Agriculture Prices Plummet on Recession Fears

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Agriculture commodities fell amid solid ex-US competition and oversupply concerns, coupled with recession fears for the US economy.

Wheat

Prices reversed, exports remain strong
  • December wheat prices rebounded to $5.65 per bushel, driven by supply concerns as France faces its worst soft wheat harvest in over 40 years.
  • According to analysts, the 2024-25 wheat production is expected to fall to 25.2 million tons, 27% below the five-year average.
  • July US exports surpassed +8.4% on a yearly basis, adding further pressure for wheat prices to lower in the near term.
  • Moreover, Ukraine’s grain exports surged to over 3 million metric tons for the 2024-25 season by July 26, up from 1.9 million tons the previous year, adding to the global supply abundance.
Corn

Corn futures reached 4-year low, despite strengthened exports
  • December corn futures plunged to below $4 per bushel in August, the lowest in nearly four years, amid an outlook of weak demand and strong supply.
  • The USDA projects that global corn stockpiles for the 2024/25 marketing year will rise to 311.6 million tons, an increase from 309.1 million the previous year, while production estimates have been raised to 1.23 billion tons.
  • This data has contributed to cautious market sentiment, as rising supply and increased competition from Brazil exert additional downward pressure on prices.
  • Additionally, ongoing economic uncertainties (fears of a potential US recession) and concerns about declining farm income intensify fears of oversupply and highlight the challenges posed by weak demand dynamics.
Soybeans

Soybean prices plummeted amid increased competition
  • November soybean prices have dropped to $10.1 per bushel, marking an almost 4-year low, driven by abundant supply and relatively low demand.
  • The anticipated large global production for 2024/25 is contributing to the price decline, with Brazil expected to produce an exceptionally large crop that will further increase global supply.
  • Additionally, improved weather conditions in the US, with rain alleviating previous dryness, are also benefiting crop yields.
  • Meanwhile, recent USDA export data shows that, although sales are substantial, they are below the typical pace, with new crop sales at a 20-year low.