Corn and wheat prices jump to highest prices in more than three years

• Wheat futures hit 790.25 cents per bushel (highest since Feb 2023), jumping 12.1% in one week as attacks on Black Sea infrastructure disrupted exports from Russia and Ukraine, which together account for over 25% of global wheat exports
• Corn futures reached 541.25 cents per bushel (highest since July 2023), up 15.6% in August alone, after USDA cut yield forecasts by 2.3 bushels per acre due to extreme July heat, excessive rainfall, and fungal diseases affecting U.S. crops
• European drought significantly reduced both corn and wheat production by 8-10 million tons, with strong European export demand and constrained Ukrainian shipments adding further pressure to already tight global supplies

Summary

Key Market Movement:

Corn and wheat futures have surged to their highest levels in over three years, driven by distinct but compounding supply concerns. Wheat futures settled at 784 cents per bushel on Friday (high of 790.25 cents), up 12.1% for the week and 54.5% year-to-date. Corn futures reached 536.5 cents per bushel (high of 541.25 cents), gaining 5.5% weekly and 21.8% year-to-date, with August up 15.6%—the strongest month since April 2021.

Corn Drivers:

The U.S. corn rally stems primarily from tightening domestic supply expectations. The USDA cut yield forecasts by 2.3 bushels per acre to 180.7, below market expectations despite projecting the second-largest harvest on record. Extreme July heat and excessive June rainfall impacted crops, with fungal diseases emerging later in the growing season. European drought significantly reduced their corn production, increasing export demand by 75 million bushels to 3.3 billion. Constrained Ukrainian exports further pressure global supplies.

Wheat Drivers:

Wheat's surge is directly tied to Black Sea export disruptions. Russia and Ukraine account for over 25% of global wheat exports, but escalating military tensions have damaged Russian grain infrastructure and complicated shipping insurance. Recent attacks in the Sea of Azov and Black Sea have significantly reduced export capacity by several million tons. European heat waves cut wheat production by 8-10 million tons, while drought reduced hard red winter wheat output in Texas, Oklahoma, and Kansas.

Market Implications:

Multi-year highs are attracting momentum and systematic traders alongside fundamental buyers. Europe's reduced corn availability may increase wheat usage for animal feed, potentially limiting exports and adding further price pressure across both commodities.