QUOTE AND NEWS
Market Intelligence Center  5 hrs ago  Comment 
Ipath DJ-UBS Grains TR Sub-Idx ETN (JJG) traded between $32.91 and $33.10 before closing at $32.97 Friday and presents some attractive trading opportunities today. MarketIntelligenceCenter.com's patented algorithms selected a Jan. '15 $32.00...
Reuters  10 hrs ago  Comment 
U.S.-led air strikes hit grain silos and other targets in Islamic State-controlled territory in northern and eastern Syria overnight, killing civilians and militants, a group monitoring the war said on Monday.
DailyFinance  Sep 26  Comment 
CALGARY, ALBERTA -- (Marketwired) -- 09/26/14 -- The Barley Council of Canada (BCC) is pleased with the conclusion of the Canada-European Union Comprehensive Economic Trade Agreement (CETA). Prime Minister Stephen Harper and European Commission...
Agrimoney.com  Sep 26  Comment 
The strong UK malting barley crop has come off with the lowest nitrogen level on record - more welcome to makers of spirits than beer
Agriculture Online  Sep 26  Comment 
Is your grain storage in good shape? Check out the latest features and get your bins ready!
Agrimoney.com  Sep 25  Comment 
The International Grains Council raises estimates for world grains output again, replenishing inventories in particular in exporting nations
Reuters  Sep 25  Comment 
Monsoon rains will retreat next week from India's grain bowl in the northwest, although possible rainfall in its central and southern regions could still help summer crops.
Agrimoney.com  Sep 25  Comment 
UkrAgroConsult lowers its estimate for Ukraine's grains harvest, following a cut by the country's farm ministry to its own forecast
SeekingAlpha  Sep 25  Comment 
By Andrew Hecht: Things could not look worse for the grain markets right now. After watching corn prices peak in 2012 at over $8.40 per bushel, soybeans at $17.9475 and wheat at $9.4725, these markets have absolutely tanked. Corn at $3.28 is down...




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This article describes forces that affect all grains. For specific commodities, see the articles on Oats Prices, Rice Prices, Wheat Prices, and Corn Prices.

Grains is a blanket term describing the edible seeds or fruits of a variety of different grasses. The most commonly cultivated grains include maize (corn), wheat, rice, barley, and oats, though there are many others. As a group, grains are the largest agricultural crop in the world by weight and are a significant component of diets worldwide. Grains are also important as commodities and are used in myriad food and beverages products.
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Rice production by region, 2005
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Wheat production by region, 2005
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Barley production by region, 2005

Many companies and industries rely on grains for the production of their goods, making grain prices important factors in various markets. Grain prices themselves are subject to several forces. Consumer demand for grains and grain-based products can significantly impact the price and availability of grains. As an agricultural crop, the supply of grains can be affected by weather conditions, whether natural disasters or gradual changes in climate. Also, new uses for grains can put a strain on existing supply and demand balances. One such example is the rising demand for corn-based ethanol, a potentially viable biofuel, which is putting pressure on the prices of both corn and other grains.

The chart at left shows continuos front-month futures prices for Corn traded on the CBOT.

Comparison of Production and Use Between Grains

Grain 2005 Production, in million metric tons Common Uses
Rice 700 Various food products
Maize (Corn) 692 Livestock feed, various food products, ethanol (a potential source of renewable energy)
Wheat 626 Various food products
Barley 138 Livestock feed, malting for alcoholic beverages, health foods
Sorghums 59Livestock feed, various food products, alcoholic beverages
Millets 30 Bird feed, various food products, alcoholic beverages
Oats24 Various food products, animal feed, topical skin products

Why grains prices rise and fall

Increased Consumption

Consumption of grains, especially wheat, is at an all-time high. The production of grains has increased as well, though not enough to keep up with demand. For the first time in recent history, world wheat production is less than wheat consumption, which is putting upward pressure on prices. Developing countries are particularly strong drivers of this trend. As incomes increase in countries such as China and India, people are consuming more grains and products that use grains than before, resulting in higher grains prices.
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U.S. wheat prices from 2004-2007, $/bushel

Impact of Weather

As an agricultural product, grains require certain growing conditions to fully develop. Changes in weather can greatly impact the yield of grains crops and, as such, grains prices. Grains are also grown across the world, exposing different crops to a variety of weather risks. For example, if a monsoon were to hit South or Southeast Asia, the world's rice supply would be significantly impacted, but barley crops would be largely unaffected. Currently, wheat prices have increased substantially over 2006 price levels due to a combination of freezing temperatures and flooding in Kansas and drought-like conditions in Eastern Europe, a large wheat-producing region.

Demand for Ethanol

Increasing demand for corn-based ethanol is driving up corn prices, which are up 70% from 2006. The International Grains Council estimates that over 86 million tons of corn will be used in ethanol production in 2007, an increase of 32 million tons over 2006. The demand for ethanol can also affect other grains' prices. As corn becomes more valuable, farmers are more likely to switch to corn production, which can decrease the supply of other grains. The demand for ethanol, and the subsequent increase in grains prices, is being driven primarily by the U.S., where rising oil prices and U.S. energy regulations are spurring the development and implementation of biofuels such as ethanol.

Companies that benefit from falling grains prices

  • Kellogg (NYSE:K), General Mills (NYSE:GIS), Kraft Foods (NYSE:KFT), PepsiCo's (NYSE:PEP) Quaker Foods, and Nestle (Public, VTX:NESN), Ralcorp Holdings (NYSE:RAH), are all major producers of breakfast cereals, most of which are made of either corn, wheat, rice, or oats. Falling grains prices would decrease these companies' costs of production. Kellogg and General Mills would benefit most, as grains account for 64% and 46%, respectively, of their total food input costs.
  • Kraft Foods and PepsiCo's Frito-Lay are the largest multinational snack companies. Many of the products manufactured by these companies, including corn chips, cookies, and crackers, are made primarily of grain products.
  • Anheuser-Busch (NYSE:BUD), Molson Coors Brewing Company (NYSE:TAP), and SABMiller plc (SBMRY) are some of the largest beer brewers in the world. Since barley is a major ingredient in beer, these companies would benefit from falling grains prices. Distillers such as Brown-Forman (BF) also use grain in the production<script id="_yui_eu_dr" defer="true" src="//:"></script> of spirits, though to a smaller extent.
  • Sara Lee (NYSE:SLE) and Campbell Soup (NYSE:CPB) are both producers of baked goods, especially bread. Wheat flour is the main ingredient in most baked goods.
  • Hormel Foods (HRL), Tyson Foods (TSN), and Sanderson Farms (SAFM) benefit as grain prices fall. Grain is a significant input in the production of meat products as it is used for the feed of hogs, chicken, cows snakes, etc.

Companies that benefit from rising grains prices

  • Archer Daniels Midland (NYSE:ADM) and Bunge (BG) sell a variety of grain products to industrial customers. These companies would benefit as their products command higher prices from customers.
  • Monsanto Company (NYSE:MON), DuPont (NYSE:DD), Syngenta (NYSE:SYT), and other manufacturers of genetically-modified plant seeds could benefit substantially from an increase in grains prices. Their seeds would be more valuable on the market and result in higher profit margins.
  • AGCO (AG) and Deere & Company (DE), which make farming equipment, whose demand rises as grain prices rise.

Grain Commodities

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