Market Analysis

By Karl Setzer

 

Census export data for the month of July favored corn and soybeans over wheat. July corn exports totaled a monthly record 294.4 million bu. This was a 22.6 percent increase from last July, although it was 5.65 percent less than June’s exports. July ethanol exports were also a record at 199.5 million gallons.

Soybean exports in July totaled 69.5 mbu, a four-year high for the month and a 6.29 percent increase from July 2025. Soybean exports receded 1.34 percent from June as Chinese imports slowed. July soy meal exports were a record at 1.59 million tons, a 19.7 percent increase from last year.

Wheat exports were a four-year low in July at 60.55 mbu due to elevated competition in the world market. July wheat exports were down 27.5 percent from a year ago.

July beef exports reflected the tight U.S. beef supply and high prices with loadings falling to 198.95 million pounds. This was the lowest July export volume since 2009. July pork exports were also pressured, with loadings totaling 528.7 million pounds. This was a 2.1 percent decline from June and the lowest July total in three years.

One development that is impacting not just U.S. but global commodity trade is a spreading out of risk. Importers are buying less from traditional sources but are buying from more sources. By doing so not only is price risk being spread out but so are production risks. Currency values, logistics and geopolitics are also impacting global trade more than ever. This has caused exporters such as the United States to see lower sales to captive destinations, but more from new buyers.

We are also seeing some traditional commodity importers cut back on total needs. One of the main ones is China, where culling to the country’s livestock herd is trimming feed demand. Sow feed production in China is down 5.8 percent from last year and piglet feed demand is down 10 percent, according to Sitonia Consulting. Livestock production has also become more efficient in China, mainly on hogs. Lower finish weights have also lowered pork production while a shift in consumer appetite has lowered pork demand.

Volatility has been increasing in futures trade and now we are seeing the same in cash markets. Country movement has increased following the recent spike in futures and this has weighed on cash values, especially in areas where harvest is quickly approaching. More buyers report having enough old crop coverage until harvest begins, which appears to be coming sooner than normal. This has applied pressure to basis in some regions of the Corn Belt, especially in regions where crops look better. Farmers in regions of high crop stress remain tight fisted with stocks and basis values are reflecting light sales.

Soybean crush for the month of July was a record, which was not surprising, but the total came in above trade estimates which was supportive. According to Census data, U.S. processors crushed 222 million bu of soybeans in July compared to 218 mbu in June and 205 mbu in July 2025. Soy meal stocks at the end of July totaled 366,931 tons compared to 433,277 tons in June. Soy oil stocks were above trade estimates at 1.96 billion pounds.

Ethanol grind on corn was also up in July. A reported 474.7 mbu of corn was ground for ethanol in July, a 2 percent increase from June and 4 percent more than July 2025. Dried distiller inventory at the end of July was 1.85 million tons, up 2 percent from Jule and 1 percent less than July 2025.

Geopolitics remain a key factor in today’s trade, and this is creating headline driven market activity. The main one is the escalation in fighting between the U.S. and Iran and the impact it is having on global energy values. Retail gasoline costs continue to rise in the U.S. and are contributing to elevated inflation and the likelihood of seeing interest rate hikes later this year.

Russia and Ukraine continue to trade attacks as well, with more damage being reported in Odessa. Ukraine is reporting August grain exports of 981,000 metric tons versus 2.35 million mt in August 2025. Russia has now suspended export taxes to try to draw in business, but this is not offering much incentive given attacks on vessels in the region.

There is a well-defined difference in opinion forming on the current market structure. A look at the charts shows corn, soybeans and wheat are all in overbought territory from the technical side. Fundamentally, these contracts are not overvalued though, and in fact, many outlooks are calling for higher futures as crops sizes dwindle and demand builds. Stocks to use ratios on these contracts are tightening with corn and soybeans already in rationing positions.

Cash markets remain strong as well, causing further separation between these two indicators. The fact we remain in a headline-driven market running high on emotions is also tempering reaction to technical indicators.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and is believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor is it intended to be relied upon for specific trading in commodities herein named.