Significant Correction Limits Further Downside Risk in Wheat

MORNING AG OUTLOOK

Corn: 

A steady start for corn after another new low for the move overnight as the upcoming 2-week forecast shows additional soil moisture boosting rains for the western belt. Temperatures will be trending above normal, especially in the northern half of the growing region over the next 2 weeks but enough rain is expected to keep crop stress low in the majority of the crop region. Precipitation is expected from Texas northward into the northern Plains and northern Midwest. Including last night’s new low, July corn has made lower lows in 9 of the last 10 sessions but has moved down into a fundamental value zone, in our opinion. Part of yesterday’s pressure can be attributed to the higher Argentina crop production estimate from the Buenos Aries Grain Exchange of 64 million tonnes, up from USDA at 59 million. The EU says they are on track to implement the trade deal with the US at the end of this month, which could improve the competitiveness of US corn into EU feed channels. Weekly ethanol production this morning is expected at 1.117 million barrels per day, up from 1.089 last week and stocks 25.202 million barrels, up from 24.968 last week.

Soybean Complex:

A higher start for beans this morning as the vegoil bull market continued overnight. Bean oil is near another new contract high as hostilities ramp up again in the Middle East with Iran striking Kuwait’s airport. Open interest rose across the complex yesterday, indicating new selling and bean open interest hit a new high for 2026. Weather models are showing precipitation chances from Texas north into the Plains and northern Midwest over the next week, with very light showers in the eastern belt and southeast US. Temperatures will be warmest in the northern Midwest and heat will spread south into the lower Midwest. Soil moisture improvements are expected in the western belt while a drying trend in the eastern belt is not yet a concern due to adequate subsoil moisture. In other news, the EU says they are on track to implement a trade deal with the US by the end of June. The EU is already a strong buyer of US beans and that is likely to continue but the agreement specifically mentioned preferential access for bean oil, which if realized, could add another layer of demand for bean oil. With US weather seen as mostly favorable, vegoil strength and the hoped-for additional China demand must carry the day until weather turns adverse. Limited crop stress at this time of year makes for tough conditions to extend a rally.

Wheat: 

New lows for the move again overnight and Chicago July has closed higher once in the last 9 sessions. With HRW harvest ongoing, weather is having less influence on prices and the market has been focused on ample global supplies and poor US export competitiveness. But there are several signs that the current decline may not last, including, lower Australian production estimates of 26.7 million tonnes down from USDA at 30 million, China acknowledging significant lodging problems in their wheat crop due to heavy rains, Morocco planning to suspend their SRW import duties to rebuild domestic stocks, French conditions dropping 3% this week and Ukraine’s state railway proposing a 45% increase in freight rates due to Russian attacks and heavy debt. For the above reasons, risk/reward for the bears at current prices may be limited. Showers are expected to improve conditions in the EU but crop stress may continue in France where coverage will be more limited.

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