CHICAGO: Corn and wheat futures have rallied to their highest prices in more than three years, though the factors driving the gains for each crop remain distinctly different.
Wheat futures settled Friday at $7.84 per bushel, up 3.1% on the day, after hitting an intraday peak of $7.9025, the highest level since Feb. 14, 2023. The contract posted a weekly gain of 12.1%, its largest since March 2022.
Year-to-date, wheat is up more than 54.5%, fueled largely by escalating tensions between Russia and Ukraine in the Black Sea region.
Corn futures settled at $5.365 per bushel Friday, up 0.6%, after reaching $5.4125, the highest since July 28, 2023. Corn gained 5.5% for the week and is up 15.6% in August, on track for its best monthly performance since April 2021, when it rose 19.31%.
The contract has advanced 21.8% year-to-date, supported by tighter U.S. supply expectations and robust demand, with constrained Ukrainian exports adding further pressure on global stocks.
Corn’s Rally Rooted in U.S. Crop Concerns
The recent climb in corn prices is largely attributed to growing anxiety over U.S. production and a weaker-than-expected output outlook, according to market analysts.
“From the beginning of August to now, the consensus in the market is that there is less supply than we thought at the start of the month,” analysts said.
He pointed to the U.S. Department of Agriculture’s August World Agricultural Supply and Demand Estimates report, which lowered corn yield forecasts more sharply than traders anticipated, cutting the projection by 2.3 bushels per acre to 180.7 bushels, even as the USDA still predicted the second-largest harvest on record.
Compounding those concerns, Osnato noted that field observations from the Pro Farmer Crop Tour revealed disappointing results, with extreme July heat damaging crops after excessive June rainfall in many U.S. growing areas. Parts of the eastern Corn Belt also experienced heavy August rains, and corn fungal diseases developed later in the season.
While less significant than U.S. production, Osnato said extreme heat and drought across Europe over the summer substantially reduced corn output there. Strong European import demand added to the strain on already tight global supplies.
In its August report, the USDA raised U.S. corn export projections by 75 million bushels to 3.3 billion, reflecting higher global demand and reduced shipments from Ukraine, a major corn exporter. Osnato said that effect is more muted for corn than for wheat, adding that some disruption to Ukrainian corn exports had already been factored into prices.
Wheat Rally Tied to Black Sea Disruptions
Wheat’s price surge, in contrast, is closely linked to geopolitical instability and supply interruptions from the Black Sea region, which accounts for more than a quarter of global wheat exports.
Recent attacks in the Sea of Azov, a key conduit to the Black Sea, along with military strikes on grain facilities, oil tankers and vessels have made it difficult for shipping firms to secure insurance, further choking off movement of Russian and Ukrainian grain. Russia, the world’s largest wheat exporter and a low-cost supplier whose prices often set the global benchmark, has seen its shipments hampered by the unrest.
Weather has intensified the supply squeeze. Osnato said a severe heat wave cut European wheat production by an estimated 8 million to 10 million metric tons, while drought also reduced hard red winter wheat output in Texas, Oklahoma and Kansas.
Beyond the fundamental supply worries driving both markets, analysts said the breakout to multiyear highs can itself generate additional buying momentum, as traders and funds chase the upward trend.
