Weekend Rains Trigger Pullback, But Demand Remains Strong

With rain falling in the upper Midwest at the end of the week and more forecast for the weekend, the path of least resistance was lower as markets finished the week lower. Developments in Ukraine also weighed heavily on wheat prices as they are discussing proposals to export wheat through other avenues rather than just eh Black Sea where Russian bombing continues. With setbacks in two of the three bullish stories from July, the markets corrected sharply to end the month. With more rain for the central Corn Belt over the weekend, the concern over a full-blown weather market will subside, but with China buying US beans on a more consistent basis and bio-fuel margins still strong, the demand side of the equation only strengthened. The new month will continue to trade US weather, war news and Chinese demand.

News and Notes:

• Welcome rain started on Thursday and continued through the weekend for large areas of the WCB and central Corn Belt with cooler temperatures expected through the first week of August.
• Each chart on Page 2 took a bearish turn this week as the rain and fund selling drove price lower through moving average support. The grain and soy charts are more concerning as Sunday night’s gap open higher and lower trade through and for the week does not look good on the charts. It is always to talk about the funds with all their money, but when the weather pattern ads rain in late July and early August, the technicals don’t stand a chance. The diesel chart also shows the ongoing uncertainty in the Straits and Russia’s loss of significant diesel refining capacity as Ukraine targets more energy infrastructure. Although it is our late summer and cold weather is not a current concern, a lack of diesel/heating oil for the world this winter is a growing concern.  
• Although Ukraine is exploring additional ways to export their wheat crop, the bombing in the Black Sea to both sides port infrastructure continues to intensify. Even if Ukraine can secure other routes can be opened, it will make their grain exports more expensive and keep US exports competitively priced. Europe’s production problems will have a long-term effect on world supplies well into 2027.
• China was named as a buyer in Friday’s daily export sales report as they continue to be a regular buyer through the planning process of the September trade meeting in Washington. With one month remaining in the USDA’s fiscal year, exports of all major crops are well ahead of last year and in line with all current USDA estimates. Domestic use also remains strong and with committee negotiations ongoing in Washington to make year-round E-15 permanent an interesting new source of demand in the years ahead. Small refinery exemptions remain a sticking point in the final implementation of the new guidelines.
• Weekly Changes: Corn - 29 1/2 (Sep ‘26), + 23 1/2 (Dec ‘26), Beans  - 69 1/2 (Sep ‘26), - 66 (Nov ‘26), Wheat – 28 3/4 (Sep ’26), Crude - 464, Diesel + 1, Dow +411, US Dollar  -511, Cattle + 468, Feeder Cattle + 270, Hogs  - 280 , Cotton + 181, Milk - 12 (17.09).

Despite this week’s weather induced setbacks, the overall bullish leaning fundamentals remain in place. August is almost always a roller coaster of changing forecasts as the crops move toward maturity and the inconsistency of the US growing season weather still points to corn yield falling below trend line while beans still have the opportunity to meet it, but probably not exceed it. With the weekend rains, opening calls are lower as the immediate US weather threat has diminished. Have a great Sunday.