Due to adverse weather conditions in US wheat-producing regions and pressure on grain production caused by the closure of the Strait of Hormuz, wheat futures prices rose by 5% last week and climbed further on the 20th.
The renewed closure of the Strait of Hormuz affects not only energy but also derivative products like fertilizers, which could impact grain production in the medium and long term and exacerbate price volatility.
According to Bloomberg data, as of 1:25 pm on Monday, the July wheat contract on the Chicago Board of Trade rose 1.67% to $6.0925 (24 ringgit) per bushel. The July corn contract also climbed 0.38% to $4.5925 (18 ringgit) per bushel. On the other hand, the July soybean contract edged down 0.11% to $11.8175 (46.73 ringgit) per bushel.
In the energy market, Brent crude oil futures once again returned to the $90 per barrel range. As of 1:25 pm, prices were up 5.50% at $95.35 (377 ringgit) per barrel; West Texas Intermediate (WTI) crude futures rose 6.01% to $88.89 (351.5 ringgit) per barrel.
Market participants pointed out that if disruptions to the Strait of Hormuz continue, supplies of fuel and fertilizers could be affected, and rising related costs may further impact planting and fertilization plans in certain regions.
In addition, commodity brokerage and risk management firm StoneX stated in a report that the recent surge in US wheat prices has begun to erode US export competitiveness, potentially curbing further price increases. At the same time, rainfall in drought-affected regions could ease concerns about tight supply in the market.