Crop prices have surged as war and weather disrupt supplies, pushing wheat to its highest point in three years. The sharp rise in overall commodity prices, which increased by double-digit percentages in July, is already pressuring food manufacturers. While the immediate impact on supermarket shelves may be delayed, experts warn that the pressure is unlikely to ease any time soon.
Wheat Prices Jump as War, Weather Collide
The biggest choke point is the conflict between Russia and Ukraine, which together account for 25% of global wheat exports. Stocks are piling up in warehouses in Ukraine, while Russia is subsidizing rail lines to reroute shipments to the Baltic. Commodities analyst Andrey Sizov noted on X that 75% of Russian wheat shipments are trapped in terminals.
“Unless Black Sea exports begin flowing again, the market increasingly looks to be dealing with a multi-season supply issue rather than a short-term logistics problem,” Lachstock Consulting stated in a note.
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Wheat fell slightly on the last day of the month, but the 3.6% decline did little to dent the 30% runup since a June low on the Chicago Board of Trade. September wheat settled at $7.67, with the cash price at $7.05 ¼, closing the month at the highest level since July 31, 2023.
Turkish and Russian officials were set to meet to discuss a deal that would allow Black Sea wheat shipments to resume. The Bloomberg Agriculture Spot Index showed 10 major commodities up more than 13% in August, with sugar and cocoa up more than 20% on fears a possible super El Nino could wreak havoc. Drought and heat damaged this summer’s corn crop in both the U.S. and Europe. Corn closed the month at $5.375 a bushel; soybeans, $12.8775 a bushel; sugar, $17.81 a pound, and cocoa, $6,771 a ton.
El Niño Clouds the 2027 Crop Outlook
Commodity intelligence platform CropGPT released data indicating El Nino already is having an impact on rice, sugar and wheat, with rainfall down about 63% in some growing areas—a development that could reduce crop size by 20%. The situation is particularly dire in parts of Pakistan where precipitation is off by 45% from its long-term average. The wheat harvest in the United Kingdom is expected to be the worst since 1984.
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“Most reports have been focused on the effects that El Niño is having, and will continue to have, on global weather and sea temperatures, but that is just the tip of the iceberg in terms of impact on our everyday lives,” CEO Rob Weston said in a press release. “The lack of rainfall in multiple geographical areas is hitting crops now—and could very likely get worse.”
As the war continues, fertilizer and diesel also are concerns. Arif Gasilov, a partner at Gasilov Group, said farmers likely will reduce the amount of fertilizer they apply in the 2027 growing season and switch from corn to soybeans.
