Weather & Trade Turbulence: Why Wheat is Bullish and Corn Faces Crosswinds in 2025

The U.S. agricultural sector is navigating a perfect storm of weather volatility and geopolitical trade dynamics, creating stark divergences between wheat and corn markets. While wheat prices are primed for a surge due to supply constraints and restrictive policies, corn faces headwinds from oversupply and demand shocks—but could rebound if trade tensions ease. Here's why investors should go long on wheat now and wait on corn until uncertainties clear.

The Wheat Bull Case: Supply Tightness and Geopolitical Restraints

USDA Crop Ratings Paint a Cautionary Picture for Corn, But Wheat Holds Steady
As of June 2025, U.S. wheat markets are underpinned by tight global supplies, while corn faces yield risks from excessive rainfall and oversupply pressures. Key data points:
- Winter wheat: 52% rated “good-to-excellent,” up 2 points week-on-week but still historically low.
- Spring wheat: A dire 50% in “good-to-excellent” condition, sharply down from last year's 74%.
- Corn: 69% in “good-to-excellent” condition, 6 points below 2024 levels, with emerging concerns over Midwest over-saturation.

India's Export Ban: A Geopolitical Anchor for Wheat Prices
India, the world's second-largest wheat producer, has maintained its export ban since 2022 to prioritize domestic food security. Despite a record 2024-25 harvest of 115.43 million tons, the government refuses to lift restrictions, fearing price spikes ahead of elections. This policy has cut India's global wheat exports to near-zero, reducing global supply and boosting prices.

The ban's persistence—despite industry calls for limited flour exports—means global buyers must rely on traditional suppliers like Russia and the U.S., tightening already constrained markets.

Corn's Crosswinds: Avian Flu, Oversupply, and Trade Risks

While wheat thrives on scarcity, corn is grappling with a trifecta of challenges:

1. Brazil's Avian Flu Crisis: A Demand Shock
   Outbreaks of H5N1 in Brazil's poultry industry have triggered export bans from key markets like China and the EU, slashing demand for corn as feed. Domestic corn prices in Brazil's Campinas region fell 7.6% in May 2024, and U.S. corn prices dropped 5.5% to $4.49/bu.

The USDA projects Brazil's 2024-25 corn harvest at 130 million tons and U.S. output at 402 million tons—massive surpluses that could keep prices depressed unless demand recovers.

1. Weather Risks: Too Much Rain, Too Little Drought
   Heavy rainfall in the Midwest has delayed planting and risks over-saturation, while the Southern Plains face dry conditions. A prolonged wet pattern could reduce yields, but current USDA data shows corn's early progress is ahead of averages.

2. Trade Tariffs: A Sword of Damocles
   U.S. corn exporters face uncertainty over potential tariffs from major buyers like China. If trade negotiations fail, oversupply could worsen. However, a resolution could unlock demand and trigger a rebound.

Investment Strategy: Long Wheat, Cautious on Corn

Go Long on Wheat:
- Buy wheat futures (ZC) or ETFs like DBA ahead of Q3 harvests.
- The India ban and global supply tightness create a structural bullish trend, with prices likely to climb as buyers compete for limited exportable surplus.

Wait on Corn:
- Avoid long positions until trade tensions ease (e.g., U.S.-China tariff deals) and weather clarity emerges.
- Short-term traders could capitalize on volatility but should set tight stop-losses.

The Bottom Line

Wheat is the clear winner in this volatile landscape, backed by geopolitical supply constraints and weather-driven risks. Corn, while undervalued, requires patience until demand recovers and trade clouds lift. Act now on wheat—wait and watch for corn.

Invest with conviction in wheat's bullish fundamentals, but let corn's crosswinds clear before committing capital.