World grain markets have started the new year with sharp gains, led higher by US soybean and corn futures. Prolonged dry weather and a rainfall deficit for developing corn and soybean crops across both Argentina and Brazil are raising concerns that yields will be adversely affected amidst strengthening export demand, particularly from China. Chicago Board of Trade (CBOT) corn and wheat futures rallied to highs this week not seen since 2014 as speculative funds continued to buy and established record-long positions. Price gains for corn futures have reached 50% since the summer.

Private estimates already see Brazil and Argentina corn production 10 to 15 million tonnes below the United States Department of Agriculture (USDA) December estimates and, with less corn available and prices rising, demand and values for wheat are rising too. The Argentinian government suspended corn export sales until 1st March 2021 and industrial action by port workers further disrupted trade flows for the world’s third largest corn exporter.

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