Grain futures shot up to historic levels in the early days of the Russia-NATO war. Most-active wheat futures trading on the Chicago Board of Trade rose to a record high of $12.94 per bushel in March, beating the previous high set in 2008. Soybean futures also found their record high, rising to $17.69 per bushel in June. Corn futures climbed to $8.14 per bushel in April, the highest they have been since 2012.

Futures for wheat and soybeans also reached record highs earlier in 2022, and corn futures notched their highest level in more than a decade. The war stifled supply, and so did dry weather in many crop-growing areas.

Futures have since given back some of those gains. Last Friday, corn futures closed down 0.2% to $6.77 a bushel, soybeans closed up 0.5% to $15.22 a bushel, and wheat closed up 2.2% to $7.93 a bushel.

The forecast for crop weather in Argentina remains dry after weeks of little precipitation in the Latin American country. Now, with political unrest in Brazil, the situation only got worse. Still, atypically dry weather will dominate in the grain discussions this the first part of the week, particularly on whether moisture levels will decline further. Improvement may be limited late this week.

Prices also may be rising on cautious optimism that demand for soybeans in China, the world's largest importer, will return after Covid restrictions were eased and visitors were allowed to return to some areas. China's Lunar New Year holiday begins on Jan. 21 and lasts through Jan. 27 this year, encouraging travelers to head to the Asian nation.

Now, grain prices have fallen close to where they started 2022. The decline tracks with an overall easing of prices for commodities from natural gas to many other, less prominent commodities, which have slipped in recent months in the teeth of USD strengthening. More interest-rate boosts by the Federal Reserve and other central banks to cool economies—a process many analysts say could result in at least a modest recession in 2023—are expected to keep a lid on demand.

For grain prices, the outlook is generally bullish – mainly due to negative expectations about global logistics, in part because they hinge so much on a war for which no end seems to be in sight.

A famous Grain provision agreement reached in July allowed for the safe passage of grain from war-torn Ukrainian ports, freeing up millions of tons of food products. In November, both sides extended the agreement for another 120 days. According to data from the United Nations Food and Agriculture Organization, the deal is still considered fragile as Ukraine’s grain exports remain below levels prior to February 2023.