Wheat most vulnerable to climate and geopolitical risks

Wheat is currently the most vulnerable of the major grains and oilseeds to climate and geopolitical risks. The strengthening El Niño phenomenon in the second half of 2026 is creating additional risks for grain and oilseed production in Australia, Southeast Asia, Southern Africa and Central America, Zhou Libin, agricultural research manager at the London Stock Exchange Group (LSEG), said in an interview with Yicai.

According to Zhou, global wheat supplies are facing both weather-related and geopolitical pressures. Drought in the EU, prolonged heat and drought in the United States, and adverse weather conditions in Australia are reducing production potential. At the same time, geopolitical tensions in the Black Sea region are creating risks for grain exports, forcing importing countries to diversify their sources of supply.

Low water levels on the Rhine and Danube are adding further pressure to supply chains. Heat and drought in Western and Central Europe are complicating inland waterway shipping, increasing risks for grain transportation. According to the expert, the combination of production declines and trade disruptions makes the global wheat market the most vulnerable among major agricultural commodities.

Corn is also facing pressure from adverse weather. Drought in the EU could reduce production by more than 15%, or about 10 million tonnes, according to LSEG, while heat and drought in the United States are also limiting crop prospects. At the same time, expanding corn acreage in South America is partly offsetting weather-related losses. Soybeans are currently less vulnerable due to rising production in Brazil.

Zhou said the combination of weather shocks, geopolitical conflicts, high energy prices, changes in feed and biofuel demand could increase volatility in agricultural markets. Even when global supplies are sufficient, local shortages or disruptions to trade routes can create significant supply interruptions and sharp price fluctuations.

Climate risks are also increasingly affecting agricultural product quality. Heat, drought during grain filling and excessive rainfall before harvest can reduce protein content in wheat, while irregular rainfall and rising temperatures increase the risk of mycotoxins in wheat and corn. Zhou said future assessments of climate impacts on agricultural markets will increasingly consider not only crop volumes, but also quality, safety and suitability for processing.

Tags: wheat, drought, war, export, prices, Black Sea region