Grain Markets React to Weather Forecasts and Trade Tensions

The grain markets are being influenced by several factors at present. Weather forecasts for the Corn Belt over the next couple weeks indicate wetter conditions, which may limit buyer interest in corn and soybean futures. However, a U.S. soybean crop weather market scare in August could reignite bullish enthusiasm.

A positive development is the recent decline of the U.S. dollar index to a seven-week low. This has supported grain markets. Meanwhile, an extreme heat wave in western Europe is hurting crops, with France's corn crop expected to decline by 35% to 9 million metric tons this year, its lowest since at least 1980.

Export and domestic demand for corn and soybeans have picked up, with the USDA reporting daily U.S. corn sales of 286,097 metric tons to Mexico last Friday. Additionally, higher crude oil prices have lifted demand for corn, with use for fuel alcohol in June reaching 466.7 million bushels.

Grain traders are keeping a close eye on the weekly USDA crop progress reports and the Pro Farmer annual corn and soybean crop tour in late August. The U.S.-China relations remain shaky, with tensions over trade issues heightening the importance of domestic soybean crush use. President Trump and Chinese leader Xi Jinping's upcoming meeting in September is also being closely watched.