Wheat prices rose to a three-year high this week as traders grew increasingly concerned about drought conditions in the U.S. Great Plains and in northern Europe. Both regions are major producers of the grain, as well as other commodities.
One of the hardest hit areas is Germany, which is facing its smallest wheat crop in almost 15 years. In addition to losing 20% of its wheat crop, the nation is also facing large losses of its rye and barley crops, which could force the country into buying foreign grain to make its hearty breads and beers.
Globally, updated estimates are projecting this year’s wheat harvest to be almost 4% smaller than last year, which helped to push prices sharply higher. Kansas City hard red wheat futures touched $5.97 per bushel on Thursday, while Chicago soft red wheat futures were close behind, topping out at $5.93.
For U.S. farmers who weren’t devastated by drought, this rally has been a welcome relief, as prices have risen almost 25% in the past month.