Drought in Australia pushes local wheat prices up nearly 10%

The El Niño climate phenomenon has caused a prolonged drought in Australia’s key grain-producing regions, reducing the country’s wheat harvest and export potential. Amid tighter supplies, Australian wheat prices rose by 9.4% in August to $291/t.

The smaller Australian crop has added pressure to the global wheat market, where supplies are already tightening due to lower production in the EU. Australia is one of the key grain suppliers to Asian markets, making the decline in its export availability particularly significant for importers in the region.

Lower shipments from Australia are increasing competition for wheat from other exporting countries, including the Black Sea region. This is providing additional support to global prices and prompting importers to seek alternative sources of supply more actively.

A record wheat harvest in Argentina could partially offset the decline in global supply. However, domestic demand and logistical constraints are limiting the country’s ability to expand exports, meaning Argentine wheat cannot fully compensate for lower supplies from Australia and the EU.

Tags: Australia, prices, wheat