Insight Focus
July corn has plummeted in Chicago as European grains rally. Chicago wheat gained nearly 10% on supply concerns. Further upside in Europe is limited despite dry weather fears.
Wheat rallied last week on worries of lower-than-expected supply, triggering a rush for short cover. Wheat in Chicago nearly posted a 10% weekly gain, while other European grains also rallied. Euronext corn followed wheat higher, though we believe the main driver was the large net speculative short. In contrast, July corn plummeted in Chicago, continuing its downside pressure — somewhat strange given that old crop stocks remain tight, a situation that should be confirmed in the USDA’s June 30 quarterly stock report.
We think any further upside in Europe may come from concerns about how many regions were impacted by a very dry April and May, although everything is pointing to healthy wheat and good progress in corn. Therefore, further upside should be limited, and we may even see a correction after last week’s rally. Corn in Chicago should stop falling given tight all-crop stocks.
There are no changes to our forecast for Chicago corn for the 2024/25 crop (September/August), which is expected to average USD 4.55/bushel, with some downside risk depending on the trade war. The average price since September 1 is running at USD 4.47/bushel.
Chicago Corn Drops Despite Tight Old Crop
Corn in Chicago opened last week negatively and consolidated losses through the rest of the week—somewhat strange, as it was really July corn (old crop) that dropped sharply, while September corn posted only small weekly losses. This is unusual, considering it is old crop supply that is tight, as reflected in the strong corn basis.
US corn is now fully planted, and conditions are rated 72% good or excellent—up one point week-on-week and the same as last year. In Argentina, corn harvesting is 49.6% complete. In Brazil, Safrinha (second crop) corn harvesting is 3.9% complete versus 13.1% last year and the five-year average of 8.4%.
French corn planting is now officially complete, and condition ratings stand at 83% good or excellent, down two points from the previous week and compared with 81% last year. Corn planting in Russia is ongoing.
Wheat Rallies on Slow Harvest, Spec Shorts
Wheat also opened the week negatively, but unlike corn, it rallied by mid-week in both Chicago and Euronext. The very slow harvesting pace in the US, worsening conditions in France and a sizable net speculative short in both US and European markets triggered a short-covering rally.
French wheat condition was rated 68% good or excellent, down two points from the previous week and compared with 62% last year. US wheat is 10% harvested versus 25% last year and the five-year average of 16%. US wheat condition was rated 52% good or excellent, down two points from the previous week and compared with 49% last year. US spring wheat is now fully planted, with conditions rated 57% good or excellent—up four points week-on-week, but down from 76% last year.
The Russian Minister of Agriculture projected 2025/26 wheat production at 90 million tonnes versus 82.4 million tonnes harvested last year. This significant growth comes despite 500,000 hectares being declared under emergency due to severe drought and spring frost. This forecast contrasts with the latest WASDE estimate of 83 million tonnes. The minister did not specify whether the projection includes occupied territories, which could explain the discrepancy.
Ukraine has started harvesting wheat, with early yields showing a 13% year-on-year decline. It is still very early, and some recovery is possible, but fears of dry weather may now be materialising.
On the weather front, the US Corn Belt is expected to receive rains and storms along with high temperatures. Brazil will see a cold front, but the central-south region will remain mostly dry, while Argentina is forecast to be warm and dry. Northwestern Europe is expected to stay mostly dry with high temperatures, whereas the Black Sea region will receive more rain, and temperatures there are expected to be mild.
