Corn Belt Weather and an Upcoming Trump-Xi Summit Are Driving Grains Prices Now

A series of weather forecasts indicating wet conditions over the coming weeks could dampen demand for corn and soybean futures in the Corn Belt. Forecasters do not believe these weather patterns will reinvigorate soybean or corn enthusiasm. However, a recent drop in the U.S. dollar index has provided a benefit to grain markets, hitting a seven-week low on Friday.

Recently, lower U.S. dollar values have strengthened the purchasing power of foreign buyers. Coffee prices are also declining as Colombian coffee exports resume. In the corn market, bulls are regaining control as a new rally emerges. Traders are monitoring weather conditions in key Western European grain-growing areas, where an extreme heat wave has damaged crops.

The French corn crop is expected to drop by 35% to 9.0 million metric tons, its lowest level since at least 1980, according to France's farm ministry. Support for corn futures was seen last Friday as the USDA reported daily U.S. corn sales of 286,097 metric tons to Mexico, with 29,808 MT allocated to the 2026-27 marketing year and 256,289 MT to the 2027-28 marketing year.

Higher crude oil prices have also boosted demand for corn, with ethanol use increasing 4.5% in June compared to the same period last year. U.S. soybean sales to China in the 2026-27 marketing year have reached 238,000 MT, and there are whispers among traders that China might be liquidating stored soybeans to free up space for additional U.S. purchases.

The upcoming Pro Farmer annual corn and soybean crop tour in late August will be closely watched by traders, as positive U.S. corn and soybean crops are expected. Meanwhile, tensions between the U.S. and China over the war in Iran and trade issues are intensifying the significance of domestic soybean crush to maintain demand. President Trump and Chinese leader Xi Jinping are set to meet in Washington, D.C. in September, and their political rhetoric is causing soybean market bulls to be cautious.

Soybean complex futures were negatively impacted by short-term factors last week, but longer-term fundamentals remain favorable. Soybean crush in June reached 6.53 million tons, surpassing both previous month and year levels. Despite this surge in crush, meal and oil stocks continue to decline, indicating sustained demand. A potential El Nino event could also influence South America's growing season, leading to tighter global supplies if it materializes.

Winter wheat (ZWU26) and spring wheat (KEU26) futures markets experienced short covering and perceived bargain hunting following weather-related challenges in major wheat-growing regions worldwide. Ukraine's Agriculture Ministry has warned that exports could plummet from 64.4 million MT to 29.6 million MT in the 2026-27 marketing year due to port operations disruptions.

Favorable U.S. wheat harvest weather in the central Plains and Midwest has created commercial hedging pressure in wheat futures markets. Rainfall is expected to moderate fieldwork over the next week to 10 days, with no anticipated crop quality issues. Some areas of the northern Plains and Canadian Prairies are experiencing stress due to heat and drought, which may reduce yield potential.