The wheat futures market has had quite a year, but in spite of global news events which have fueled substantial rallies in price, the actual movement of physical wheat hasn’t really followed the market’s storyline.
Back at the end of February, oil prices and other commodities like wheat shot up in price when the U.S. military strikes on Iran shook up global shipping. One of the spin offs of the conflict in the Persian Gulf is that it drew supplies and support away from the Russia-Ukraine war, and destabilized the uneasy calm that had kept grain vessels moving through the Black Sea and supplying wheat from this important growing region to other markets around the world.
Ultimately, the more that the situation deteriorated in the Persian Gulf and Black Sea, the higher North American wheat prices rose since more of the world would have to rely on American wheat as it became clear that North America was a safer place to source wheat supplies. Ships were sent to pick up that wheat.
The price rally in Chicago wheat futures through the spring and summer was substantial. On February 19, (10 days before the initial U.S. attack on Iran), Chicago December wheat futures were trading at $5.89. After six months of a steady flow of military actions in the Persian Gulf, Ukraine, Russia, Yemen and even the Red Sea fueling concerns over the world’s ability to move wheat, by the end of August 31, December wheat futures in Chicago had risen all of the way to $7.88. This was a full 33 % increase in soft red wheat prices in just six months.
Then came the unravelling of the wheat price rally. In spite of the story that wheat purchasers around the world will need to source American wheat due to safe reliable ports from which to load out vessels, U.S. wheat export sales through the summer and early fall of 2026 are at their lowest volumes in three years. Export sales and export inspections of U.S. wheat in September and October were low enough that money began to leave the wheat futures and by mid-October Chicago December wheat futures were down to $6.60. This was a 20 % drop over the six weeks since the end of August.
The bottom line is that price works. The international buyers of wheat are not much different than you or I behave when we are in a grocery store. When an item is expensive, we tend not to purchase any more of it than we actually need, and when things are cheap, we tend to stock up. When wheat futures spent July and August at multi-year highs, both feed and export buyers of wheat lost their incentive to make big purchases. Now that values of wheat have come back down, it is reasonable to expect to see export activity pick back up.
The story that global wheat buyers would have to move away from Ukrainian and Russian sources due to safety concerns was, in fact, correct. While both Ukraine and Russia have continued to move some volume of wheat through alternative shipping gateways, Argentina, Australia, and Canada, have all recorded noteworthy increases in their wheat export sales over the 2026 calendar year. (In the case of Canada, the increase has been in Prairie spring wheats exported primarily off the west coast).
It appears that concerns about global wheat shipping attracted an enormous amount of fund money into the U.S. wheat futures, causing the massive 33 % rise in values which we saw over the spring and summer. The cash wheat markets, most closely correlated to the U.S. wheat futures, rose to values which were unattractive to purchasers in other parts of the world. Source countries, like Australia and Argentina, where cash prices are less closely connected to the U.S. wheat futures, did not swing as far due to the fund buying, and therefore were more attractive in the global market. As the fund money backed out of wheat futures, and the prices have moved back to a more appropriate level — 10 % above where they were in the spring — American wheat as of mid-October was attractively priced in the global market.
Personally, I would caution anyone from having great expectation that wheat exports out of U.S. or Great Lakes ports will pick up in November, or December, and that’s not because the wheat prices are still too high, but rather because there are logistics and capacity constraints in our port infrastructure during the fall. Our grain terminals are focused on harvest time soybean and corn exports. Even if there are wheat stocks in a loadable position, there is a shortage of available ships to load due to the geo-political issues which have marine traffic moving in non-typical corridors. Also, the available marine freight was already booked to haul soybeans and corn.
On a positive note, there is still a lot of time for American wheat exports to catch back up before the end of the marketing year.
We are still eight months away from the first of the 2027 crop soft red winter wheat being harvested in the south eastern states, and a full nine months away from any winter wheat harvest in the Great Lakes shipping basin. None of the geo-political issues which have confounded international shipping in the Black Sea, the Strait of Hormuz, or the Suez Canal have resolved themselves.
Rally enthusiasm clearly over-valued wheat for a period of time, but that sales-limiting problem appears to be behind us now.
Steve Kell is a Simcoe County crop farmer and handles grain merchandizing for Kell Grain, with elevators in Belleville and Gilford.
STEVE KELL: What was that wheat rally all about?
The wheat futures market has had quite a year, but in spite of global news events which have fueled substantial rallies in price, the actual movement of physical wheat hasn’t really followed the market’s storyline.
Back at the end of February, oil prices and other commodities like wheat shot up in price when the U.S. military strikes on Iran shook up global shipping. One of the spin offs of the conflict in the Persian Gulf is that it drew supplies and support away from the Russia-Ukraine war, and destabilized the uneasy calm that had kept grain vessels moving through the Black Sea and supplying wheat from this important growing region to other markets around the world.
Ultimately, the more that the situation deteriorated in the Persian Gulf and Black Sea, the higher North American wheat prices rose since more of the world would have to rely on American wheat as it became clear that North America was a safer place to source wheat supplies. Ships were sent to pick up that wheat.
The price rally in Chicago wheat futures through the spring and summer was substantial. On February 19, (10 days before the initial U.S. attack on Iran), Chicago December wheat futures were trading at $5.89. After six months of a steady flow of military actions in the Persian Gulf, Ukraine, Russia, Yemen and even the Red Sea fueling concerns over the world’s ability to move wheat, by the end of August 31, December wheat futures in Chicago had risen all of the way to $7.88. This was a full 33 % increase in soft red wheat prices in just six months.
Then came the unravelling of the wheat price rally. In spite of the story that wheat purchasers around the world will need to source American wheat due to safe reliable ports from which to load out vessels, U.S. wheat export sales through the summer and early fall of 2026 are at their lowest volumes in three years. Export sales and export inspections of U.S. wheat in September and October were low enough that money began to leave the wheat futures and by mid-October Chicago December wheat futures were down to $6.60. This was a 20 % drop over the six weeks since the end of August.
The bottom line is that price works. The international buyers of wheat are not much different than you or I behave when we are in a grocery store. When an item is expensive, we tend not to purchase any more of it than we actually need, and when things are cheap, we tend to stock up. When wheat futures spent July and August at multi-year highs, both feed and export buyers of wheat lost their incentive to make big purchases. Now that values of wheat have come back down, it is reasonable to expect to see export activity pick back up.
The story that global wheat buyers would have to move away from Ukrainian and Russian sources due to safety concerns was, in fact, correct. While both Ukraine and Russia have continued to move some volume of wheat through alternative shipping gateways, Argentina, Australia, and Canada, have all recorded noteworthy increases in their wheat export sales over the 2026 calendar year. (In the case of Canada, the increase has been in Prairie spring wheats exported primarily off the west coast).
It appears that concerns about global wheat shipping attracted an enormous amount of fund money into the U.S. wheat futures, causing the massive 33 % rise in values which we saw over the spring and summer. The cash wheat markets, most closely correlated to the U.S. wheat futures, rose to values which were unattractive to purchasers in other parts of the world. Source countries, like Australia and Argentina, where cash prices are less closely connected to the U.S. wheat futures, did not swing as far due to the fund buying, and therefore were more attractive in the global market. As the fund money backed out of wheat futures, and the prices have moved back to a more appropriate level — 10 % above where they were in the spring — American wheat as of mid-October was attractively priced in the global market.
Personally, I would caution anyone from having great expectation that wheat exports out of U.S. or Great Lakes ports will pick up in November, or December, and that’s not because the wheat prices are still too high, but rather because there are logistics and capacity constraints in our port infrastructure during the fall. Our grain terminals are focused on harvest time soybean and corn exports. Even if there are wheat stocks in a loadable position, there is a shortage of available ships to load due to the geo-political issues which have marine traffic moving in non-typical corridors. Also, the available marine freight was already booked to haul soybeans and corn.
On a positive note, there is still a lot of time for American wheat exports to catch back up before the end of the marketing year.
We are still eight months away from the first of the 2027 crop soft red winter wheat being harvested in the south eastern states, and a full nine months away from any winter wheat harvest in the Great Lakes shipping basin. None of the geo-political issues which have confounded international shipping in the Black Sea, the Strait of Hormuz, or the Suez Canal have resolved themselves.
Rally enthusiasm clearly over-valued wheat for a period of time, but that sales-limiting problem appears to be behind us now.
Steve Kell is a Simcoe County crop farmer and handles grain merchandizing for Kell Grain, with elevators in Belleville and Gilford.