The wheat market focused much of this year on persistent drought in the Southern Plains that’s expected to result in the smallest winter harvest since the mid-1960s.
Spring wheat growers in the Northern Plains faced no such weather calamity but shared a common denominator with their winter counterparts: The market was unkind.
After rallying to a two-year high at $7.33 per bushel around mid-May, July hard red spring wheat futures tumbled as much as 17% by mid-June. The HRS drop was similar in magnitude to those in the hard red winter and soft red winter markets.
One might expect a stronger spring wheat price performance after USDA in March forecast U.S. plantings to shrink to 9.42 million acres, the lowest since 1970. But sustaining rallies remains a struggle across the wheat classes for a variety of reasons that are likely familiar.
Wheat is “suffering from a thousand cuts,” said Tanner Ehmke, CoBank lead economist for grains and oilseeds. He cited a few factors weighing down wheat prices, including:
- Lower spring wheat acreage and lost HRW production are already priced into the market, so the trade mindset is shifting to “rain makes grain,” with no significant moisture concerns affecting the spring wheat growing regions in the Northern Plains.
- Top global wheat producers, including Russia and Ukraine, are receiving ample rains, while in Australia, moisture conditions are starting the season “surprisingly benign” for an El Niño year.
- In Argentina, farmers are planting into decent soil moisture, and the Argentine government recently lowered its export tax on wheat.
In the U.S., the spring wheat market is receiving mixed signals. The spring crop was planted ahead of the historical average pace, and development was also running slightly ahead of average. But based on USDA condition ratings, the crop is actually in worse shape than a year ago (55% good-to-excellent rating as of June 14 vs. 57% a year earlier).
Concerns over too much or too little rainfall have been cited. Most of Montana was in moderate to severe drought as of mid-June. But top HRS producer North Dakota appears to be in good shape moisture-wise.
For wheat producers, there are some reasons for longer-term price optimism, and a few developments that emerged late in the spring are worth keeping an eye on:
El Niño confirmed. Earlier in June, the National Oceanic and Atmospheric Administration’s National Weather Service announced El Niño had developed in the tropical Pacific Ocean and said it’s predicted to intensify to a moderate or strong level this fall. El Niño has been associated with drought-related crop shortfalls in Australia.
Global stocks tightening. In its June World Agriculture Supply and Demand Estimates, USDA lowered its forecast for Australia’s 2026-27 wheat harvest by nearly 7%. (The country’s crop is expected to contract over 22% from 2025-26.) WASDE also included slightly reduced 2026-27 global ending stocks and predicted a 3% drop in worldwide production, the first decline in eight years.
Carry getting stronger. In HRS futures, the premium that deferred futures held over nearby contracts, known as the carry, expanded sharply much of the spring. In early June, the December HRS futures’ premium to the July contract briefly topped 50 cents, nearly double levels in late April. Strengthening carry could be interpreted as a signal to store grain now in hopes of selling at higher prices later. Be sure to consider other factors, such as storage costs and interest rates.
Weather and geopolitics remain perpetual wild cards, meaning the prices that don’t look very appealing today could quickly move in a different direction. As always, expect the unexpected.
“I’d caution that things could quickly change with USDA calling for a smaller world wheat crop this year with global usage also rising,” Ehmke said. “World exporter stocks are expected to tighten, so the market is going to limit the downside for wheat because of loss in acreage and the El Niño risk to yield in Australia.”