Corn Belt Weather and an Upcoming Trump-Xi Summit Are Driving Grains Prices Now

Wetter weather forecasts for the Corn Belt over the next couple weeks will likely limit buyer interest in corn (ZCZ26) and soybean (ZSX26) futures. It’s very likely going to take a U.S. soybean crop weather market scare in August to reignite bullish enthusiasm in soybeans and corn. So far, weather forecasts are not indicating such. 

However, a positive for the grain markets recently has been a slumping U.S. dollar index ($DXY) that Friday hit a seven-week low. 

Grain traders are also keeping an eye on weather conditions in major western European grain-growing regions, amid an extreme heat wave that is hurting the crops there. The French corn crop is expected to decline 35% to 9.0 million MT, its lowest since at least 1980, after heat wave and drought hurt the crops, according to France’s farm ministry.

Export, Domestic Demand for Corn, Soybeans Has Picked Up

Corn futures did see some support last Friday as the USDA reported daily U.S. corn sales of 286,097 metric tons (MT) to Mexico. Of the total, 29,808 MT were for the 2026-27 marketing year, and 256,289 MT were for the 2027-28 marketing year.

Higher crude oil (CLU26) prices have also lifted demand for corn, with use for fuel alcohol in the month of June at 466.7 million bushels, according to the USDA, up 4.5% from the same time last year. The ethanol blend rate in U.S. gasoline also hit a record high 11.29% in May as rising oil costs increased biofuels demand.

The USDA also reported last Friday morning U.S. soybean sales of 238,000 MT to China during 2026-27. There are rumblings among traders that China is clearing out some storage and auctioning old soybean stocks to make room for more U.S. soybean purchases.

Grain traders will keep watching the weekly USDA crop progress reports on Monday afternoons. 

The closely followed Pro Farmer annual corn and soybean crop tour in late August is coming into trader focus. It’s so far looking like good U.S. corn and soybean crops will be harvested this fall.

U.S.-China Relations Still Shaky

Tensions between the U.S. and China over the war in Iran and trade issues will heighten the importance of domestic soybean crush use in keeping demand firm. President Donald Trump and Chinese leader Xi Jinping are scheduled to meet in Washington, D.C. in September. Both countries have made political jabs at each other in recent weeks, which is keeping soybean market bulls skittish.

While short-term factors weighed on soybean complex futures last week, longer-term fundamentals lean positive. Soybeans crushed in June hit 6.53 million tons, up from both month-ago and year-ago levels. Despite the increase in crush, stocks of meal and oil continued to decline, highlighting that demand continues to stay strong. A potentially historic El Nino set up could also impact South America’s growing season in the coming months, resulting in a tighter global balance sheet if realized.

Black Sea Grain Shipping Constraints Still a Flashpoint for Wheat Futures

The winter wheat (ZWU26) (KEU26) futures markets last Friday saw short covering and perceived bargain hunting as some major wheat-growing regions of the globe have seen weather problems, while shipping grains out of the Black Sea remains problematic. Ukraine’s Agriculture Ministry has warned exports could fall from 64.4 million MT to 29.6 million MT in the 2026-27 marketing years, without regular port operations.

Good U.S. wheat harvest weather has been occurring in the central Plains and in parts of the Midwest, which has provided for commercial hedging pressure in wheat futures markets. Some slowdown in fieldwork is expected due to more frequent rainfall in the coming week to 10 days. No crop quality issues are likely. U.S. spring wheat northern Plains and southern Canada Prairies are stressed and losing yield potential due to the lack of rain and hot temperatures.

Let me know what you think. I enjoy hearing from my valued Barchart readers all around the globe. Email me at jim@jimwyckoff.com.