background image background image background image

How high can grain prices grow?

Commodities 5 minutes to read
Picture of Ole Hansen
Ole Hansen

Head of Commodity Strategy

Summary:  Corn futures in Chicago continue to scream higher as the market adapts to a potential dramatic collapse in the prospect for US acreage and yields this season. Widespread flooding across the US corn-growing belt has jeopardised vast amounts of this year's crop.

Slides below are from today’s which is live daily at 6:45 GMT (CET +2, ET -4).

Adverse weather and flooding in the Midwest and Plains have not only delayed planting of corn and soybeans but also raised concerns that flooding may damage the quality of the wheat crop already in the ground. 

Today the price of corn reached a fresh three-year high following the release of the weekly planting progress report, currently most-watched set of data from the USDA. The latest report covering the week to May 26 found that the record slow historic planting pace continued last week with just 58% planted compared with 90% for the same time last year. US farmers across the corn belt have not been able to enter their flooded fields and with the clock ticking down to the time when planting no longer makes sense has almost arrived. This partly explains the continued rally today with the total gain on the new crop December contract having reached 25% during the past two weeks. 

Later planted soybeans could be the obvious choice for farmers running out of time to plant corn but with fields flooded the planting progress at 30% remains well below the +70% average seen the past five years. According to Reuters the total acreage of corn and soybeans left to plant has reached 99 million acres or the size of Germany.
planting chart
As we have pointed out for several weeks in our weekly COT report updates, the risk of a violent reaction in grains has been rising throughout the past few months. Just four weeks ago the speculative community or hedge funds held a record short across the major crops of corn, wheat and soybeans.

With such a one-sided position the risk of a reversal grew and once both the technical and  fundamental outlook change a sharp reaction followed. During the week to May 21 a record amount of corn was bought by hedge funds but with 116k lots still to cover before going long the market has continued to find strong support. 
corn price
The December corn contract has been here before, both in 2014 and 2015 the price reached $4.5/bu albeit during the growing, not the planting period. Both of these eventually ran out of steam and a major correction followed before the harvest season. The risk of a similar turnout this time can not be ruled out but the combination of a fundamental outlook looking worse now and the mentioned scramble to switch from short to long may carry corn higher still in the short term. 
corn chart
Source: Saxo Bank

While these developments are mostly bad news for US farmers as they don’t have the crop to sell to take advantage of the price spike it is different in South America. In response to the current price spike the cabinet chief of Argentina’s agriculture secretariat told Reuters on Tuesday that Argentina’s corn harvest for the 2019/20 season could surpass the record production of 56 million tonnes for the current 2018/19 season.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.