Global warming could lead to a threefold increase in wheat prices

Global warming and simultaneous droughts across key wheat-growing regions could drive a sharp increase in global grain prices. According to a study by Aarhus University in Denmark, with global warming of 3°C, the average wheat price could reach around $364/t — roughly three times the inflation-adjusted level recorded in 2010.

Researchers analyzed climate data, crop production areas and global agricultural commodity prices. Their calculations suggest that severe water scarcity could explain around 74% of annual fluctuations in global wheat prices between 2000 and 2021. The relationship between water scarcity and prices was found to be significantly stronger for wheat than for corn.

The greatest risk arises when drought affects several major producing regions simultaneously. On average, severe water scarcity has affected around 5% of the world’s wheat-growing area each year, but in particularly dry years such as 2000, 2010, 2012 and 2020, the share exceeded 15%. Such simultaneous weather shocks could become more frequent as the climate warms.

Climate modelling showed that with global warming of around 2°C, average wheat prices could reach approximately $273/t, while warming of 3°C could push prices to $364/t. Researchers link this increase to severe water scarcity spreading across a larger share of the world’s wheat-growing areas.

At the same time, the authors stress that drought is only one of the factors influencing wheat prices. Energy and fertilizer costs, grain stocks, trade policies and geopolitical conflicts also play important roles. However, the study suggests that simultaneous droughts across major producing countries could become an increasingly important factor for the global grain market.

Tags: weather conditions, prices, wheat, global warming