Wheat prices exploded on Tuesday, gaining over 20 cents per bushel as traders grew concerned about global supply threats. Australia’s crop is suffering due to dry conditions, and a plague of locusts is threatening crops across Pakistan, India, and China.
This winter saw a locust outbreak of biblical proportions in East Africa, ravaging crops in Ethiopia, Somalia, and Kenya. The insects are now swarming farther east, and Pakistan is suffering from the worst outbreak in over 20 years, prompting action from the United Nations. As the insects spread, they are beginning to threaten China and India, the world’s largest wheat producers. As a result of damage already wrought by the infestation, prices for food are soaring in those countries, and will likely force them to import wheat to meet their needs.
Domestically, American farmers are keeping wheat acreage steady, but increased demand from foreign buyers could leave us with the smallest stockpile in five years. As of midday Friday, March Chicago wheat futures traded for $5.56 per bushel.