The US wheat crop is looking healthier than expected this season. According to the latest USDA report, 50% of spring wheat and 52% of winter wheat are now rated in good to excellent condition. This news sent wheat prices down on Tuesday, erasing some gains from the previous day.
But it’s not all smooth sailing. The ongoing Russia-Ukraine war keeps the market on edge. While better crop health means more supply and lower prices, the conflict in Eastern Europe could disrupt grain exports and push prices back up.
When wheat conditions improve, farmers expect bigger harvests, which can help ease inflation on food. However, the Russia-Ukraine conflict is like a wild card — it keeps markets nervous and prices unpredictable.
A grains trader in Singapore summed it up: “Any news of improved production is bearish for wheat prices as harvest nears, but geopolitical risks cap the losses.” Translation: prices might drop, but the war keeps things from getting too cheap.
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Corn and Soybean Markets Also Move
Corn took a hit, falling to its lowest price in six months. It dropped 0.6% to about $4.35 a bushel. The USDA says 69% of the corn crop is in good to excellent shape, matching expectations, but concerns over global trade tensions weigh heavy.
Soybeans, on the other hand, climbed a little, rising 0.2% to $10.35 a bushel. Brazil’s soybean production forecast just got better, which adds pressure on US markets. The US soybean crop is rated 67% good to excellent, just slightly below average.
Trade tensions with China, the biggest soybean buyer, also cast a shadow. President Trump recently accused China of breaking a trade deal, but talks between Trump and Xi Jinping are expected soon. That could change the market mood quickly.
A Quick Look at Global Wheat Supply
Meanwhile, Australia expects its wheat production to drop by 10% this year due to dry weather. But even with the decline, Australia’s output will remain above the 10-year average, says the Australian Bureau of Agricultural and Resource Economics and Sciences.
So, while the US wheat crop looks good, global supply and political drama keep prices from falling too fast.
