Strait of Hormuz blockade and drought support wheat prices

On the wheat market, the trend before the weekend was downward. Yesterday prices moved up again, although gains were more modest in Paris than in Chicago. Partly this is due to the US blockade of the Strait of Hormuz. Weather in the US is also lending support to the wheat market.The May contract for wheat on the Matif closed €1 higher yesterday at €195.75 per ton. On the CBoT, wheat rose more strongly and closed 2%, or 11¼ cents higher at $5.82¼ per bushel. Corn closed ¾ lower at $4.40¼ per bushel. Soybeans gave up 13½ cents in Chicago to $11.62¼ per bushel.The situation in the Middle East continues to cause concern in the commodity markets. Talks between the US and Iran on next steps after the ceasefire yielded no results over the weekend. A new round of negotiations would start at the end of this week or early next week, a source within the Iranian embassy in Pakistan told news agency Reuters.The American president Trump has meanwhile decided to impose a blockade on ships seeking to pass through the Strait of Hormuz. However, since the blockade took effect, two ships have passed through the strait. The first left the Persian Gulf with 250,000 barrels of ethanol on board, loaded in the United Arab Emirates. The other sailed empty into the Gulf to load fuel oil, several news agencies report. Reuters reports that both tankers are not affected by the US blockade because they are not going to Iran or coming from there.A risky move According to some experts, Trump is taking a risk with the blockade. The ceasefire is fragile and although detaining commercial ships is not directly an act of violence, it could provoke a military response from Iran. On his Truth Social platform, Trump wrote that if Iran were to come near the American blockade with fast attack boats, these ships should be treated the same way as drug-smuggling vessels in the Caribbean.Smaller Ukrainian harvest However, the rise in the wheat price cannot be fully attributed to the blockade of the Strait of Hormuz. APK Inform lowered its estimate for Ukraine’s upcoming grain harvest by 400,000 tons to 58.2 million tons. For comparison, in 2025, 61.1 million tons of grain were harvested in Ukraine according to APK Inform. Of the grain harvest, 19.9 million tons is wheat, 31.5 million tons corn and 5.1 million tons barley. The wheat export forecast has been revised sharply downward from 14.5 million tons in the earlier forecast to 13 million tons now.Russia has lowered the export levy on wheat by 41% in an apparent bid to boost exports. Exporters now have to pay a levy of 329 rubles per ton (about €3.70 per ton). Market bureau Ikar expects Russia to export less grain in April than previously expected. The reason is not weaker demand but bad weather in the first ten days of this month.Wheat struggles due to lack of rain In the US, the weather is also not helping wheat growers in the southern Wheatbelt. The eastern part of states such as Kansas and Oklahoma has had rain, but farther west, conditions have remained largely dry. The condition of winter wheat in the US has deteriorated slightly, according to this week’s Crop Progress report. 34% of the acreage is rated good or excellent, compared with 36% last week. This marks a shift from two relatively good wheat seasons. In 2022 and 2023, winter wheat conditions were poorer overall. In terms of development, winter wheat is slightly ahead, with 11% headed this week compared with 7% in the five-year average. Spring wheat planting is slightly behind the multi-year average, with 6% planted this season compared with a five-year average of 7%. Of the planned barley acreage, 13% has been planted compared with 10% in the average. Corn planting is also ahead at 5% versus the five-year average of 4%. This week, the first soybean planting progress was also reported in the Crop Progress report. Of the planned soybean area, 6% has been planted compared with 2% in the five-year average.