Financial Services Association, May 29 (Editor: Niu Zhanlin) Chicago Board Futures (CBOT) wheat futures prices soared to their highest level in nine months on Tuesday, driven by a series of negative factors such as geopolitics and extreme weather.

Wheat futures rose more than 3% earlier in the day, then regained some of the gains. Analysts have been lowering production expectations for Russia, the largest exporter, in recent weeks, while Ukraine is about to usher in the driest May on record. Western Australia's historically low rainfall has also heightened supply concerns.

The US Commodity Meteorological Group predicts that the southern region of Russia will face high temperatures for several weeks. Insufficient rainfall will definitely affect wheat production, and the country's wheat has recently become more and more expensive. As the largest wheat exporter, any fluctuation in local prices will affect other markets.

On Tuesday, agricultural consulting agency Sovecon became the latest forecaster to lower Russia's wheat harvest estimates, lowering its forecast for Russian wheat production in 2024 from 85.7 million tons to 82.1 million tons. The agency notes that the May frosts caused more damage to winter crops than expected.

In addition to the drought, the Russian-Ukrainian conflict also continues to affect production in Ukraine. Attacks on agricultural infrastructure threaten exports, and food production is expected to drop 6% next season compared to the same period last year due to large numbers of laborers entering the battlefield.

Extreme weather in parts of Australia has also affected crop growth. Commonwealth Bank of Australia analyst Dennis Voznesenski said this week that if there is no rainfall after Western Australian crops germinate, there is a risk of being “burnt”, and wheat is rising faster than expected locally and globally.

According to the US Department of Agriculture's forecast earlier this month, while economies are still dealing with stubborn inflation, global food supply will tighten in the next fiscal year, which may lead to a rise in food prices.

The US Department of Agriculture said in its report that the 2024-25 global wheat inventory is estimated at 253.6 million tons, which is lower than the average estimate, the lowest level in eight years; the global corn supply is estimated at 312.3 million tons, which is about 2.1% lower than the average forecast.

Ole Houe, head of consulting services at agricultural brokerage firm IKON Commodities in Sydney, said that many factors influence wheat prices, and growers do not immediately sell their agricultural products, but instead keep inventory and wait for the price; if growers start selling inventory, the supply on the market increases, which may lead to a decline in demand and prices.