The grain sector includes CBOT soybean, corn, wheat, oats, and rice futures. In Q4, the sector declined 5.46%, with oats posting the most substantial decline. While rice, soybean, and soft red winter wheat futures prices moved lower, corn prices rose.
In 2024, all members of the grain sector declined, posting a 14.20% loss from the end of 2023. Soybean futures posted the most significant yearly decline.
Corn futures buck the trend and rally in Q4- A nearly 8% decline in 2024
Corn futures led the grain sector on the upside in Q4 with a 7.95% gain. Corn was also the best-performing grain in 2024, with the price falling only 2.71% for the year that ended on December 31, 2024.
The monthly continuous corn futures chart shows that after falling to a 2024 $3.85 low in August, corn futures recovered, making higher lows and higher highs, settling at $4.5850 per bushel at the end of 2024. The USDA lowered its forecasts for lower U.S. and global corn stocks in the December WASDE report but left the price forecast unchanged from the November report.
Soybean and soybean products fall in Q4 and post double-digit percentage declines in 2024
Soybean futures continued to make lower lows in Q4 and throughout 2024, falling 5.56% in the final quarter and 22.83% in 2024.
The monthly continuous contract futures chart highlights the decline that sent soybean futures below $10 per bushel to settle Q4 at the $9.9825 per bushel level after trading to a $9.47 low in December 2024. The USDA lowered its U.S. and global stock and price forecasts in the December WASDE report.
Soybean product prices declined, with a 10.62% drop in soybean meal in Q4 and a 20.27% loss in 2024. Soybean oil moved 8.57% lower in Q4 and was down 16.85% in 2024.
CBOT, KCBT, and MGE wheat prices fall in Q4 and 2024
The CBOT soft red winter wheat futures contract fell 5.57% in Q4 and 12.18% in 2024.
The continuous monthly futures contract chart shows CBOT wheat’s decline to a $5.1425 low in July 2024. The wheat futures were in a consolidation pattern near the low at the end of 2024, settling at $5.5150 per bushel on December 31, 2024.
The USDA told the wheat market that U.S. stocks declined, while global inventories increased in the December WASDE report, leaving the price forecast unchanged from the previous month.
KCBT hard red winter wheat moved 4.20% lower in Q4 and was down 12.89% in 2024. KCBT wheat futures settled at $5.5925 per bushel, at a slight premium to the CBOT futures but below the long-term norm of a 20-30 cents premium, indicating a lack of consumer hedging and hand-to-mouth buying by U.S. wheat wholesale consumers.
MGE spring wheat futures fell 3.91% in Q4 and were 17.63% lower in 2024, settling at $5.9575 per bushel at the end of December.
Oats and rough rice futures drop
Rough rice futures declined 8.30% in Q4 and 18.95% in 2024.
The monthly continuous futures chart highlights the bearish trend in the rice futures arena. The nearby futures price settled at 14.025 per hundredweight at the end of 2024.
Oats were the worst-performing grain in Q4, posting a 15.80% loss. The oats futures market declined 14.32% in 2024.
The monthly continuous oat futures contract highlights that the futures settled in a consolidation range near the lows at $3.3050 per bushel on December 31, 2024.
The prospects for 2025- War in Europe and U.S. tariffs could cause volatility
Grain and oilseed markets have been in bearish trends since the 2022 highs. While the war in Ukraine continues to threaten worldwide supplies, bumper crops over the past years have caused prices to drop to levels where the downside could be limited in 2025. The weather across the fertile plains of the world is always the most significant factor for the path of least resistance of prices. Meanwhile, the low prices at the end of 2025 could cause production to decline as farmers and processors have seen profit margins evaporate.
I reached out to Sal Gilberte, the founder of the Teucrium family of grain and oilseed ETF products, including the CORN, WEAT, and SOYB ETFs, for his take on the December WASDE report. Sal commented:
The last WASDE report of 2024, with its surprise ten percent reduction in U.S. corn ending stocks estimate, brought attention to an ongoing 8-year downward trend in global corn stocks-to-use ratios. To be sure, there is plenty of corn on planet earth and South American crops are expected to be robust but tightening global stocks-to-use ratios need to be monitored diligently by grain watchers. It is worth remembering that the world will use more wheat and more corn this season than will be produced. While current grain stocks are certainly adequate, flat and declining trends in supply/demand ratios in global wheat and corn markets are signaling just how reliant we have become on increasing the production of big row crops to meet demand, and increased production is highly dependent on cooperative weather. Risks to grain markets will become more and more elevated if supplies continue to tighten relative to demand.
As the worldwide population continues to grow, the demand side of the fundamental equation for the grains and oilseeds that feed and increasingly power the world increases. Producers must keep pace with the rising demand, elevating the potential for shortages when weather, crop diseases, or world events limit output. The odds favor recoveries over the coming year at the current price levels. However, picking bottoms in any market is virtually impossible as prices can fall to illogical, unreasonable, and illogical levels that defy fundamental and technical analysis before reaching bottoms. While the odds favor higher prices from the current levels, the downside risks remain high as the trends remain bearish going into 2025.
