Wheat futures settled 3.1% higher Aug. 28 at 784 cents a bushel after touching 790.25, the highest since February 2023. Wheat prices increased by 12.1% over the past week—the largest gain since March 2022. Similarly, Corn futures settled 0.6% higher at 536.5 cents per bushel the same day after hitting a high of 541.25 cents, the highest level since July 28, 2023. Corn prices rose by 5.5% over the past week and are up 21.8% year-to date—with over 15% of that occurring in August.
Both increases are taking place in the context of two wars wreaking havoc on global supply routes, in Ukraine and Iran. Attacks on ships and port infrastructure in the Black Sea and Sea of Azov have collapsed exports from two of the world’s leading export nations, and in Southwest Asia, the continued closure of the Strait of Hormuz has pummeled trade routes. This includes the vital delivery of fertilizers for crops and diesel for powering farm equipment.
The case of corn was illustrative. USDA raised U.S. corn export projections by 75 million bushels, in hopes of offsetting the reduced Ukrainian exports. But when August yields were reduced due to weather and other factors, this jolted the market. Jim McCormick of AgMarket.Net told CNBC the world had been counting on U.S. supply to cover the gap, and with that supply now in doubt, the market is “moving up into a rationing mode.”
