Wheat prices drop in Chicago as global reserves climb

The world’s stockpiles of wheat are on the rise, with bigger harvests in Australia and India potentially offsetting some of the losses from the Black Sea, where war is disrupting about a quarter of the grain’s global trade.

The world’s stockpiles of wheat are on the rise, with a bigger harvest in Australia potentially tempering impacts of the Ukraine war, which is disrupting about a quarter of the grain’s global trade.

That’s according to the U.S. Department of Agriculture’s forecast for crops, released Wednesday. Chicago wheat fell by the exchange’s limit, and remains locked there. 

Australia is poised to reap a record harvest this season, and a robust export pace out of India will continue due to ample reserves and rising global prices. In a surprising move, the agency also revised U.S. wheat exports downwards even as the war between Russia and Ukraine, both powerhouse producers, exacerbates fears of supply shortfalls.

The figures don’t “seem to really reflect problems in the Black Sea region, but it’s really hard to predict future grain flows right now,” said Terry Reilly, senior commodity analyst at Futures International LLC in Chicago.

Russia’s invasion of Ukraine has thrown the world’s wheat supplies into chaos. Futures are at their most volatile in at least a decade, and earlier this week reached an all-time high. The gains -- along with surging vegetable oil prices and corn and soybeans close to record levels -- could significantly increase global food prices that are already at the highest ever.