Weather already plays a significant role in the supply of wheat, and looking ahead, this impact is only expected to increase as farmers grapple with warmer temperatures. On the one hand, it has the potential to increase yields in some regions – according to a NASA study, higher temperatures can lead to faster plant growth, while higher CO2 levels can act as a fertilizer, further boosting yields. The same study explained that rising temperatures are also expected to significantly increase the areas in which wheat, which requires a temperate climate, can successfully be grown, with higher latitudes becoming suitable for the crop. 

For example, in Canada it is estimated that an additional 1.85 million square kilometers of land could be used for wheat cultivation. To put that figure in perspective, USDA data shows the total amount of land used for wheat cultivation in the U.S. in 2024/25 was 186,560 square kilometers. Hard red spring (HRS) wheat is the overwhelmingly dominant form of spring wheat grown in the United States and the dominant form of all wheat grown in Canada. A growing number of market participants are turning to CME Group HRS Wheat futures and options to manage risk in this space, with more than 468,000 contracts traded in the first five months since launch earlier this year.

However, rising temperatures could also threaten wheat harvests. The optimal temperature for wheat is restricted to a fairly narrow range, and temperatures above this level can damage the crop, causing it to mature too quickly, shortening the growth period and reducing the yield, one study showed. Excessive heat also limits water absorption by wheat, potentially creating additional challenges for farmers. 

More extreme weather has impacted wheat crops in parts of some key producer regions in recent growing seasons. For example, Argentina’s wheat harvest was hit by a significant drought during the 2022/23 growing season, and while Russia as a whole is projected to have an abundant crop this year, its largest grain-producing region declared a state of agricultural emergency due to drought.

Agri-tech has a key role to play in developing climate-resistant varieties of wheat, although this innovation alone isn’t expected to fully protect wheat yields. The development of both gene-edited and genetically modified (GM) wheat varieties, particularly ones that are more resilient to weather, could have a significant impact on supply and demand patterns. 

Although there are currently no commercially available GM wheat varieties grown on a large scale, countries are already showing different attitudes toward this innovation. Argentina first approved the cultivation and consumption of GM wheat back in 2020, followed by Brazil in 2023. China approved the safety of a gene-edited wheat variety for food production in 2024, but has not permitted any GM wheat for cultivation. Japan has taken a similar stance, allowing imports of gene-edited wheat but not GM wheat. In the past, Japan has imposed suspensions on the import of any wheat from countries known to produce GM wheat. 

Ongoing concerns surrounding GM wheat could possibly lead to the development of a dual wheat market. As it can also be challenging to distinguish between the two varieties, there could also be issues for certain countries when it comes to importing wheat from markets where GM wheat is grown on a commercial scale.

Government initiatives to increase food security could also help to boost wheat production. For example, China has set a target to increase grain production, including wheat, by 50 MMT by 2030. This target is being backed by government support for higher yielding crop varieties, improved irrigation systems and the adoption of agricultural techniques, including the use of drones and data analytics.

In the shorter term, the cost of production may deter some countries from producing as much wheat. Russian farmers are reducing wheat production due to dwindling, and in some cases negative, profits amid state price regulation and duties on exports, although the latter was suspended in July. 

The declining price of wheat and increased production costs have also hit profit margins for U.S. farmers, where wheat prices have fallen to a five-year low. As a result, in the Northern Great Plains region of the U.S., some farmers are starting to mix or substitute wheat with higher value crops, such as soybeans and corn. 

Over the longer term, creating genetically engineered wheat varieties that are more climate resilient could lead to higher yields and lower per unit production costs, making the crop more profitable for farmers, though such a scenario could also drive down prices. 

Rising temperatures could increase the amount of land suitable for wheat cultivation, while higher CO2 levels could boost yields. However, farmers will likely still need to adapt by using more resilient varieties of wheat and different farming methods. Meanwhile, as key producer regions face more extreme weather events, wheat prices are likely to remain volatile.