Corn vs. Soy vs. Wheat: What Investors Need to Know

Investing in corn, soybeans, and wheat can expand a portfolio and add potential gains from growth in global food demand. Each of these grains has risks and potential returns for investors, based on their goals and risk tolerance.

Commodities and Investment Options

Agricultural commodities are food sources worldwide and vital areas for investing. They are consequential in global food security and economic stability. Corn, soy, and wheat were among the earliest goods traded. Wheat harvesting began about 11,600 years ago. Corn or maize was domesticated by indigenous peoples in Mexico 10,000 years ago and became a staple in many Native American societies. Soybeans helped establish the earliest Chinese civilizations.

Corn has high liquidity in futures markets and is a popular choice for investing, accommodating both short-term traders and long-term investors. The corn market is volatile, influenced by changing weather conditions and agricultural policies. Soybeans tend to be more stable price-wise, though soybean production is concentrated in specific global regions. Wheat, whose market is often at the whims of geopolitical events such as conflicts and export bans, can also have unpredictable volatility.

Fluctuations in grain prices might indicate changes in economic growth and influence everything from the ability to put food on their tables to the stability of nations. Investors and traders enter the grain markets to diversify their portfolios, hedge against risks, or speculate on market trends. Investing in them can be a hedge against inflation since tangible assets like commodities often keep much of their value in times of economic uncertainty. Farmers protect themselves from unexpected problems in the coming harvest by locking in prices through futures contracts or derivatives.

Investing in Corn

Corn feeds livestock such as cattle, poultry, and swine. It is also important for ethanol biofuel, so fuel policies and gasoline demand influence the demand for corn. Corn is sold on the cob but is prevalent in products like corn syrup, cornstarch, and corn oil, all widely used by food manufacturers and home cooks as sweeteners, thickeners, and frying oils.

A significant amount of corn grown in the United States is turned into high-fructose corn syrup (HFCS), cheaper than cane sugar in many snacks and beverages. Leading exporters include the U.S., Argentina, Ukraine, Brazil, France, and Romania.

Corn prices depend on annual production and stockpiles. Drought or floods in regions where corn is grown could generate a price spike. At the same time, the livestock, bioethanol, and food-processing industries mean there is a stable baseline demand. There are several ways to invest in corn:

• Corn futures: Chicago Mercantile Exchange (CME) corn futures and options provide exposure to physical corn prices.
• Corn ETFs: Funds like the Teucrium Corn ETF (CORN) hold baskets of corn futures, allowing exposure without managing contracts.
• Grain producers: Stocks of companies like Archer-Daniels-Midland (ADM) and Tyson Foods (TSN) offer indirect corn exposure since they have corn processing and livestock operations.
• Farmland REITs: Real estate investment trusts (REITs) that own corn-producing farmland, like Farmland Partners (FPI), benefit from higher crop prices that boost land values and farm rent.

Investing in Soybeans

Individuals eat soybeans (soya) as raw beans (edamame), tofu, soy milk, soy sauce, miso, and countless other products. Soybeans are a top oilseed crop and are processed into two main industrial products: soybean oil and soybean meal. Soybean oil is processed for use in cooking, salad dressings, baking, and frying fats. Biodiesel production commonly drives demand for soybeans.

After the oil is extracted, the remaining solids are processed into a meal. Soybean meal is a high-protein livestock feed for poultry, swine, and farm-raised fish. Soymeal prices tend to track with meat and fish production. In addition, soybean meal is found in healthy and vegetarian alternative foods, as well as protein supplements and meat substitutes. Top soybean exporters include Brazil, the U.S., Paraguay, Canada, and Argentina.

Like corn, soybean prices fluctuate with meat production and biodiesel demand. Likewise, weather disruptions can lead to undersupply. There are several ways to invest in soy:

• Soybean futures: CME corn futures and options provide exposure to physical soybean prices, as well as contracts listed for soybean oil.
• Soy ETFs: Funds like the Teucrium Soybean ETF (SOYB) hold baskets of soy futures, allowing exposure without managing contracts.
• Grain producers: Stocks of companies like ADM and Tyson Foods offer indirect soybean exposure through their processing and livestock operations.
• Farmland REITs: Real estate investment trusts (REITs) that own soy-producing farmland, like FPI, benefit from higher crop prices that boost land values and farm rents.

Investing in Wheat

Wheat is milled into flour for staple food products such as flours, breads, pasta, baked goods, and breakfast cereals. It serves as a primary source of carbohydrates and protein for a large part of the global population. There are several types of wheat, including hard red winter wheat, hard red spring wheat, soft red winter wheat, white wheat, and durum wheat.

Key factors influencing wheat prices include weather conditions in major growing areas, global stock levels, and changes in consumption patterns. As with corn and soybeans, unfavorable weather conditions, like droughts or excessive rainfall, can significantly reduce yields and increase prices. Top wheat exporters include Russia, the U.S., Australia, Canada, and Ukraine.

Key factors influencing wheat prices include weather conditions in major growing areas, global stock levels, and changes in consumption patterns. Wheat prices are influenced by geopolitical events, trade policies, and currency fluctuations. Trade embargoes or conflicts in key wheat-growing regions can disrupt supply chains and affect prices. Some ways to invest in wheat include:

• Wheat futures: CME wheat futures and options provide exposure to physical wheat prices and come in contracts for Chicago soft red winter and Kansas City hard red winter varieties. Black Sea and Australian wheat contracts have been more recently listed.
• Wheat ETFs: Funds like the Teucrium Wheat ETF (WEAT) hold baskets of wheat futures, allowing exposure without managing contracts.
• Grain producers: Stocks of companies like ADM and Tyson Foods offer indirect wheat exposure through their processing and livestock operations.
• Farmland REITs: Those that own wheat-producing farmland, like FPI, benefit from higher crop prices that boost land values and farm rents.

Monitoring the Market

Corn, soy, and wheat are sensitive to weather patterns and how they translate into better or worse harvests. Historical prices, supply and demand trends, and market sentiment explain the potential returns and risks of investing in corn, soybeans, and wheat. Investors should analyze:

• Multiyear price charts to identify price ranges, trends, and seasonal patterns
• U.S. Department of Agriculture (USDA) forecasts for U.S. and global production, consumption, and stockpiles
• Seasonal weather forecasts to anticipate potential effects on planting, growing conditions, and yields
• The export outlook based on trade policies and major importer demand
• Input costs like fertilizer and fuel that affect profitability and crop acreage

For 2025, Corn, soybeans, and wheat are expected to see prices near or below the breakeven cost of production. Strong grain and oilseed production combined with a strong U.S. dollar and uncertain trade policy will perpetuate lower prices.

Investors should monitor the physical crop and futures markets. If futures volume rises, this could signal a rush of speculators entering the market, leading to distorted prices that affect the real supply and demand for corn, soy, and wheat. When futures prices are too far out of balance with their underlying commodities, either up or down, traders will look for opportunities for contrarian trades to expect a reversal to the mean.

Comparing Investment Vehicles

• Futures contracts: Futures provide direct exposure to grain prices. Investors can use long/short futures to speculate or hedge other positions. Futures require managing margin, rollover costs, and delivery risks.
• Options on futures: Options on grain futures provide upside profit potential while limiting the downside. Strategies like call/put buying, spreads, and covered calls can be employed.
• Exchange Traded Funds: Commodity ETFs hold baskets of futures, providing exposure without you directly trading them.
• Equities: Stocks of grain producers and commercial grain users offer indirect exposure through their operations.
• Farmland REITs: Real Estate Investment Trusts that own cropland benefit from higher grain prices that boost land values and farm rents. However, REITs provide indirect exposure from land leasing or ownership and often come with expenses and management risks.
  

The Bottom Line

Corn, soybeans, and wheat offer investors exposure to vital agricultural commodities via futures markets and ETF products. This provides the opportunity to speculate on price trends, hedge other positions, or diversify a broader portfolio. By weighing historical prices, current fundamentals, and potential risks, investors can determine which, if any, grains align with their portfolio goals and risk tolerance.

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