Diesel Export Ban Rumors Spark Grain Market Decline Ahead of Trump-Xi Summit

Grain markets traded under pressure on Wednesday due to concerns about a potential U.S. diesel export ban and rising bond yields, which could weigh on demand for grains. Mike Zuzolo, president of Global Commodity Analytics, noted that the U.S. Energy Information Administration data shows distillate inventories at roughly 107 million barrels, just above a modern-day record low of about 100 million barrels set earlier this year.

Zuzolo estimated an 8% to 15% correction is possible in soybean oil and related products if the diesel market unwinds. He pointed out that several charts, including soybean oil and both soft red and hard red wheat, are testing major trend lines.

The 10-year Treasury yield has climbed to roughly 5.12%, levels not seen since before the 2008 financial crisis, according to Zuzolo. He warned that elevated yields and a strengthening dollar historically weigh on demand for grains.