China Demand and Market Stabilization Spark Hope After Brutal June Selloff

Despite confirmation of the Chinese bean purchase that rallied markets on Wednesday and Thursday, prices faded Thursday into the 3-day weekend but still finished higher for the week. With crude oil sharply lower on the week on a signed Straits reopening and positive comments about the current framework of a long-term peace and no nukes for Iran agreement, the trade is trying to balance lower gas and diesel prices for ethanol and bean oil and the early momentum of China showing up in the daily export reports. After the long weekend, the trade can go back to trading pre-war strategy with an eye on positioning ahead of the critical June 30th USDA stocks and acreage update just seven trading sessions away.

News and Notes:

• The wet US conditions and upcoming normal rain changes are not attracting and buying attention, but the cool weather for the next week will not help a wet crop in need of sun and heat. Dry and hot gets headlines, but wet and cool will factor negatively into final yield. Europe remains in an historic dry/hot early summer. Other world weather is a not causing any crop stress.
• The daily new crop corn, bean, and wheat charts show last week’s reversal gains with wheat leading the way. Wheat rallied 47-cents from Monday’s low to Thursday’s highs, which helped corn claw higher. Beans were driven by Chinese purchases while all three markets moved from extremely oversold, but the funds remain short 75 MBU of corn, 340 MBU of wheat and are still surprisingly long over 500 MBU of beans. Overhead technical moving average resistance will be a factor in daily trade without a big piece of bullish news to spark a more fundamentally based rally.
• Thursday’s June Cattle on Feed report was slightly bearish with the May marketings were 12% last year and the 2nd lowest May in the 31-years of this report. Although May placements were below expectations, the on-feed total rose slightly and is 2% above May 2025. Screwworm news was largely absent last week, which is a positive that no additional US cases have been reported.
• I have growing confidence that the fund selloff lows are in place after the ugly early June trade and the apparent start of China living up to the trade deal. With great cash sales made during the spring rallies, I am recommending buying the September short-dated Corn $4.50/$5.00 call spread for roughly 13-cents plus commission. These options will expire August 21st to get you through the acreage report on June 30th, US pollination, and China hopefully coming into the US corn export market. Each of these things could be bullish for another 20-30 cent rally, but any combination of 2 of the 3 or the homerun of 3 for 3, would add another 40-50 cents to current prices. The total risk (including fees and commission) is about $750 per contract (5000 bu) and gives you the ability to sell additional bushels knowing that you are protected to December futures going to $5.13. These are commonly called “courage calls” and allow you the flexibility to potentially add premium to the previously sold bushels and/or give you confidence to sell more and not be worried about a corn rally continuing. Please call us about the trade and if opening an account makes sense for your operation.
• In Thursday’s daily and weekly export sales reports, the news was pretty good as China was a named buyer of beans in the daily with another bean sale to Unknown. The weekly numbers were better than expected and continue to show end user and world importer interest after the early June price break.
• Weekly Changes: Corn + 4 3/4 (July ‘26), + 3 3/4 (Dec ‘26), Beans + 9 1/4 (July ‘26), + 10 3/4 (Nov ‘26), Wheat + 21 1/4 (July ’26), Crude - 751, Diesel - 2545, Dow + 781, US Dollar - 271, Cattle + 492, Feeder Cattle + 917, Hogs  - 222 , Cotton + 325, Milk + 8 (16.07).

For just the second time since the beginning of May, talking about weekly gains is a nice change of pace. The China demand story will hopefully continue to be a steady drumbeat of support for the export bulls as finding fair value in a much cheaper world energy market with good but not great US crops in mid-June will probably develop into a choppy trade if last week’s lows can act as long-term support. With US/Iran negotiations not dominating headlines and Sunday night’s opening volatility decreasing accordingly, calmer markets should be seen heading into the June 30th USDA acreage and yield update. Have a great long weekend.