As they often do, grain and soy market participants saved the fireworks for after the Fourth of July.
Markets opened higher Sunday night and extended gains into Monday’s regular session, with December corn up 14 cents at $4.55 ½ to trade at a one-month high. November soybeans are also surging, up 41 ¼ cents at $11.89, also trading at the highest since early June. Wheat futures were also along for the rise, with September SRW futures up 9 3/4 cents at $6.23 3/4 and September hard red winter wheat up 6 cents at $6.44 ½, both around three-week highs.
As we’ve noted at Pro Farmer, the period before and after the holiday can often mark an important inflection point, either reversing or accelerating trends as the most critical period of the growing season for corn approaches and soybean traders begin to look ahead to August. The holiday-shortened week ahead of Independence Day was volatile, with December corn unchanged and November soybeans losing 8 ½ cents – leaving bulls disappointed.
So what accounts for Monday morning’s turnaround? Here are some important factors:
Weather in the U.S.: Growing conditions across the Corn Belt have been largely favorable, but with much variability. Pockets of extreme wet weather have raised concerns about potential disease pressure. The holiday weekend saw parts of central Iowa deluged by precipitation, but it’s the return of hot, dry weather forecast across the western Corn Belt that seemed to get the market’s attention.
Europe’s heatwave: It isn’t just about the U.S. A brutal heatwave across Western Europe has raised concerns about the region’s crops, particularly corn. The FranceAgriMer agency reported deteriorating crop conditions after preliminary estimates indicated extreme heat may have damaged nearly one-third of the country’s corn crop. Corn futures on Euronext last week hit a series of contract highs while U.S. corn futures languished.
U.S-China optimism: Hopes China will begin to follow through on what the White House has described as commitments to buy $17 billion a year in agricultural goods outside of soybeans – and 25 million metric tons a year of soybeans – were given a shot in the arm after China’s Ministry of Commerce on Thursday said the two countries agreed in principle to a framework for reducing reciprocal tariffs. China is seen as having little choice but to make significant corn purchases if it’s to hit that $17 billion target.
He Yadong, a ministry spokesperson, told reporters that Beijing and Washington set a broad goal of expanding two-way farm trade, without providing additional details, Bloomberg reported. The spokesperson added that China was willing to work with the U.S. to create favorable conditions for bilateral ag trade.
Can bulls keep the upside momentum?
Weather forecasts, crop conditions – in the U.S. and Europe – will likely remain center stage, while traders will also be on the lookout for signs of further demand from China. Managed money, meanwhile, has completed an astonishing round trip, with large speculators building their largest net long position across CBOT corn, soybean and wheat futures since 2022 as the start of the Iran war sparked a sharp crude oil rally and fears of food production disruptions and inflation, noted Ole Hansen, head of commodity strategy at Saxo Bank.
Those positions were quickly unwound as crude prices faded, leaving hedge funds net short corn and wheat and substantially trimming net longs in soybeans as of June 23. Data through June 30 will be released later Monday, delayed from Friday due to the Independence Day holiday.
A forced unwind of speculative shorts could provide added fuel to a rally. Of course, as the war rally demonstrated, rallies can prove short-lived. Changing forecasts or renewed tensions with China could quickly undo the upside momentum, but for now the market is working in the bulls’ favor.