Corn and Wheat Prices Increase on Tightening Supplies

WASHINGTON, DC – Futures prices — the price of a contract to deliver a commodity at a certain time in the future – for wheat, corn, and soybeans have been trending higher since August 2020. This six-month trend of rising prices accelerated in the first weeks of 2021, demonstrating stronger price gains in anticipation of USDA’s revised production forecasts for major U.S. grains in the World Agricultural Supply and Demand Estimates (WASDE) for January 2021. According to the Economic Research Service (ERS), hard red winter (HRW) wheat futures prices for the nearby month increased 13 percent (+72¢ per bushel) during the 30-day period just ahead of the January 12, 2021 release of the WASDE. During the same period, the nearby month delivery for corn increased 98¢ per bushel while soybean contracts rose $2.69 per bushel (approximately 23 percent each) as the season-average farm price of soybeans reached their highest level since the 2014 marketing year. The realization of tightening supplies coupled with robust demand from export markets, most notably China, has stimulated steady price increases for U.S. wheat, corn, and soybeans. Additionally, dry conditions in key areas of corn and soybean production in South America have reduced regional production prospects and the outlook for global supplies, providing further support to U.S. commodity prices.
(SOURCE: All Ag News)