Global Drought Already Explains 74% of Wheat Price Swings, Study Finds — and It Could Triple Prices

Bread, pasta and breakfast cereals may seem far removed from dry fields on the other side of the world, but a new international study published in the journal Earth's Future finds that when water shortages hit several of the world's major wheat-growing regions at once, the effects can reach supermarket shelves everywhere. Researchers combined climate data, crop production areas and global commodity prices to examine how drought affects wheat markets worldwide.

The team developed a new indicator called Severe Water Scarcity, which measures the share of global cropland experiencing drought during the months when crops are most sensitive to water shortages, rather than looking at local drought in isolation. The extent of severe water scarcity alone explains around 74% of annual fluctuations in global wheat prices between 2000 and 2021, the study found — a relationship far stronger for wheat than for maize, with no comparable link found for rice.

On average, about 5% of the world's wheat-growing area has experienced severe water scarcity in a typical year, but this has exceeded 15% in particularly dry years such as 2000, 2010, 2012 and 2020, and the share is rising with climate change. Using climate models, the researchers estimated that at around 2 degrees Celsius of global warming, the average wheat price would reach approximately $273 per tonne, rising to about $364 per tonne at 3 degrees of warming — roughly three times the inflation-adjusted global wheat price recorded in 2010.

"We already know that climate change affects agricultural production. What is new here is that we can document a clear link between widespread drought across the globe and the prices faced by consumers and food markets," said co-author Jørgen E. Olesen, professor and head of the Department of Agroecology at Aarhus University. The researchers note that drought is not the only factor shaping wheat prices — energy and fertilizer costs, grain stocks, trade policy and geopolitical conflicts also play a role — but say drought's compounding effect across regions has previously been difficult to quantify.