Extreme Weather and Geopolitical Conflicts Drive Volatility in Grain and Oilseed Prices

Recent months have seen grain and oilseed markets affected by both extreme weather conditions and geopolitical tensions, including the conflicts in the Middle East and Ukraine. The United Nations Food and Agriculture Organization (FAO) reported that in September, the global grain price index rose by 3% from August but remained 10.2% lower than in September 2023.

Grain Prices: Wheat and Corn Respond to Weather and Geopolitical Factors

In September, global wheat prices rose following three months of decline, driven by unfavorable weather in major exporting countries. However, the impact was softened by cheap Black Sea grain supplies. Corn prices also saw an increase due to low water levels in major rivers in the U.S. and Brazil, high exports from Argentina, and strong domestic demand in Brazil.

The IGC Grains and Oilseeds Price Index reached a four-year low in August before seeing a slight recovery. Wheat prices were supported by geopolitical risks and adverse weather, while corn prices were influenced by increased premiums in the Persian Gulf and speculative demand on the Chicago Mercantile Exchange (CME). Wheat export prices remain 10% below last year, which may lead to a reduction in planted wheat area in the 2025/26 season due to low profitability and adverse weather forecasts in the Northern Hemisphere.

Vegetable Oil Prices Reach 2023 Highs

The vegetable oil price index rose by 4.6% in September, reaching its highest level in 2023. Palm oil prices continued to climb for a fourth consecutive month, amid forecasts of reduced seasonal production. Soybean oil prices also increased as U.S. refining output came in lower than expected. Meanwhile, rapeseed and sunflower oil prices rose due to reduced production from a poor harvest in the 2024/25 marketing year.

USDA’s October Report: Forecasts of Reduced Wheat Supplies and Exports

The latest USDA World Agricultural Supply and Demand Estimates (WASDE) report forecasts a reduction in wheat supplies, consumption, and trade for the 2024/25 marketing year, with an increase in ending stocks. The USDA expects global wheat supply to decline by 1.9 million tons to 1.06 billion tons, while consumption is projected to decrease by 2.4 million tons to 802.5 million tons. Exports are forecast to drop by 0.7 million tons to 215.8 million tons, with ending stocks expected to rise by 0.5 million tons to 257.7 million tons—although these stocks remain the lowest since the 2015/16 season.

Key changes in export projections for wheat include reductions in the Russian Federation (from 55.5 to 48 million tons), the EU (from 37.87 to 30 million tons), Canada (to 26 million tons), Australia (to 25 million tons), and Ukraine (from 18.58 to 16 million tons). In contrast, the U.S. is expected to increase exports from 19.24 to 22.45 million tons.

Corn and Oilseed Production Outlook

The USDA also adjusted its corn export forecast downward from September, lowering it to 190.5 million tons compared to 191.37 million tons in September and 195.75 million tons last year. This reduction includes adjustments for Ukraine (from 29.6 to 24 million tons) and the Russian Federation. However, exports are expected to increase for the U.S., from 58.42 to 59.06 million tons, while Brazil and Argentina’s estimates remain stable at 49 and 36 million tons, respectively. Corn import demand is expected to fall for China and Iran but increase for Egypt and the Philippines, with final global corn stocks estimated at 306.5 million tons.

In oilseeds, global production estimates were slightly reduced to 687.32 million tons, down from September’s estimate of 687.42 million tons but still above last year’s 657.56 million tons. U.S. oilseed production is expected to decrease by 0.3 million tons to 134.4 million tons, offset by increased production in other countries, including a rise in sunflower and cotton production that partially counters declines in soybean and canola output.





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