Bulls Rise in the Grain Market After Being Left for Dead

Grain Futures Markets Show Signs of Recovery

Grain futures markets experienced a challenging start to the week, but as the trading days progressed, they saw a significant resurgence. This recovery was primarily driven by corn, with several key grain futures markets closing at technically bullish weekly highs on Friday. These include December corn (ZCZ25), November soybeans (ZSX25), December SRW wheat (ZWZ25), and December HRW wheat futures (KEZ25). These chart patterns indicate that these markets may have reached near-term price bottoms and could see increased buying activity from speculators this week.

Corn Market Likely to Lead Any Sustained Rally

Despite recent weather conditions in the Corn Belt being somewhat bearish for the corn market, there are signs that this trend might be shifting. Forecasters predict drier conditions and higher temperatures in the Midwest, particularly in the central and southern regions, over the next few weeks. Temperatures could reach up to 100 degrees on some days.

While most of the U.S. corn crop is progressing well through the critical pollination stage, there are reports of some issues in certain areas of the Corn Belt. The extent of these problems remains unclear, but the coming weeks will provide a clearer picture. The previous bearish sentiment in the corn market appears to have been tempered by the nearly optimal growing conditions observed over the past several weeks.

On the demand side, U.S. trade deals and export demand for U.S. corn are expected to play a significant role in price movements once there is a better understanding of the size of the U.S. corn crop. The corn market bulls were disappointed with last week's USDA weekly export sales data, which did not meet expectations following recent strong global demand for U.S. corn.

Soybean Crop Enters Critical Growth Phase

November soybean futures saw three consecutive sessions of price gains, with September soybean meal futures (ZMU25) also posting a technically bullish weekly high close on Friday. This follows a contract low earlier in the week. For any sustained price uptrend in the soybean complex, soybean meal futures will likely need to drive the advances, as this market has been the weakest in the complex over the past several weeks.

Weather conditions in the U.S. Midwest from now through August and into early September will be crucial for the soybean crop. As the Midwest experiences hotter temperatures next week, traders will be closely monitoring extended weather forecasts to determine if the drier and hotter conditions persist. Historically, there tends to be a weather-related market scare during the summer months in both corn and soybean futures markets. Since there were no significant rallies last year, a weather scare is overdue.

U.S. export demand for soybeans must improve in the coming weeks and months for any sustained price uptrends in the soybean complex. New U.S. trade deals are expected to play a major role in boosting global demand for U.S. soybeans and meal. Improved trade relations with China will be especially important for the soybean market.

Winter Wheat Futures Rebound from Key Support Levels

The soft red winter and hard red winter wheat futures markets saw their near-term downtrends temporarily halted as prices rebounded from strong technical support levels. The fact that these support levels held, along with the bullish weekly high closes on Friday, suggests that wheat futures may have formed near-term price bottoms. However, for the wheat market to continue its rebound and transition into an uptrend, it will need support from rallies in the corn and soybean markets.

Current weather conditions for the U.S. winter wheat crops are mostly favorable, including for the harvesting of the winter wheat crop. However, commercial hedge pressure from the ongoing winter wheat harvest may limit further price increases in wheat futures.

In the U.S. northwest, spring wheat is facing some drought conditions. Currently, 36% of the U.S. spring wheat producing region is experiencing some level of drought.

On the demand side for U.S. wheat, the U.S. and Indonesia have agreed to a trade deal. Indonesia is the world’s largest importer of wheat.

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