Insight Focus
Last week, Trump announced a commitment by China to purchase USD 17 billion in US agricultural products, causing grains markets to rise. However, as the week drew on, a lack of confirmation of the deal from the Chinese camp made markets jittery. Still, risk to yields caused by high fertiliser prices continues to sustain pricing.
The market last week digested the data of the May WASDE together with the announcement of the Chinese purchases of US agricultural products. Although a deal was not yet confirmed by China, it did confirm conversations were taking place.
Trump’s announcement of China having committed to buy USD 17 billion per year in US farm products sparked a rally early last week, but a correction followed on Tuesday. This continued throughout the rest of the week on lack of confirmation by China. However, the Monday rally was enough to offset later losses, and all grains closed the week positive.
A question mark looms over crop conditions in the northern hemisphere, which could impact yield. Planting progress is progressing very well across most regions from the US to Russia so the main bump on the road will come from lower fertiliser use due to the price rises. French farmers had already warned as well of much lower acreage expected.
Source: World Bank
The focus in the coming weeks will be weather, the first corn condition report from the USDA, and any confirmation of Chinese purchases of US agricultural goods. We think there are reasons for Chicago corn to continue consolidating above USD 4.50/bushel. There is no change to our forecast for Chicago corn to average USD 4.40/bushel during the 2025/26 (September/August) crop. The average price since September 1 is running at USD 4.37/bushel.
Corn Trades Largely Sideways
China’s failure to confirm Trump’s claims of a USD 17 billion trade deal triggered profit taking and a fall in prices during the second half of the week. Argentina also scrapped taxes on exports at the end of last week, which weighed on international prices.
The last WASDE report downgraded corn yield to 183 bushels/acre, from 186.5 bushels/acre for the old crop but this is still a relatively conservative projection.
In Argentina, BAGE increased its corn production forecast to 64 million tonnes from 61 million tonnes, but this still remained below the Rosario Grain Exchange, which is projecting 68 million tonnes. This would be an all-time high for Argentina.
US corn is 76% planted – on par with last year and six percentage points ahead of the five-year average. Corn planting in France is 96% completed versus 94% last year and the five-year average of 91%. Condition is 90% good or excellent, unchanged week on week and slightly ahead of last year.
Corn planting in Russia is 60.8% complete versus 72.8% planted last year. Corn planting in Ukraine is 80.1% complete versus 87% last year. Corn harvesting in Argentina is 32% complete. Summer corn harvesting in Brazil is 75.3% complete, behind last year and the five-year average, which came in at 82.3% and 79.4%, respectively.
Wheat Conditions Worsen
Wheat also a positive week, fuelled not only by the China news but also by worsening conditions again in US wheat and a downward revision to EU yields.
The EU MARS bulletin revised wheat yield lower to 5.8 tonnes/ha from 6.09 tonnes/ha last year. However, this still remains above the five-year average of 5.65 tonnes/ha.
US winter wheat is 27% in good or excellent condition, down one point week on week and well behind last year, which recorded a rate of 52%. French wheat is 80% good or excellent, unchanged week on week and slightly ahead of last year.
Ukrainian spring wheat is almost completely planted, ahead of 94.6% last year. Russia spring wheat planting is 41.3% complete, behind 50.3% last year. Wheat planting in Brazil is 26.3% complete – largely on par with last year and the five-year average.
The US plains and corn belt are expected to receive above normal precipitation, which should help both wheat and corn condition after several weeks of low rains. Argentina is expected to be dry and cold — even reaching freezing temperatures. This cold front will move north to Brazil and will be accompanied by some rains. Northwest Europe is expected to remain hot and dry while the Black Sea region will remain mixed.
