Wheat prices began the new year on a firm footing, driven by growing concerns over the health of winter crops in the United States. The most actively traded wheat futures contract on the Chicago Board of Trade (CBOT) climbed to 522 US cents per bushel on Thursday, its highest level since December 26. At the time of writing, the March contract was trading slightly lower at around 518 cents.
The rally built on an already strong start to the year, with wheat opening trading at approximately 500 cents per bushel. Strength was also visible in Europe, where wheat futures on Euronext in Paris reached about EUR 192 per ton, marking their highest level in roughly seven weeks.
US winter Wheat conditions deteriorate across various states
Analysts attribute the recent price gains primarily to worsening winter wheat conditions in several major US growing regions. According to Commerzbank AG, the condition of winter wheat plants has declined noticeably since late November, particularly in Kansas, the largest wheat-producing state in the US.
Kansas plays a critical role in global wheat supply, and even modest changes in its crop outlook tend to have an outsized impact on international markets. The latest concerns have prompted traders to reassess production expectations and factor in the risk of tighter supply later in the year.
Weather patterns weigh on crop health
Unfavorable weather has emerged as a key driver behind the weakening crop outlook. Agricultural analysts point to a combination of insufficient snow cover, sharp temperature swings, and prolonged dry spells across the US Plains.
Snow cover is especially important for protecting winter wheat from extreme cold, and its absence increases the risk of crop damage. Dry conditions further limit plant development, raising the likelihood of lower yields if weather patterns fail to improve in the coming months.
While the US Department of Agriculture reported only a slight decline in the share of Kansas wheat rated good or excellent, sharper deterioration was recorded in neighboring Nebraska and Oklahoma. With drought conditions persisting across parts of the Plains, analysts warn that further declines remain possible.
USDA data in focus as weekly updates pause
The USDA releases winter wheat condition data on a monthly basis during the winter season, meaning markets will have limited visibility in the near term. Weekly national updates are not scheduled to resume until early April, increasing uncertainty around crop development during a critical period.
Investors are now turning their attention to the USDA’s upcoming report on US winter wheat acreage, due next Monday. A Reuters survey of analysts suggests planted area could come in at around 32.41 million acres, which would mark the smallest winter wheat acreage in six years, according to Commerzbank estimates.
US wheat stocks expected to remain elevated
In addition to acreage data, the USDA will also release updated figures on US wheat inventories. Market participants surveyed by Reuters expect wheat stocks to total about 1.64 billion bushels as of December 1.
The report will also confirm last year’s winter wheat planting, previously estimated at 33.15 million acres. Commerzbank commodity analyst Carsten Fritsch noted that this figure would represent a 4.5% increase compared with the prior year.
Corn and soybean stocks seen rising sharply
While wheat markets are reacting to potential supply constraints, the outlook for other major grains appears very different. US inventories of corn and soybeans are projected to rise significantly over the three months leading up to early December, reflecting the completion of the annual harvest.
Corn stocks, in particular, are expected to surge to record levels. USDA projections indicate inventories could reach 12.96 billion bushels, nearly 1 billion bushels higher than a year earlier, driven by strong production and successful harvest conditions.
Soybean stocks are also forecast to increase, with inventories projected at 3.25 billion bushels, representing an annual rise of nearly 5%.
For now, wheat prices are likely to remain sensitive to weather developments across the US Plains and upcoming USDA reports. With crop conditions under pressure and planting area expected to decline, traders are increasingly factoring in the risk of tighter wheat supply later in the season.
At the same time, ample corn and soybean stocks may limit broader grain market rallies, creating diverging trends across agricultural commodities as the year unfolds.
