Hotter Forecast and Chinese Demand Keep Grain Rally Intact

Weekend and early week forecasts showed the return of a hotter and drier forecast into month end and sharply higher crude prices initially sent corn and beans to big gains and new 6-week highs before farmer selling and overhead technical resistance slowed the rallies. Wheat finished lower after a much higher start on wetter forecasts for Europe for the next 10-days. China was confirmed as a buyer of another 5 MBU of beans which added to the general row crop strength in addition to the other supportive news. With expectations of additional crop condition cuts in the coming weeks and threatening forecasts for the remainder of US pollination, the markets have taken the slightly bullish USDA July report and found other bullish factors for support.

News and Notes:

• The weekend and both of Monday’s forecast updates remain consistently dry and hot for the WCB with little rain except for the ECB in the next week. Each forecast update will continue to be the biggest daily story as a poor end to pollination and start to key bean growing stages. Europe is forecast for cooler temperatures and some rain, but most reports are that it is too little too late for the majority of their crops. Super El Nino formation will continue to be a problem for the rest of 2026 and for the early stages of the Southern Hemisphere growing season.
• The daily December corn chart is on Page 2 and shows today’s gap higher opening and failed attempt to close above the 200 DMA (black line) and 50-DMA (green) for the first time since May 20th. There was another important thing accomplished in today’s rally as the rally made a full 50% retracement from the contract high on May 13th ($5.06 ½) to the June 30th low ($4.25 ¾). The market is moving toward overbought (bottom box green line 58.95), but the funds are moving into a small (70-90 MBU) net long, which could set up an explosive rush to buy corn if the weather forecasts remain hot and dry.
• Corn and bean crop conditions were both up 1% from last week. Last week’s dry/hot weather helped more of the crop area than it hurt, but the upcoming week will be closely watched as the excess soil moisture is depleting quickly. 34% of the corn crop is in pollination. Both corn and bean crop ratings are now 6% below last year’s.
• The daily export report showed China as a named buyer of 5 MBU of beans for the 26/27 marketing year, which means they will be delivered sometime between 9-1-26 and 8-31-27. The price was above posted South American offers which emphasizes China’s efforts to buy US beans. China’s momentum toward being a consistent large weekly buyer of US beans is increasing. To fulfill their trade agreement, China needs to buy roughly 36 MBU a week until year end. China also promised after the May trade meeting to also purchase 10 MMT of corn, which should be in the last quarter of the year.
• Crude oil rocketed higher through the day to move back over $78 a barrel for the highest daily close in a month. How the US gets the Straits reopened to full traffic is unknown, but the President Trump stated the US Navy will help give safe passage to all commercial traffic expect Iranian ships. A 20% “fee” was mentioned but the world transportation community if against that idea. After 4-months, the world energy markets are right back to fighting the daily headlines. Technically, crude oil will target the $81-$83 area (chart gap and moving average resistance) which would push diesel futures back to the $4 a gallon area.

Weather and demand have quickly become the lead stories for our markets with each new forecast model and each morning’s flash export sales reports being weighed for day-to-day price discovery. The support that $80+ crude oil would provide would be a bonus, but the threat of falling US yields will be an important piece of support on any breaks. A pattern of a slow quiet grind higher would be ideal as the constant volatility and shocks to the markets adds a larger level of anxiety in executing a marketing plan. The rest of July is setting up to be the best bullish growing season scenario in nearly a decade, after the miserable May/June performance.