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

Corn and wheat prices have surged to their highest levels in more than three years. But the forces driving recent rallies for these two crops are notably different.

Wheat futures settled 3.1% higher at 784 cents per bushel on Friday after hitting a high of 790.25 cents, the highest since Feb. 14, 2023 when it traded 797.5. Wheat jumped 12.1% this week, its biggest weekly gain since March 2022. Overall, wheat futures were up more than 54.5% year-to-date, amid escalating Russia-Ukraine tensions in the Black Sea.

Corn futures settled 0.6% higher at 536.5 cents per bushel Friday after hitting a high of 541.25 cents, the highest level since July 28, 2023. Corn gained 5.5% for the week and is up 15.6% in August, on pace for its best month since April 2021 when it rose 19.31%. The contract is up 21.8% year-to date on tighter U.S. supply expectations and strong demand, with constrained Ukrainian exports adding pressure to global supplies.

Corn's recent rally is largely driven by mounting concerns around the supply of the U.S. crop and a weak outlook, while disruptions to Ukrainian exports continue to add pressure to the global supply.

"From the beginning of August to now, the consensus in the market is that there is less supply than we thought at the beginning of the month," said William Osnato, Barchart director of commodity data research and analysis.

Osnato points to a number of reasons for this. A recent report by the U.S. Department of Agriculture (USDA's) August World Agricultural Supply and Demand Estimates (WASDE) report lowered corn yield estimates more than traders expected, despite projecting the second-largest harvest on record. The agency cut its yield forecast by 2.3 bushels per acre to 180.7.

In addition, Osnato said the crop's outlook got further impacted by the disappointing field observations from the Pro Farmer's Crop Tour . Pro Farmer found extreme July heat had impacted the crop, after excessive rain in June for many areas in the U.S.

"We are a little past the peak point of the growing season, which is late July, early August, but you can still have poor weather impact the crop at this point," Osnato said. Several portions of the eastern Corn Belt were impacted by excessive rainfall during August, along with the development of corn fungal diseases later in the growing season.