Agriculture Futures Soar on US Exports

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Grain prices fell in Friday’s session after closing multiple sessions in the green. Demand from China that drove US exports higher, as well as intensified geopolitical risk, has given the market a bullish outlook in the short term.

Wheat

Wheat set back below $6, US exports strengthened
  • Wheat prices faced sizable losses in Friday’s session, retreating from the 3-month high $6 mark.
  • The usual culprits of large domestic and global stocks were likely to blame for this decline.
  • The previous rally on wheat was supported by reports of unfavorable weather that would cut Russia’s wheat crop, as well as heightened concerns over supply disruptions following a drone strike on a Ukrainian river port.
  • Concern over production shortfalls in top global wheat-producing regions (Russia & the EU) may underpin prices for the near-term.
  • US July-September exports picked up pace at +39% y/y.
Corn

Corn hits 3-month high on better-than-expected US exports
  • Corn futures climbed above the $4.2 mark in September, reaching a two-month high on supply concerns and improving demand.
  • While the USDA reported an unexpectedly high national average yield of 183.6 bushels per acre, lower yield projections in key states have cast doubt on this optimistic outlook.
  • Ukrainian grain exports also fell 16% in September, with wheat making up 78% of shipments, as farmers held off on sales to avoid low post-harvest prices.
  • On the demand side, US corn exports hit a five-year high over the latest four-week period, further supporting upward price pressure.
Soybeans

China’s demand boosted US exports, soybeans rallied
  • Soybean prices dipped slightly to $10.5/bushel, with the USDA’s grain stocks report showing old crop soybeans stored across all US position totaling 342 million bushels, a 29% increase compared to the same period in 2023.
  • Meanwhile, Brazil’s soybean planting for the 2024/25 season reached 2% of the expected area as of last Thursday, up from 0.9% the previous week, but still behind last year’s 5.2%.
  • Soybean prices had surged to a two-month high of almost $10.7 in late September after Hurricane Helene caused significant damage to crops and infrastructure in the Gulf Coast.
  • On the demand side, strong export sales and increased demand from China, which has been stockpiling in anticipation of geopolitical developments, added upward pressure to prices.