Prices for corn and soy have decreased, wheat has experienced a rather sharp drop, and investment funds have begun to take profits. Now, the agricultural sector awaits the USDA's report on global supply and demand (WASDE) on Friday, which will determine the next significant market move.
The question arises: is the current decline merely a short-term break after a recent rise in the grain market, or are we witnessing the beginning of a broader trend reversal?
In the GroundRules market update prepared by Agricultural Market Trends (AMT), agricultural economist Kons Moraba analyzes the complex mechanisms behind the latest market changes and points out what agribusiness should pay attention to.
Local commodity prices in South Africa have been declining recently. Spot prices reflect the current cost of the commodity, while futures contracts show the expected future value.
Specific data shows that spot prices for white corn have fallen to 3,960 rand per ton, while the July 2027 contract trades at 4,309 rand. Yellow corn has dropped to 3,980 rand per ton, and the July 2027 contract to 4,181 rand. Soy has also become cheaper, falling to 8,462 rand per ton, with the May 2027 contract priced at 8,175 rand.
There has also been a decrease in sunflower seed prices to 9,997 rand per ton (May 2027 – 9,406 rand) and wheat to 6,075 rand per ton (December contract – 6,168 rand). Other segments showed different trends: sorghum import paratization (arrival in Durban) stands at 5,430 rand per ton; shelled Argentine peanuts (Randfontein export paratization) cost 22,015 rand per ton; while cotton went against the trend, rising to 12,110 rand per ton.
Moraba explained that the main reason for the downward price pressure is large institutional funds taking profits. Large investors previously held record long positions in corn and soy, betting on price increases. As Moraba explains, when a sufficient number of large investors simultaneously sell assets to realize profits, it creates strong downward pressure on prices.
Geopolitical events have also negatively affected market sentiment. Vladimir Putin's statements regarding possible peace negotiations caused a sharp drop in wheat prices, which subsequently led to a decline in corn and soy prices. Russia and Ukraine remain global powers in grain production. Moraba noted that the war generates logistical uncertainty, adding a 'war premium' to international prices. If peace prospects improve, this premium will decrease. However, since the conflict remains highly unpredictable, analysts warn that peace in the near future is unlikely, and the war premium could quickly return.
It is important to note that although Ukraine and Russia maintain significant wheat reserves, export logistics and port infrastructure are decisive factors. Demand for wheat remains structurally stable due to its critical role in ensuring global food security. Consequently, analysts see significant potential for wheat price growth until December, especially if drier weather sets in.
The market is shifting focus to Friday, September 11th, awaiting the upcoming USDA WASDE report. The central debate revolves around US corn yield forecasts. Although the Pro Farmer Crop Survey estimated the yield at approximately 173 bushels per acre, market sentiment suggests that the USDA may publish a figure closer to 178 bushels per acre.
Regarding soy, despite record yield estimates, adverse weather over the past three weeks may prompt the USDA to adjust the harvest volume. Continued aggressive purchasing by China has provided a strong floor for soy prices. According to Moraba, potential trade talks between Donald Trump and Xi Jinping at the end of September could release additional demand if agreements are expanded to include commodities such as corn.
Furthermore, seasonal harvest pressure in the US means more physical grain will enter the market, intensifying competition among sellers. Moraba emphasized that market observers should focus on final stocks—grain remaining after accounting for total global consumption, ethanol production, animal feed, and exports—rather than just yield figures. He advised: 'Do not confuse market correction with market ending. A few days of price decline tells us what traders are doing right now. It does not necessarily tell us what demand and supply will look like in three months.'
Considering weather risks in South America, such as El Niño, looming over the upcoming planting season in Brazil, any potential blow to production could reignite bullish sentiment in global grain markets until the end of the year.
