Insight Focus
Grains rallied on weather and rising fertiliser costs. Markets focus on the May WASDE for signals on how the USDA will reflect risks to acreage and yields, with particular attention to potential reductions in US corn area. While last week’s rally may prompt some profit-taking, ongoing geopolitical tensions keep upside risks dominant, with prices likely to consolidate around USD 4.5–4.6/bushel.
This update is from Nixal Commodities. For more information, CLICK HERE.
All grains were up again on weather worries potentially delaying corn planting, and Brent was up, exacerbating the problem with fertilizer costs. Focus now turns to the May WASDE.
There was strong bullishness across the board last week, driven by a combination of weather concerns and the rally in crude oil impacting fertiliser costs for corn and spring wheat. US wheat has the lowest crop conditions since 2023, and dryness persists in the US Plains, while rain in the Corn Belt could result in lower planting pace, to be reflected in the next two crop progress reports.
However, the biggest unknown is the potential impact of lower corn acreage and lower yields due to very high fertiliser costs—not only in the US but across the entire Northern Hemisphere. The question is not whether there will be a negative impact on production, but rather the magnitude of that impact in terms of reduced corn output. The Northern Hemisphere corn planting season is now fully underway, and it is too late for fertiliser prices to return to affordable levels, even if the US and Iran reach a peace agreement soon.
The focus now turns to the May WASDE next week and what kind of impact the USDA will reflect in its estimates. Beyond the May WASDE, there will be another in June, but most important is the June acreage report, which should reflect any changes in US corn acreage.
The rally last week may trigger some profit-taking this week, but as long as the conflict continues with no light at the end of the tunnel, there is more upside than downside risk. Expect some consolidation around the USD 4.5–4.6/bushel region ahead of the WASDE.
There is an upward revision to our estimate for Chicago corn, now expected to average USD 4.4/bushel during the 2025/26 (September/August) crop vs. USD 4.18/bushel before. The upward revision comes on the back of the risk of lower acreage and lower yields as potential impacts from the war in Iran. The average price since September 1 is running at USD 4.3/bushel.
Corn Rises on Planting Delays and Input Cost Concerns
Corn in Chicago rallied right at the opening last week on concerns about planting delays in the US due to rain, and Brent consolidating again above USD 100/bbl raised fears of fewer corn acres and lower fertiliser use, potentially having a negative impact on yields. Despite a negative day on Thursday, the market rallied again on Friday, finally closing the week 2% higher.
US corn is 25% planted vs. 22% last year and the five-year average of 19%. Corn planting in Russia is 13.3% complete vs. 28.4% planted last year. Corn planting in Ukraine is 9.9% complete vs. 17.5% last year. Corn harvesting in Argentina is 28% complete. Summer corn harvesting in Brazil is 62% complete vs. 71.9% last year and vs. the five-year average of 65.2%. Safrinha corn planting is now finished.
Wheat Gains on Weather Risks Despite Late-Week Pullback
Wheat also rallied at the beginning of the week on weather concerns—too dry in some areas in the US—and the risk of lower fertiliser use in spring wheat threatening yields. However, it sold off during the second half of the week, still closing 2% higher overall. The Euronext May contract plummeted, but this was simply due to low liquidity as expiry approaches, while the September contract rallied along with Chicago.
The EU MARS bulletin published last week projected EU wheat yields at 5.83 tonne/ha, down 4% from 6.05 tonne/ha last year, but above the 5.64 tonne/ha five-year average.
The USDA forecast Australian wheat production to fall 19% year-on-year to 29 million tonnes, mostly on expectations of lower yields.
US winter wheat is 30% in good or excellent condition, unchanged week-on-week and vs. 49% last year. Ukraine spring wheat is 92.5% planted vs. 87.8% last year. Russia spring wheat planting has started and is 2.9% complete vs. 18% last year.
On the weather front, Western Europe is expected to remain warm and sunny, with rain during the second half of the week, while unstable weather is expected in the Black Sea region. US weather is expected to be cold, with a risk of frost in the Midwest and Plains and rain in the south. Brazil is expected to be dry across the Centre-West, with colder weather and rain in the south. This cold weather will also reach Argentina, with a risk of frost in the south.
