Cooler Forecast Sparks Grain Selloff Despite Lingering Supply Risks

A much less stressful run of weather forecasts overnight and today pressured the markets to sharp losses with beans leading the way as the concern over the hot and dry early August outlook has softened. A lack of Chinese daily purchases further encouraged the bears selling but today is as simple as the forecast change. Limited news was available from Russia and Ukraine on progress or setbacks, but with Iran restarting attacks on US bases in the Middle East and several more ships in the Straits, crude oil rallied sharply which did not help the grain or soy markets as it had earlier this year. Weather forecasts, Black Sea news and Chinese demand rumors continue to drive daily direction into early August.

News and Notes:

• A cooler and wetter forecast in the 6a and 12p model updates was today’s weather wrinkle with increased soaking rain chances for the NCB this weekend while the heat expected in early August is now forecast to stay further south and out of Iowa, Minnesota and the ECB. The forecasts had been fairly consistent lately but quickly changed and the market was forced to react.
• The daily December corn chart is on Page 2 and shows today’s close under the 100-DMA (blue line) for the first time in a week. Other support is just below today’s trade at the 200-DMA (black line) at $4.67 ¾ and the 20-DMA (red) at $4.66 ½. The funds continue to sort through the overbought conditions. A small chart gap is from $4.68 ¼ to $4.69 that will be filled in the 200-DMA is tested. Today’s close was $4.71 3/4.
• The weekly crop conditions fell more than expected and in our updated yield models we are thinking yield is 178.6 BPA for corn and 51.9 for beans. The bean yield estimate is too early for any reliability, but the corn yield estimate is falling in line with other models as the crop is through pollination. If August remains as imperfect as July has been, it is hard to see corn yield improving and ending over 178-179 with beans potentially falling under 51. A good comparison is 2024 when the late July corn ratings were almost identical and that years final yield was 179.3.
• The Federal Reserve met this week and announced today that they were not changing rates this month, but there is a growing difference of opinion on the Board of Governors. Gas prices, among other things, are pressing several to think a rate hike to cool off upcoming inflation threats is the best course of action. Rate cuts are only being discussed by a small minority of board members. Expect flat to higher rates through the remainder of 2026.
• Please listen to the latest FieldLink podcast discussing mid-season applications to improve yield potential and a market review of the July crop report and all the events moving the markets.
• There were no daily flash sales of anything this morning which added to the bearish momentum and Thursday’s weekly export report is not expected to hold any upside demand surprises. If the demand market is going to keep a steady trajectory for higher prices, the news needs to be daily rather than just periodically. The bulls need confirmation every day.

There is not a lot to explain in a bullish weather market when a forecast changes to cooler and wetter at a critical point in the crop development. The big picture is that bean crop could still reach trend (53) with normal August weather while the US corn crop could stabilize, but it is hard to see US national corn yield and conditions improving dramatically with today’s forecast changes. Expect volatility and start to get an idea on where your yields are to help fine tune your marketing plan and what percentage you are or can be confident in selling on any upcoming rallies.