Black Sea Disruptions, Lower Yields Fuel Grain Market Rally

Grain markets have rallied in recent days due to disruptions in the Black Sea region and lower US corn yields. The Pro Farmer tour projected a US corn yield of 173 bushels/year, which has partially been priced into Chicago corn prices, but further upside remains if the September WASDE confirms a smaller crop.

Wheat exports out of Ukraine and Russia are also facing challenges due to ongoing conflict, with inland routes through neighboring countries at capacity. A sharp cut in exports could be achieved through higher prices, supporting wheat prices unless an export corridor is agreed upon by Russia and Ukraine.

The situation in the Black Sea region supports grain prices, particularly for wheat, which accounts for nearly 30% of global trade. The August WASDE reduced old-crop ending stocks by 75 million bushels due to higher exports, but new-crop stock-to-use falls from 11% to 10.1%, reflecting lower carry-in and higher production.