U.S. trade policy continues to dominate global discussions, with potential tariffs injecting uncertainty into international markets. While the direct impact of tariffs on trade is well-documented, the anticipation of such measures has also influenced commodity prices, including wheat.
Between January 1 and February 19, wheat futures surged due to a combination of trade uncertainty, weather-related risks, and currency fluctuations. Kansas City Board of Trade wheat futures rose 11%, Chicago Board of Trade gained 8%, and Minneapolis Grain Exchange increased 7%. Although prices have since retreated, key market drivers remain in focus.
Trade and Currency Pressures
Since September, the U.S. Dollar Index has climbed 6%, peaking at 109.9 on January 13—its highest level since October 2022. This strength is linked to inflation concerns, economic uncertainty, and shifting trade flows. As a “safe haven currency,” the dollar often strengthens during periods of market volatility. However, a strong dollar makes U.S. exports, including wheat, more expensive, which in turn influences futures prices.
Weather Risks and Market Impact
Wheat prices also faced upward pressure due to extreme weather conditions. The U.S. Southern Plains experienced a harsh winter with temperatures 12-15°F below average, alongside sparse snow cover, raising the risk of winterkill for wheat crops. Russia faced similar challenges, with frigid conditions following a dry winter. Early estimates for Russia’s 2025/26 wheat crop have been as low as 78.7 million metric tons due to these dry conditions.
While temperatures have since moderated and snow cover has mitigated some risks, the full impact on yields remains uncertain until spring. As immediate winterkill threats diminish, wheat futures have started to decline, but market volatility is expected to persist as the Northern Hemisphere crop exits dormancy.
