Grain Rally Stalls Into July 4th as Heat Eases and China Stays Quiet

Thursday’s end of the week’s trade was initially higher on momentum since Tuesday’s post-report bounce before profit taking and positioning ahead of the long-weekend pushed prices back to finish fractionally lower. A return to normal US temperatures after this week’s sizzling Corn Belt heatwave is expected by early next week which also capped the rally. Weekly exports were within expectations, and China remains absent from the daily sales reports, which is becoming more of a concern as the optimism of large Chinese purchases through the summer after the trade summit is fading. Crude oil fell to pre-war levels in early trade before bouncing, but the 3-week $25 a barrel price break are giving everyone a break at the pump but pulled out that leg of support from the bio-fuel markets. US weather and Chinese demand are market keys in July and August.

News and Notes:

• The US forecast continues to show a return to normal Midwest temperatures into mid-July, but no widespread soaking rains are forecast. World weather remains challenging for Europe and India which will need to be closely watched moving deeper into their growing seasons. A Super El Nino is expected to have bullish world weather impact as most forecasters have it developing in the weeks ahead.
• The daily Dec corn, Nov beans and Sep wheat, and August diesel are on Page 2 and show the late week progress since the USDA report in the grain and soy markets. Dec corn struggled to stay above the 20-DMA (red line) to close the week, but with the funds still short about 250 MBU, the funds will be quick to lighten their position if the chart turns more bullish. The bean and wheat charts are more neutral, but neither has closed above the 100-DMA (blue line). The August diesel chart is shows the support and resistance of the 100-DMA (blue line) since the peace negotiations started. Tanker movement through the Straits has returned to normal faster than expected.
• The US weekly jobs numbers were weaker than expected, which ironically is good for the US farm markets. First, it makes interest rate hikes less likely, and it broke a strong rally in the US Dollar. US ag markets are more competitive in weak US$ environments and nobody likes to pay more interest.
• The USDA announced an initiative to invest $500 million in increasing US fertilizer production with new plants in Nebraska and Louisiana. Total plant cost is roughly $5 billion. It is a good gesture, but it will take years for new US produced fertilizer to affect prices. One immediately positive step was announced that the US will drop the 10% tariffs on Moroccan phosphate imports, which could drop those prices up to 22%.
• Thursday’s weekly export report had all sales within estimates, but no daily flash sales announcements were released. Ethanol demand last week was an 11-week high, but no more announcements or rumors came out of Washington about year-round E-15 legislation progress.
• Cattle prices fell for the second straight week for the first time since the middle of April as cash prices have softened and were $5 lower this week.
• Weekly Changes: Corn + 12 1/4 (Sep ‘26), + 1/2 (Dec ‘26), Beans + 5 1/2 (Sep ‘26), - 8 1/2 (Nov ‘26), Wheat + 12 1/4 (Sep ’26), Crude - 54, Diesel + 800, Dow + 974, US Dollar - 506, Cattle - 660, Feeder Cattle - 925, Hogs  + 217 , Cotton - 255, Milk - 18 (15.54).

Going into last Tuesday’s USDA acreage update, there was legitimate concern that we could be going from the frying pan into the fire if the USDA had reported a sizable acreage shift to corn. Fortunately, they did not. With the 20 ¼-cent bounce from Tuesday’s lows to today’s highs, the corn market is showing the resiliency we need to see. The end to this week’s brutal heat will cap the momentum, but next week’s crop conditions will begin to show the impact of this week’s heat and crop stress as US pollination accelerates. China remains a frustrating trade partner as they have made no internal or market moves to show their willingness to begin to honor their increased purchase commitments from the May trade agreement. US weather, Chinese demand, and then world weather will be the driving factors once we get back from the 3-day weekend celebrating America’s 250th birthday on Saturday. Have a happy and safe 4th and a great weekend.