Wheat futures climbed again Friday as traders prepared for two closely watched U.S. Department of Agriculture (USDA) reports while continuing to monitor Ukraine’s expanding drone campaign targeting Russian energy and logistics infrastructure around the Black Sea.

In early Chicago trading, September soft red winter wheat rose about 13 cents to nearly $6.33 per bushel, while Kansas City hard red winter wheat gained roughly 16 cents, approaching $6.70 per bushel. The widening premium for hard wheat—a key ingredient in bread flour—highlighted growing concern over tightening supplies of higher-quality milling wheat.

Lowest U.S. Wheat Acreage in More Than a Century

The rally has been driven by both domestic and international developments.

The USDA’s June 30 Acreage Report estimated U.S. wheat plantings at 42.74 million acres, the smallest area recorded since the department began tracking the crop in 1919.

Markets are now awaiting Friday’s Crop Production Report and World Agricultural Supply and Demand Estimates (WASDE). According to a Wall Street Journal survey of analysts, U.S. wheat production is expected to total approximately 1.52 billion bushels, down from 1.56 billion bushels projected in June and potentially the smallest harvest since 1970.

Persistent drought across the Southern Plains has significantly reduced this year’s hard red winter wheat crop, tightening supplies of premium milling wheat.

Ukraine’s Drone Campaign Adds Global Risk

At the same time, geopolitical concerns continue supporting wheat prices.

Ukraine’s military reported additional long-range drone strikes overnight targeting Russian refineries and infrastructure connected to the Sea of Azov, extending attacks that have increasingly affected Russia’s energy sector.

Officials in Kyiv have estimated substantial disruptions to portions of Russia’s refining capacity, while Western officials have also noted growing impacts on fuel production and logistics.

Although the attacks have primarily targeted energy infrastructure, they have also increased concerns surrounding Russian Black Sea export operations.

Russia Remains the World’s Largest Wheat Exporter

One of the market’s biggest concerns centers on Novorossiysk, Russia’s largest grain export terminal.

The Black Sea port handles roughly 20% of Russia’s grain exports, including large volumes of wheat shipped to buyers across North Africa, the Middle East and Asia.

Previous drone attacks near the port have prompted sharp market reactions even without confirmed disruptions to grain shipments.

Commodity traders note that perceived risks to Russian exports can quickly ripple through global wheat markets and, over time, influence the cost of flour, bread and other grain-based foods worldwide.

Large Global Harvest Limits the Rally

Despite rising geopolitical tensions, several factors continue limiting wheat’s upside.

Russian agricultural analysts continue projecting a large domestic harvest this season, with consultancy SovEcon recently increasing its Russian export forecast to 46.5 million metric tons.

Russia has already begun harvesting across multiple regions, with production running ahead of last year in several growing areas.

Australia is also expected to produce another strong wheat crop, helping offset tighter U.S. supplies.

Those large global harvests have repeatedly slowed wheat rallies as buyers remain confident adequate world supplies will remain available.

Volatility Likely to Continue

Analysts say wheat prices are currently balancing two competing forces: historically tight U.S. production and abundant export supplies from other major producers.

Much of this week’s advance also reflected short covering, as traders who had previously bet on lower prices bought back positions amid deteriorating U.S. crop prospects and rising geopolitical tensions.

For food manufacturers, grain processors, bakers and grocery retailers, the outlook points to continued volatility rather than a sustained one-directional trend.

Friday’s USDA reports are expected to provide the next major catalyst for grain markets, but developments surrounding the Black Sea conflict are likely to remain an important driver of global wheat prices throughout the summer shipping season.

JBizNews Desk | New York
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