Corn Rallies on Crop Tour Yields, Soybeans Slump Amid Trade Fears
Corn futures continued to rally on Monday, pushed higher by disappointing yield results from last week's Midwest Crop Tour. The tour came in well below USDA's August estimate, with yields averaging four and a half bushels below.
Mike Castle, senior commodities economist at StoneX, attributed the strength to the lower-than-expected yields, but cautioned that it does not guarantee a matching cut from USDA. He noted that the wider than normal spread between the tour's results and USDA's estimate 'kind of suggests maybe we see some additional downside here in terms of USDA's yield and production expectations.'
The market will be closely watching Monday afternoon's crop progress report, which Castle said could sway the market depending on corn conditions. A bigger decline in conditions would drag down yield estimates, while a steadier reading would keep them 'somewhat constant.' Looking ahead, Castle expects the market's focus to shift from supply to demand.
Soybeans, however, fell sharply on Monday, pressured by fears of renewed U.S.-China trade friction tied to Treasury Secretary Scott Bessent's planned announcement on Iran sanctions enforcement. China is Iran's top oil customer and largest trading partner by dollar value, and Castle argued that its recent soybean buying has been driven more by politics than economics.
The weekend saw a breakdown in U.S.-Canada trade talks, with 50% tariffs imposed on an estimated $20 billion of Canadian goods. Canada has signaled retaliatory tariffs beginning around September 8, but Castle believes neither side stands to benefit from the escalation.