Insight Focus
Black Sea tensions and yield concerns lift grain prices. Wheat led gains last week as escalating Russia-Ukraine tensions disrupted Black Sea exports, while Chicago corn remained supported by concerns over lower US yields following the Pro Farmer Tour. Attention now turns to next week’s WASDE report, where any meaningful cut to the USDA’s corn yield estimate could further tighten the outlook and keep prices well supported.
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The rally across grain markets continued last week, driven by escalating tensions between Russia and Ukraine that are disrupting wheat exports and ongoing concerns about lower US corn yields. Wheat led the gains, supported by the prospect of Black Sea exports being blocked, while Chicago corn continued to price in the impact of the low yield estimate from the Pro Farmer Tour.
All eyes now turn to the September WASDE report due next week and how much it will reduce its corn yield projection following the 173 bushels/acre estimate from the Pro Farmer Tour. As we wrote last week, if this yield is recognised, a significant cut to exports will be required, and that can only be achieved through higher prices. While some profit-taking could emerge this week, downside risks should remain limited unless the Russia-Ukraine situation is resolved and concerns around US corn yields ease.
There are no changes to our forecast for Chicago corn to average USD 4.4/bushel during the 2025/26 (September/August) crop year. The average price since September 1 is running at USD 4.38/bushel.
Corn Rally Continues Amid Growing Supply Concerns
Chicago corn rallied from the open last Monday, surpassing USD 5/bushel, continuing to price in the low Pro Farmer Tour yield forecast and the crop progress report showing worsening conditions. However, the rest of the week was really a wheat story, with wheat pulling corn and soybeans higher after Russia said attacks on Ukraine would intensify, raising the prospect of wheat exports being completely blocked.
The European Commission’s MARS bulletin reduced its corn yield estimate to 6.61 tonne/ha, down from 6.93 tonne/ha previously.
Eastern European corn was rumoured to have been sold into France, which gives a sense of the level of concern, considering France is traditionally an exporter.
The only relief on the corn side came from South Africa increasing its production forecast to 17.4 million tonnes, a record crop and 700,000 tonnes higher year on year.
US corn condition is rated 57% good or excellent, down three points week-on-week and compared with 71% last year. Corn condition in France is 28% good or excellent, down one point week on week and compared with 62% last year. Safrinha harvesting in Brazil is 90.4% complete, versus 94.8% last year and the five-year average of 91.1%.
Wheat Leads Grain Complex Higher as Exports Stall
As mentioned above, wheat led the gains across the entire grains complex as tensions between Russia and Ukraine intensified. Putin stated there was no point in discussing peace, and both sides increased attacks, effectively blocking wheat exports.
The situation in the Black Sea, particularly in Russia and Ukraine, is simply not improving, and Ukraine exporting grain inland through neighbouring countries is not a realistic solution, as those countries are already moving their own grain. One example of this disruption is that French wheat has been sold to Sudan and Egypt, markets traditionally supplied by Russian wheat.
US spring wheat condition is rated 51% good or excellent, down one point week on week and compared with 49% last year. Harvest progress stands at 62% complete, versus 51% last year and the five-year average of 52%. French wheat is fully harvested.
Wheat harvesting in Russia is 73.2% complete, versus 65.1% last year. Wheat harvesting in Ukraine is 97% complete. Wheat harvesting in Brazil is 6.7% complete, versus 7.7% last year and the five-year average of 8%.
Mixed weather conditions are forecast this week across US growing regions, with the Corn Belt expected to see favourable weather for corn development. Rain is forecast in Brazil not only this week, but a wetter-than-normal September is also expected. Meanwhile, dry and cold weather is forecast in Argentina. Northwestern Europe is also expected to see mixed conditions, with rain and warmer temperatures in Germany, while drier and warmer weather is forecast to return to France.
