The prices of corn and wheat in the futures market in the United States have surged to their highest levels in over three years. At the same time, as the United States is a major exporter of corn and wheat globally, the prices in the U.S. market also reflect and influence the trends in the global grain market.
On Friday (August 28th), the grain futures trading prices on the Chicago Board of Trade (CBOT) showed significant increases in corn and wheat prices.
Wheat futures rose by 3.1% on Friday, closing at 784 cents per bushel, reaching a high of 790.25 cents during trading hours, the highest level since February 14, 2023, when the peak price was 797.5 cents.
Wheat futures prices have risen by 12.1% this week, marking the largest weekly increase since March 2022.
Overall, with the escalating tensions between Russia and Ukraine in the Black Sea region, wheat futures prices have increased by over 54.5% so far this year.
Corn futures rose by 0.6% on Friday, closing at 536.5 cents per bushel, reaching a high of 541.25 cents during trading hours, the highest level since July 28, 2023.
Corn futures prices have risen by 5.5% this week, with an increase of 15.6% so far in August, potentially achieving the best monthly performance since April 2021, when the increase was 19.31%.
Due to expectations of tight U.S. corn supplies and robust demand, coupled with restrictions on Ukraine’s corn exports, further pressure is being exerted on global supplies, leading to a 21.8% increase in corn futures prices so far this year.
William Osnato, Director of Commodity Data Research and Analysis at the financial market data and technology service provider Barchart, stated, “From early August until now, the market consensus is that the supply is less than what we had anticipated at the beginning of the month.”
Osnato highlighted some reasons contributing to this situation, including the U.S. Department of Agriculture’s forecast of corn production lower than traders’ expectations in a recent report; observations by leading U.S. agricultural marketing organization “Pro Farmer” indicating adverse effects on corn crop growth in some planting areas due to excessive rainfall and extreme heat this summer, as well as the emergence of corn fungal diseases in the late growing season; the severe impact on European corn production due to persistent extreme heat and drought throughout the summer; and restrictions on corn exports from Ukraine, one of the major global corn exporting countries, due to the effects of the war.
In contrast to the situation with corn, the increase in wheat prices is related to disruptions in global supply.
Following the escalation of tensions between Russia and Ukraine in the Black Sea region, the interruption of grain exports has driven prices higher. Russia and Ukraine are major wheat exporting countries globally, with both countries accounting for over a quarter of the global wheat export volume. Concerns over the interruption of supply in that region have intensified, becoming a significant factor driving the increase in wheat prices.
Weather impacts have further added pressure to wheat supply. Osnato pointed out that the scorching weather this summer has reduced European wheat production by approximately 8 to 10 million metric tons, while drought has also decreased the production of hard red winter wheat in states like Texas, Oklahoma, and Kansas.
(This article referenced reporting from CNBC)