Research
From Hormuz to El Niño: Global disruption, not wheat shortages, is driving Australian wheat prices
Global wheat prices have risen as disruption to Black Sea exports, energy markets and shipping routes increases costs and uncertainty, while El Niño poses an additional risk to the outlook. While global wheat supply remains adequate, markets are pricing in a risk premium rather than a wheat shortage. This report examines what this means for Australian wheat prices, input costs and the outlook for 2027.
Global wheat prices have risen as renewed military conflict makes Black Sea grain more difficult and costly to export. While global wheat production has been solid this year and stocks remain adequate, disruption to ports, vessels and shipping routes has made exports less reliable and raised freight and insurance costs, resulting in a risk premium rather than an outright wheat shortage.
The early October 2026 CBOT wheat forward curve largely prices in a drop in Black Sea wheat exports, with prices into mid-2027 pointing toward the AUD 365 to AUD 370/tonne range. This represents about a 12% price rise over the last three months, as by early June 2026, the same futures contracts – March to July 2027 – were showing prices of AUD 325 to AUD 335/tonne.
Further attacks, port closures or shipping disruption would provide additional price support, with the potential upside depending on the severity and duration of the disruption. Conversely, a ceasefire, export agreement or restoration of Black Sea export capacity could release accumulated grain inventories into export markets and remove a substantial share of the risk premium that is currently priced in.
Since Houthi attacks have disrupted shipping through the Red Sea and the Bab el-Mandeb Strait, Australia may benefit from relatively shorter shipping times to Asian buyers compared with competitors in Europe, providing stronger support for wheat prices.
Looking ahead to 2027, El Niño could also lift eastern Australian wheat prices if it contributes to lower winter rainfall and reduced production as is typically associated with the event. Higher fertiliser, fuel and freight costs remain a concern and continue to pressure wheat-farming budgets, offsetting much of the benefit from recent agri commodity price gains.