In recent weeks, analysts have been increasing their wheat production estimates for major exporters Russia, Ukraine and the EU-27. This has left a negative tone and seen world prices continually ease during June. This change has been highlighted by London wheat futures which lost £14/t during the month. However, the primary negative price driver has been expectations for a notably higher 2021-22 US corn crop than previously anticipated. Since March, the United States Department of Agriculture (USDA) has estimated the US corn planted area to be just 350,000 acres larger than last year at 91.1 million acres. In contrast, high prices and ideal drilling conditions have led some analysts to estimate an area of more than 96 million acres. This week the USDA updated its estimates and fearing a notable increase in predictions, speculative funds reduced their long positions, adding to price pressure. Average trade wheat area estimates were just below 93.8 million acres, but the USDA surprised the markets with an estimate of 92.7 million acres, which is 1.1 million acres below this average prediction. The market’s reaction was sharp. From the week’s low, Chicago Board of Trade (CBOT) corn prices gained 14% and reported the biggest weekly corn price gain since 2011. Despite the USDA predicting a larger wheat area than previously thought, world wheat prices followed corn higher. London wheat futures regained half their June losses.

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