UK wheat futures fall to £173/t in response to Iran ceasefire

The provisional agreement of a two-week ceasefire between the US and Iran and the reopening of the Strait of Hormuz shipping route has weighed on global commodity prices this week.

UK wheat futures opened at £173.50/t on 8 April for the May 2026 contract, down by almost £4/t on the previous day’s peak.

Wheat markets had received a temporary uplift in March due to conflict in the Middle East, in what is otherwise a subdued marketplace with an abundant supply of grain globally.

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Benoit Fayaud, senior manager of grains and oilseeds at market insight firm Expana, told Farmers Weekly that the announcement of a ceasefire between Iran on one side and the US and Israel on the other is a bearish signal for markets.

He said: “It should be noted that the prices of these commodities, and cereals in particular, had decoupled from the rise in crude oil prices due to short- and medium-term fundamentals that remain bearish. This easing of tensions therefore adds to the weight of fundamentals in the price direction of grains and oilseeds.

“That said, volatility is likely to remain high in the coming weeks, as many uncertainties remain regarding a lasting resolution of the conflict.”

Brent crude oil dropped back by roughly 15% overnight following the announcement of an agreement on 7 April, as markets react to a rapidly evolving situation in the Middle East.

If the agreement remains in place, it may also lead to some easing of on-farm input costs such as red diesel and fertiliser.

Mr Fayaud added: “It will also be important to monitor how nitrogen fertiliser prices evolve, as they have so far been a major source of concern for farmers around the world.

“Ultimately, farmers may hope for a return of input prices to levels more consistent with grain and oilseed selling prices. Otherwise, their margins will come under severe pressure.”

The war in Ukraine is still having some influence on grain markets as well, with a Russian news agency reporting that a Russian grain vessel was attacked by Ukrainian drones in the sea of Azov last week.

Global supplies

The International Grain Council forecasts total world grains production at a record high of 2.47bn tonnes for 2025-26, however it projects production to fall to 2.42bn tonnes for the 2026-27 crop year.

Amid a well-supplied market with weak supply-demand fundamentals, wheat prices may fall further if a long-term agreement in the Middle East is reached.

Traders at Dewing Grain said: “Strip out the war premium and you are left with record global wheat stocks, a structurally declining US wheat area, a drought-stressed [US] plains crop at a 35-year low opening rating, EU exports running ahead of last year, and an 88.5m tonne Russian crop.”

The US Department for Agriculture’s crop progress report on 6 April forecast just 35% of the US winter wheat crop as in either good or excellent condition across the 18 major wheat producing states, down considerably on year-earlier levels.

Meanwhile, Expana’s Europe and Black Sea crop report forecasts EU27 soft wheat at 128.6m tonnes for 2026-27, down 8.5m tonnes on the year.