Grain traders are closely watching the U.S. Department of Agriculture's July World Agricultural Supply and Demand Estimates (WASDE) report, but weather and global developments may have an even greater impact on markets in the weeks ahead.
Nathan Steudle, agriculture director for Eagle Radio in St. Joseph, Missouri, said the July USDA report is traditionally less dramatic than other monthly reports, but several key numbers could still influence grain prices.
For corn, analysts are expecting slightly tighter old- and new-crop ending stocks because export demand has remained strong. Steudle said new-crop ending stocks below 1.7 billion bushels would likely be viewed as supportive for prices.
Soybean expectations differ, with analysts anticipating an increase in new-crop ending stocks due to ample supplies. However, Steudle said stocks below about 320 million bushels would be considered a bullish surprise. Wheat markets could also see movement as traders continue to monitor drought-reduced production and lower U.S. ending stocks.
Beyond domestic numbers, Steudle said global production estimates will likely have the biggest influence on futures markets. Traders are closely watching Brazil's corn crop, Argentina's corn and soybean production, and world ending stocks.
China's recent purchase of U.S. soybeans has also attracted attention. While the announcement initially boosted soybean prices, Steudle said the market quickly reversed course once the purchase became official.
"They bought the rumor and then sold the facts," he said, noting that exports to China remain essential as producers continue operating with tight margins.
Weather remains the dominant concern for producers as corn enters its critical pollination stage.
Steudle said hot temperatures, warm overnight lows and limited rainfall could reduce pollination and kernel development. He added that weather forecasts often have a greater impact on grain markets than the weather itself, as traders react quickly to changing outlooks.
"Corn's made in July," Steudle said. "We're about to find out."
While U.S. wheat production has struggled with drought and heat, Steudle said Europe is experiencing similar problems. He said severe heat across parts of Europe has significantly reduced wheat production, tightening global supplies and helping support wheat prices.
On the trade front, the United States, Canada and Mexico have begun their first joint review of the U.S.-Mexico-Canada Agreement (USMCA). Steudle called completion of the review critical, saying Canada remains a challenging negotiating partner amid ongoing tariff disputes, while Mexico has generally been more cooperative.
International tensions are also affecting agriculture. Steudle said renewed conflict involving Iran has raised concerns about energy markets and fertilizer supplies because the Middle East remains a major supplier of crude oil, natural gas and fertilizer ingredients.
Any disruption to shipping routes could increase diesel fuel, propane and fertilizer costs, further squeezing already narrow profit margins for farmers.
"Those higher input costs are going to squeeze the margins, and they're already tight," Steudle said. "It all rolls downhill."
Steudle also pointed to proposed federal legislation that would allow year-round sales of E15 gasoline and provide an additional $10 billion in farm support. The provisions are currently attached to supplemental war funding legislation moving through Congress.
If approved, he said the measures would provide meaningful support for grain producers facing low commodity prices and rising production costs.