Wheat Surge Sparks Broad Grain Rally as Global Supply Concerns Grow

Wheat’s explosion higher on significant port damage from this week’s bombing from both Ukraine and Russia rippled through all markets and supported an impressive corn rally while beans were higher on record bean crush numbers. Despite a less stressful temperature outlook for most of the Corn Belt into month end, the world loss of production, growing logistics problems, and significant growth in world demand, the markets have been forced to pivot from their spring position of comfortable world stocks to a year of potentially significant contraction of world stocks.

News and Notes:

• The WCB, northern and southern Plains will remain dry into month end as temperatures moderate after this week’s sizzling temperatures. More regular rains are expected for the ECB in the week ahead. Europe has gotten most of the drought headlines, but Canada’s crops are suffering and  drought and wildfires are again a problem this year. World production is in retreat.
• The daily September wheat chart is on Page 2 and shows today’s rocket shot higher on more closures and delays for Russian wheat exports. Today was the largest rally day since May 12th and put prices within 20-cents of the contract highs. The funds were the largest of the big volume day as they came into this week still short 240 MBU and have trimmed roughly 60 MBU from that since the beginning of the month which helped support the 90-cent rally so far in July. It is not an apples-to-apples ratio, but if the funds are forced by world events to get back to flat, the potential is obvious. The market is the most overbought (bottom box green line at 71.25) since late April, so a potential volatile period of consolidation would not be a surprise. Europe’s wheat crop is torched, the US crop was terrible, and the world’s largest wheat exporter has major war-related shipping problems. New contract highs seem inevitable relatively soon. The current contract high is $7 and today’s close was $6.xcvb.
• The lack of a daily sales announcement to China and a poor week of ethanol use did not have a lasting impact on today’s trade, but beans will be very sensitive if China takes a few weeks off from honoring the trade deal. June bean crush was a record but record demand for bean oil outstripped production to lower US bean oil stocks. World demand continues to expand at a record rate.
• The team at Helena’s FieldLink podcastput together an all-star cast to discuss in-season fungicide application and how to maximize your profitability. My recent market update is also included.
• Crude oil and diesel remain extremely volatile on all news, but President Trum assuring escorted passage through the Strait for all, but Iranian ships did stop the rally at $80 +/- crude and $4 +/- diesel futures. Energy prices will become more sensitive to the escalation in Ukraine bombing as port and energy infrastructure are becoming more frequent targets.
• The Russia/Ukraine war had been largely ignored by the wheat market for years until this week’s new problems with both countries export capacity. Russia is the world’s largest wheat exporter and although they can rail and truck those bushels elsewhere to put on a boat, which will take time and significantly more freight costs than taking out of the Black Sea and Sea of Azov. Wheat is the wildcard in how far corn can rally as the spread between old crop corn and wheat at $2.34 favors corn working into feed rations over wheat. Corn was up 9-cents today on a less threatening US forecast because of its relationship with wheat. If wheat makes a run at $8 (which many analysts are now predicting), corn will need to push closer to $6 than the low $5 area of the current contract high.

It continues to be an unusual year as normally the only thing that matters on July 15th is US weather. Well, not in 2026. The Russia/Ukraine and US/Iran wars have consistently added cross-currents to the daily trade for even more complexity in finding fair value and executing a marketing plan and dealing with uncertain cost structures in fuel and fertilizer. A US weather problem that cuts 1-2 BPA from the corn yield and 1-1.5 BPA from the bean crop would ignite a bonfire of across-the-board rallies as the war impacts will not be ending anytime soon and could continue to effect markets well into 2027. We are researching upside potential and good areas to add to sales, which will lead to new Sales Targets this weekend.