists and disrupts crop production further. The US Department of Agriculture forecasts lower global production, citing smaller crops in the US and Canada, although higher output in Russia and Ukraine is expected to partly offset the decline.

Farmers in North America, the European Union, the UK, and Australia are either reducing wheat acreage or switching to other crops due to rising fertiliser costs following the Iran conflict. El Niño-induced weather risks have also affected production in several countries. For example, wheat sowing has fallen to a seven-year low in Australia, while common wheat production is forecast at 140.8 million tonnes, down from 149.8 million tonnes last year.

Global trade is projected to decline to 205 million tonnes from 216 million tonnes, and ending stocks are expected to fall to 279 million tonnes from 285 million tonnes. The USDA expects global wheat output to decline by 3% year-on-year, while demand will continue to grow due to higher food, seed, and industrial use.

The agency has pegged the US season-average farm price at $6 a bushel ($220.46 a tonne), but wheat futures on the Chicago Board of Trade are currently trading at $6.54 a bushel ($240.30 a tonne), close to the two-year high of $7 a bushel ($257.21 a tonne).