This, however, encouraged cereal farmers to expand their area under cultivation and this and favorable weather means the market is now flooded. Brazil, for example, had a bountiful harvest of corn and soybeans last year, and Russia exported a record amount of wheat in 2023. Ukraine, meanwhile, managed to ship most of its own harvest despite Russia’s blockade of its Black Sea ports.[3]
According to Bloomberg’s calculations, grains are more volatile than other commodities. It is the most price elastic sector, and currently the price decline appears to be accelerating.
Our Chart of the Week shows the trend for the Bloomberg Grains Subindex, which often leads the BCOM commodity index. If this relationship continues to hold, it suggests there may be further downside potential for the broad commodity index. And speculative positioning, as reported weekly by the U.S. Commodity Futures Trading Commission, suggests that market participants foresee continued price declines for wheat.[4]