FX.co ★ Wheat futures surge on Russian crop worries

Global grain prices have come under pressure from unseasonal May frosts hitting Russia. Against this backdrop, Russian agricultural producers could suffer heavy losses, experts warn.

Unexpected May frosts recorded in some regions of Russia caused a sharp rise in wheat futures on the Chicago Mercantile Exchange in the United States. According to estimates, the cost of the cereal grain surged to levels not seen since August 2023.

Earlier, experts cut their grain harvest forecasts for this year, dragging Chicago wheat futures lower.

Notably, Russia is the world's largest exporter of wheat. Although the areas affected by frosts are not extensive, the situation is exacerbated by the drought the country experienced earlier this year.

"The situation looks alarming throughout the European territory of the country," the Institute for Agricultural Market Studies (IKAR) said. The agency acknowledges that the damage to many grain crops will be significant, although there are no precise estimates yet.

Last week, IKAR lowered its forecast for Russia’s 2024-2025 wheat crop to 91 million tons from a previous estimate of 93 million tons. The agricultural consultancy also cut the nation’s overall grain crop forecast. In addition to grains, oilseeds were among those affected by unexpected frosts, experts noted.