Insight Focus
Grains have sold off on weather and China concerns. Cumulative negative news and heavy fund length triggered broad long liquidation, with favourable weather and lack of Chinese buying adding to downside pressure. Near-term conditions remain bearish, but ongoing weather risks and supply uncertainties should provide a floor and leave scope for prices to recover, with flat to upside risk.
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Grains were in sell-off mode last week on favourable weather across most geographies and worries about China not fulfilling its purchase commitments.
Cumulative negative news last week, together with the length of spec funds, triggered a sizable long liquidation and probably producer selling too. But prices have fallen considerably given there is no peace deal pressing the market lower, and risk related to El Niño remains high. Also, Russia is recording its slowest planting pace in almost 10 years for spring wheat due to excess water. Spring wheat accounts for one third of Russia’s wheat production.
A correction would be expected, but the June WASDE will be released this Thursday, and it remains to be seen whether the USDA will maintain corn acres unchanged. Corn yield is currently at 183 bushels/acre, down from 186.5 bushels/acre last year. It is still unclear if this number fully factors in lower fertiliser usage.
The good weather expected for this week in most growing regions is not supportive in the short term. But the other weather-related risks should be enough to put a floor in the market and even move it higher. We predict flat to upside risk.
There are no changes to our forecast for Chicago corn to average USD 4.4/bushel during the 2025/26 (September/August) crop. The average price since September 1 is running at USD 4.37/bushel.
Corn Declines on Weather and Tariff Risks
Corn in Chicago opened with a negative tone last week and continued selling off during the rest of the week on the back of favourable weather and crop conditions. New tariffs also risked a reduction in US agricultural exports. The rally of the dollar last Friday put further pressure on Chicago grains.
The week started with strong planting progress in US corn. While the first condition report was not especially strong, rains last week and this triggered selling interest. Weekly export sales showed no signs of China buying, which together with the US proposing new import tariffs sparked fears of China not committing to its agreed purchases after the US-China summit three weeks ago.
Just to add to the negative sentiment, New World screwworms have been found in US cattle, sparking fears of slaughter and therefore potentially impacting feed demand.
All in all, it was a bit of a risk-off week, with favourable weather across most regions, no signs of China buying US ag products, and the risk of lower feed demand all coming together and triggering a spec long liquidation.
Outside of the US, the Ukrainian Grains Association is forecasting corn production of 32.1 million tonnes, up from 31.1 million tonnes last year.
US corn is 93% planted, slightly ahead of both last year’s 92% and the five-year average of 92%, while the first condition report shows 67% rated good or excellent, a touch below last year’s 69%. Corn planting in France is complete, with 84% rated good or excellent, down four points week-on-week and just below last year’s 85%. Corn planting in Russia is 90% complete, broadly in line with last year’s 90.3%, and in Ukraine it stands at 98.2%, marginally ahead of 98% last year.
In Brazil, summer corn harvesting has reached 84.6%, lagging last year’s 89.6% but close to the five-year average of 85.9%. Safrinha harvesting is at 0.6%, slightly behind 0.8% last year and well below the five-year average of 1.8%.
Wheat Sell-off Ignores Tightening Signals
Wheat was not immune to the sell-off and plummeted as well, despite the very poor condition of US wheat, worsening conditions in Europe, and severe delays in Russia with spring wheat planting.
The Ukrainian Grains Association is forecasts wheat production of 22.8 million tonnes, basically unchanged from 22.5 million tonnes last year.
US winter wheat harvest has reached 5%, moving ahead of both last year and the five-year average, which were each at 3%. Crop condition is rated 26% good or excellent, unchanged week on week but significantly below last year’s 52%. US spring wheat planting is 94% complete, matching last year’s pace and running ahead of the five-year average of 89%, while 47% of the crop is rated good or excellent, slightly below 50% last year. French wheat is 76% good or excellent, down two points week-on-week but still above last year’s 69%.
Ukraine’s spring wheat planting is virtually complete at 99.9%, well ahead of 95.4% at the same point last year. In Russia, spring wheat planting has reached 78%, notably behind last year’s 91.7%, while winter wheat planting stands at 11%.
In Brazil, wheat planting is 41.1% complete, progressing ahead of both last year’s 38% and the five-year average of 38.3%.
Above-average temperatures are forecast to return to northwestern Europe by the end of the week, with irregular weather during the first half of this week. In the Black Sea region, periodic rainfall is expected, which is positive for crop development. The US is expected to be warm and rainy in the Corn Belt. Brazil is expected to be dry with cold, sunny days.
