Watch for price rally in wheat as global production drops

The volatile wheat market may gear up again late this year and into 2027 as global supplies seem on the verge of trending lower due to adverse global weather conditions and geopolitical strife. 

What’s happened

In late June I discussed keeping an eye on wheat futures due to the notion that one or more global weather events in a major wheat-producing region of the world might send wheat prices higher.

I had no idea that the rally in wheat futures would start just weeks later due to a drought in Europe, one of the top producing wheat regions in the world. 

On July 1, December 2026 Chicago wheat futures had a price low of $6.02½ and by July 24 reached a price pinnacle of $7.28¼. An astounding rally of over $1.25 over just three weeks. Prices have retreated lower since then, with December 2026 Chicago wheat trading near $6.60 as of this writing. 

The drought in Europe zapped production potential, with a recent estimate from France’s agricultural ministry suggesting their 2026 wheat production may be close to 32 million tons, down nearly 7% from the previous year. Drought conditions were noted across Europe into Germany, Romania and Poland as well. 

From a marketing perspective

The drought-induced crop loss for wheat throughout the European Union is now priced into the market. What lies ahead for overall global wheat production potential is what traders will be pondering next. Watch these three noteworthy items over the coming weeks. 

• Global weather. Due to El Nino weather conditions, we know that the wheat crop in Europe suffered production losses due to drought. That information is priced into the market for now. Looking ahead, the El Nino weather pattern potentially could visit adverse growing conditions on India and Australia, which are also major global wheat producers. Everything that India grows, they use domestically. So, if there were a weather problem in India, it may force them to import wheat. Australia is a global leader in wheat exports, so if there were a weather issue affecting production in Australia, it could potentially translate in less crop to export to the world. Traders will eagerly be monitoring weather conditions in these countries. 
• The Aug.12 USDA WASDE report. Traders will be keen to see tomorrow’s USDA WASDE report that will shed light on global production levels along with global demand updates. As of the July 2026 USDA report, global ending stocks for wheat for the 2026-27 crop year were pegged at 272.84 million metric tons, which was down from 279.04 MMT last year. Will the report show that global ending stocks for wheat are continuing to trend lower? If so, that may keep price support under wheat futures.
• The Black Sea and its ongoing geopolitical strife. Traders have to keep an eye on the ongoing war with Ukraine and Russia, primarily from an exporting logistical standpoint. The problem for now isn’t that wheat in those two countries can’t be raised due to war, what is in question is if they are able to export the wheat that they grow. The ongoing war for those two countries has put strain on their export capabilities between rivers, rail and ocean-going vessels.

Prepare yourself

The July wheat price rally for wheat is tamed for now with wheat futures losing nearly half of those gains. However, the wheat story may continue to unfold into 2027. Weather and geopolitics will remain front and center for traders. 

The top five nations that produce wheat are China, the European Union, India, Russia and the United States. So far in 2026, wheat production in the United States and the EU is reduced due to drought. 

Looking at the top three global wheat producers, two of the three consume nearly all of the wheat they grow, with China consuming more wheat than they produce and relying on imports. India produces enough to meet domestic demand most years. What if India has a poor crop and then has to rely on imports as well? That would really change the global dynamics of supply and demand.

Watch the details of the Aug. 12 USDA WASDE report. Look at what USDA has to say about global supplies of wheat. We know two wheat crops are trending smaller: the U.S. wheat crop and the EU. Traders need to watch how the USDA pegs wheat production for Canada, Russia, Australia, China and India.

Keep in mind: The bearish sentiment for wheat in the past two years has shifted to neutral because of the crop reduction in Europe due to their drought. Sentiment could turn quite friendly in 2027 depending on how other countries’ wheat crops fare. Be ready for anything. 

Reach Naomi at naomi@totalfarmmarketing.com or find her on X at @naomiblohm.