Global conflicts sees wheat prices jump, but Australian farmers' costs climb too

Overseas wheat prices are jumping, but not here

Wheat prices rallied hard offshore this week, up 4.3% to $6.32 a bushel in the US and 5.9% in Europe. The rally was driven by tightening supply: the US government's latest crop report cut its 2026/27 US wheat production estimate to 41.8 million tonnes — the lowest since 1970 — and lowered Canadian production by a million tonnes to 34 million tonnes, almost six million tonnes below last year.

Australia's own wheat price barely moved by comparison, rising just 0.8% for the week, with feed barley up 0.4%.

"Local prices followed offshore futures higher, but the move was smaller than the US and Europe because Australian weather conditions continued to improve," said Dennis Voznesenski, CBA's Director, Sustainable and Agricultural Economics.

Good growing conditions increase expectations of a larger wheat harvest, with a larger potential yield putting downward pressure on Australian wheat prices.

The Strait of Hormuz risk isn't just about oil

Over the weekend the US and Iran exchanged a series of blows following Iran's attack on a commercial vessel on the Oman side of the Strait. Iran now claims the Strait of Hormuz is closed while the US President and CENTCOM insist it remains open.

“That standoff has been showing up in farmers' costs since the conflict first escalated in February. Not just what they're paid for wheat, cattle or canola, but what they pay to grow it,” said Voznesenski.

Middle East fertiliser prices and diesel prices at the terminal gate both spiked sharply in the weeks after the war began, before easing back over more recent months.

"The restart of hostilities shows that the Strait of Hormuz disruption is far from over and that prices could easily spike again," Voznesenski said.

A separate Black Sea risk is also building

Ukrainian strikes disrupted Russian shipping through the Sea of Azov between 7 and 11 July, raising concern over a key strait Russia relies on to move grain from inland and southern regions out to export ports. From 10 July, Russia paused accepting new vessel applications through that route.

Further disruption there would hit Russia's smaller ports, though its largest ports would remain unaffected; combined Russian and Ukrainian grain exports by sea in June had already reached 3 million tonnes, double the same month last year.

*All prices listed are from July 13 2026.

Read Dennis Voznesenski’s full note here.