Grain markets closed the week with mixed results as corn led gains driven by strong export demand and technical buying, while soybeans faced pressure from lackluster Chinese demand despite modest end-of-week increases. Wheat markets showed mixed performance, supported by a weaker U.S. dollar and export activity but tempered by expectations of ample global supplies. Weather concerns, including potential frost in the U.S. Midwest and favorable conditions in other regions, continue to influence market sentiment heading into the holiday weekend.
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In this edition:
Harvest Headlines: Events impacting crop prices.
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Market Overview
Harvest Headlines
Corn Price Events
Strong Export Sales Bolster Prices: USDA reported combined old and new crop corn export sales of 81.6 million bushels for the week ending August 21, with Mexico as the top destination at 24.4 million bushels. This robust demand, toward the higher end of analyst estimates, fueled technical buying and pushed December futures up 10.25 cents to $4.2025.
Short-Covering Rally into Holiday Weekend: Traders reduced net short positions ahead of the Labor Day weekend, contributing to a 12.5-cent gain in September futures to $3.98 and a weekly increase of 8.75 cents for December contracts. This rally reflects growing market optimism despite expectations of a record 16.7 billion bushel U.S. crop.
Brazil’s Ethanol Projects Signal Demand Growth: Brazil’s 21 active corn-based ethanol projects, with 12 under construction, could boost corn demand by 14 million metric tons by 2027 to produce 8.2 billion liters of ethanol. This development supports long-term U.S. export prospects as Brazil’s domestic corn use rises.
Weather Concerns Emerge in Midwest: Reports of tar spot and southern rust in parts of the Midwest raise concerns about crop health as harvest nears. While only 5% of U.S. corn acreage faces drought, down from 8% last year, these diseases could impact yields in affected areas.
Canadian Production Increase: Statistics Canada projects a 1.5% year-over-year increase in 2025 corn production to 612.17 million bushels, primarily in Ontario and Quebec. This rise could offset some import needs, potentially easing pressure on U.S. export markets.
LSEG Raises Brazil’s Corn Forecast: LSEG increased its 2024/25 Brazil corn production estimate by 4% to 137.4 million metric tons due to expanded planted area. This higher supply outlook could temper global price gains despite strong U.S. demand.
Soybean Price Events
Lack of Chinese Demand Weighs on Market: Soybean prices remain under pressure due to absent Chinese new crop purchases, with China increasing imports from Argentina and Uruguay to fill the gap. November soybeans closed up 6.5 cents at $10.54½ but were down 4 cents for the week, reflecting cautious market sentiment.
Technical Buying Offers Support: Short covering and technical buying lifted soybean prices modestly, with September futures up 8.5 cents to $10.36¾. However, ongoing U.S.-China trade tensions and lack of progress in tariff talks limit upward momentum.
Biodiesel Production Hits Six-Month High: June biodiesel and renewable diesel production reached 409 million gallons, with soybean oil usage up 2% to 1.045 billion pounds, the highest since December 2024. Despite this, year-to-date usage is down 11.3%, suggesting USDA’s forecast of 12.250 billion pounds may be overly optimistic.
Dry Weather Concerns in U.S.: Expanding dry conditions in some U.S. growing areas could limit soybean yield potential, with significant rainfall not expected until the following week. This weather risk contributed to market caution despite the week’s modest gains.
South American Supply Dynamics: Argentina’s soybean imports are expected to double to 10 million metric tons in the 2025/26 marketing year, driven by China’s sourcing shift. This trend could further reduce U.S. soybean export opportunities unless trade negotiations improve.
Crush Margins Hit Two-Month Low: Spot board crush margins fell to $1.53½ per bushel, down 66 cents for the week, pressured by weaker soybean meal and oil prices. This decline signals challenges for processors amidst mixed product demand.
Wheat Price Events
Mixed Performance with Export Support: Wheat prices were mixed, with December CBOT wheat up 5.25 cents to $5.34¼, supported by a weaker U.S. dollar and positive export reports. However, Kansas City and Minneapolis contracts closed lower for the week, reflecting global supply pressures.
Russian Export Tax Increase: Russia raised its wheat export tax to 134.4 roubles per metric ton for the period ending September 9, up from 32.1 roubles. This adjustment could curb Russian exports, potentially supporting global wheat prices in the near term.
Potential Frost in U.S. and Canada: A light freeze is possible in Canada’s eastern prairies and the upper U.S. Midwest, with overnight lows next week under close watch. Such conditions could impact spring wheat harvest progress and quality.
Argentina’s Wheat Crop Develops Well: The Buenos Aires Grain Exchange reports 85% of Argentina’s wheat crop has adequate to optimal soil moisture, signaling strong production potential. This favorable outlook could weigh on global wheat prices.
Global Supply Expectations Pressure Prices: Anticipated higher wheat production from key exporters like Europe, Russia, and Ukraine has depressed FOB values throughout the week. Despite Friday’s gains, ample global supplies remain a bearish factor for wheat markets.
U.S. Spring Wheat Harvest Progress: Minneapolis wheat futures were steady to firm, supported by expectations of good week-to-week spring wheat harvest progress in the U.S. and Canada. The USDA’s delayed crop progress report, due Tuesday, will provide further clarity on harvest pace.
Extended Commentary
Grain markets are entering the post-holiday week navigating a complex set of conflicting signals, leading to the mixed price action seen today. Corn, despite a slight pullback after a strong pre-weekend rally, continues to find support from robust export demand and technical short-covering. However, this bullish sentiment is being held in check by the sheer scale of the anticipated U.S. crop and forecasts for expanded production in Brazil and Canada, creating a tense balance between strong current demand and a potentially massive future supply. Soybeans remain the laggard, as the market cannot shake the bearish weight of anemic new-crop demand from China. While technical buying and domestic biodiesel use offer minor support, the ongoing pivot by Beijing toward South American suppliers is a powerful headwind that continues to pressure prices, as evidenced by the consistent declines across all future contracts.
Looking ahead, weather and global trade dynamics are poised to be the primary market movers. The immediate focus is on potential frost across the upper U.S. Midwest and Canadian prairies, a significant wildcard that could threaten yields on late-maturing corn and soybean crops while disrupting the final stages of the spring wheat harvest. This Northern Hemisphere weather risk is juxtaposed with a favorable outlook in the south, where Argentina’s wheat crop is developing well under optimal moisture. For wheat, the market will be closely watching whether Russia's higher export tax can meaningfully redirect global demand, though for now, the overwhelming pressure of a global supply glut continues to cap any significant price rallies. For soybeans, any change in the U.S.-China trade relationship remains the most critical factor for a sustained market recovery.
