December corn ended 2 3/4 lower at $4.38 1/2, November soybeans were down 3 3/4 at $11.91, September soft red winter wheat was up 9 3/4 at $6.45, hard red winter was up 11 3/4 to $6.78 and spring wheat gained 4 3/4 closing at $6.58.
Row Crops Ease on Weather, Ratings
Corn and soybeans saw some light selling pressure on moderating weather forecasts and a 1% improvement in condition ratings for both corn and soybeans nationally.
Rich Nelson, chief strategist for Allendale says, “A little waffling as far as that weather forecast late yesterday through today, plus the fact we did rise in terms of those ratings when most of the estimates were for no change.”
Still he says the trade is pausing right now until the weather story is really decided with only 34% of the corn silking and 19% of the soybeans setting pods.
“Keep in mind, this is the largest week of pollination for the Midwest. Next week will be number two.”
Corn Crop or Yield Damage?
So will the crop that is pollinating see any damage from heat or dryness? Is the extended weather threatening enough to cause more weather premium to be added to row crop prices?
“Now, typically in years since 1980, in years with above normal temperatures, combined with maybe a little dryness typically we do drop yields below trend. Given the fact that we’ve really recharged a lot of soil moisture in many areas that’s a big question for right now,” he explains.
So Nelson believes the trade may shift from ideas of slightly above trend to below trend but the market is not ready to price that in yet.
August More Critical for Soybeans
August is the more critical month for weather for soybeans as that is when pods are set.
Nelson says, “Pod set is only 19% complete as of Sunday. Certainly not just this week, but really the next two weeks after this, as well as the first week of August, that’s when things really start cooking as far as watching weather for soybeans. So it is certainly too early
just yet to make any sharp claims about soybean yields just yet, especially with this extended forecast beginning to kind of waffle around a little bit here.”
EU Weather
The EU has had heat and drought the last several weeks and continues to see the crop ratings deteriorate. While the markets there are trading higher as a result that hasn’t spilled over into the U.S. markets yet.
Nelson says USDA did acknowledge the lower corn crop in the WASDE cutting production by about 3.7 million tons, and they have further tightened that world balance sheet for corn.
“USDA’s current stocks to use number for corn for world basis is 20.8%. That’s actually the lowest. I want to say going back 13 years,
maybe 14 years. So we certainly have a lightly tightened story for the corn side of things. It doesn’t make a panic situation for the trade, but it certainly highlights the fact that the U.S. is in a prime spot for old crop corn exports as well as the new crop right now.”
Soybeans Watching China Demand
Soybean export demand is all about China. There was not flash sale to China on Tuesday which seemed to disappoint the market.
Last week they bought around 1 MMT of U.S. new crop soybeans but Nelson thinks they will be back in the market.
“I do think that China has now established a pattern to where they will be regular buyers. It may not be every single day, but as it stands right now, our bookings, so what we know from that last weekly report, plus the overnight sales so far since then. China’s got 1.1 million tons booked so far. Unknown, which the vast majority of which is China as well, they have 1.8 million tons. So we still have a long way to go to fill the trade’s hope and expectation for 25 million tons total.”
Nelson is comfortable with these numbers and says the trade is as well.
Row Crops Hit Technical Resistance
Both corn and soybeans were stopped by strong technical resistance on the charts Monday.
December corn can’t close above key moving averages like the 50 the 200 day. But Nelson points out, “I’m happy that we came back a little bit here from the morning losses at one point, and that’s true for corn and soybeans. I’m also happy with the fact we do have a small intraday gap still waiting at the prior day’s close, $4.63 1/4, a similar number for soybeans.”
He says corn can likely rebound to fill the gaps but will have a tough time holding above $4.70 on Dec corn and $12 on November soybeans.
To make that leap he says the market will need to see yields for corn and soybeans fall below trend.
“A lot of us on the analyst side have pointed out crops in the past eight to nine years, they’ve been taking heat a little better than prior decades,” he adds.
Wheat Rallies as Black Sea Exports in Question
The wheat market rallied as the attacks in the Black Sea region have escalated and the market is putting in some risk premium on concerns tied to export disruptions.
According to Nelson, “With the Kerch Strait basically closed to any traffic on the cargo side, there still is movement within the Sea of Azov, but as far as that Kerch Strait, the key export push, this is still limited right now. And this is about a quarter of Russia’s cargo traffic. And
certainly for us on the wheat side, we’ll watch it very closely. Now, the month of July is not a big export month. SovEcon only estimated about 2 million tons for July.”
He says the bigger deal is if this changes and extends into August through November, that’s when Russia’s shipping out 4 to 5 million
tons each month. So, if it does last, it’ll be a much more significant issue.
Spring Wheat Deteriorating?
The spring wheat was at 58% good to excellent, up 1% from last week. But with 100 degree heat in parts of spring wheat areas this week will the crop deteriorate?
“A little different than corn or soybeans, which do have some geographic locations, which do have a soil moisture buildup. This is our first real stress for that spring wheat crop.”
June saw good rains according to Nelson but which helped support strong yield ideas but the question is how well will this crop respond to maybe a little stress?
“So I do think we need to add a little premium on that spring wheat side specifically. Keep in mind though, we’ve reduced the market’s concern about U.S. supplies, but this is not a dramatically terribly tight supply on the U.S. issue here. So we do have valid reasons for higher prices. We’re not quite sure if this is a runaway bull market though.”
However, there was talk that China was looking for soft red winter wheat on Monday.
Cattle Melt Down
August live cattle fell $3.30 to $231.42 1/2, August feeder cattle dropped $5.55 to $348.80.
Live and feeder cattle futures were sharply lower and made new lows for the move. Cash was down over $7 last week and Choice boxed beef was also down over $7 on Monday.
Nelson says the market has taken about $25 per hundredweight off of choice beef over 14 days and it is a seasonal move.
“It’s not just a concern about 2026 consumer demand or weakening consumer demand. It’s the fact that this is also a seasonal. We’re basically stuck between steak holidays right now. And the next one is Labor Day, which we won’t really start procurement until August. So typically, wholesale beef has another one, if not two weeks left of pressure.”
So there may be more downside left in the short term.
Cattle Take Out Support
Live cattle futures took out key support that was struck on the charts the day the New World Screwworm (NWS) case was announced in the U.S.
“And from a chart basis, this does not look pretty because this opens this market up to a bit of downside, which is quite open on the
charts here.”
He also didn’t like the fact that feeders saw so much pressure. “Typically, cash feeders are rebounding into August 1st or so. This was certainly was a contraseasonal issue for for feeders and we’re still not finding clear support yet.”
Nelson was also surprised with the selloff considering the CPI data came in cooler than expected. Inflation dropped from 4.2% in May down to 3.5% in June.
“Interesting to see that the cattle market said, hey, you know, even though consumers have an extra dollar pocket, which are not going to energy cost, the market did not really find too much support. So a little concerned about that.”
Hogs See Slight Gains
August lean hogs bounced $.35 to $98.45 on Tuesday but still can’t get above key chart resistance despite improving fundamentals.
Nelson says, “As far as chart wise, we added $5 to wholesale pork last week. We had a minimal gain for cash hogs last week. Monday’s cash hog trade up almost $1. So we do have a moderate rebounding cash market story. How long it lasts is another issue.”
Technically he wants to see August futures fill their one last open downside gap at $96.92, and then a rebound higher after that. “And keep in mind, there are still gaps waiting at higher prices for those hog future charts.”
