Chicago wheat futures started the day under slight pressure as weak export sales and favorable weather in key global growing regions limited upside potential. The latest USDA export sales report showed weekly sales at just 269,008 metric tons, marking the lowest volume in five weeks. French wheat conditions declined slightly, with FranceAgriMer reporting that 73% of the crop was rated good or excellent, down from 74% the previous week. Russia's wheat exports continued at a steady pace of around 550,000 tons per week, but lower stock levels and concerns over Black Sea tensions kept traders cautious.
Corn prices showed resilience in early trading, supported by firm ethanol demand and limited farmer selling. However, weaker-than-expected U.S. export sales weighed on the market, with weekly sales at 856,912 metric tons, below trade expectations. Argentina’s corn crop outlook remained uncertain as recent heavy rains provided some relief to drought-affected regions, but overall crop progress remained behind schedule. The Buenos Aires Grain Exchange reported that 28% of the crop was rated good to excellent, a slight improvement from the previous week. Meanwhile, expectations for higher corn acreage in the U.S. kept long-term price pressure intact.
Soybean prices opened with volatility as traders weighed declining U.S. export commitments against signs of improving South American production. USDA data showed total U.S. soybean export commitments at 42.7 million metric tons, covering 86% of the USDA’s annual forecast. This pace was in line with the historical average but below last year’s levels. Brazil’s harvest progressed steadily despite intermittent rainfall delays, while Argentina’s crop condition improved slightly, with 24% rated excellent, up from 22% last week. Meanwhile, concerns over potential Chinese demand weakness added pressure to the market.
The global grain market continues to navigate uncertainty, with shifting trade policies and weather events shaping price action. The U.S. agricultural trade deficit is expected to reach a record $49 billion this year, with China’s lower import demand playing a key role in the imbalance. The ongoing tariff debate in Washington could further disrupt trade flows, particularly with Mexico and Canada, two of the largest buyers of U.S. corn.
In South America, weather conditions remain highly variable. While Brazil has seen some relief from excessive dryness in key soybean-growing areas, Argentina has been dealing with heavy rainfall, which could either stabilize yields or lead to excess moisture issues depending on the coming weeks. Forecasts suggest drier weather ahead in Argentina, which could aid harvest progress but also stress late-planted crops.
In Europe, wheat markets are reacting to a mix of favorable weather and declining export competitiveness. The European Commission slightly reduced its forecast for soft wheat exports from the EU, reflecting stiff competition from Russian and Ukrainian supplies. Russian wheat remains the cheapest on the global market, though logistical issues persist due to war-related disruptions. Ukrainian corn exports remain steady at around 550,000 tons per week, even as infrastructure constraints limit additional shipments.
The energy market continues to influence agricultural prices, with crude oil hovering around $70 per barrel after a sharp decline last week. The dip in energy prices has raised concerns about weaker biofuel demand, particularly for corn-based ethanol and soybean oil used in biodiesel production. However, the Biden administration’s commitment to maintaining ethanol blending requirements has provided some support to corn prices.
Chinese commodity demand remains a wildcard, with reports suggesting a slowdown in agricultural imports as Beijing prioritizes domestic production and food security measures. China’s soybean imports in January were down 9% year-over-year, adding pressure to U.S. exporters already facing stiff competition from Brazil. At the same time, Chinese wheat imports are expected to fall to 8 million metric tons this season, a 32% decline from last year, as government policies focus on boosting domestic grain reserves.
In the broader macroeconomic picture, U.S. inflation concerns and Federal Reserve interest rate policies continue to impact commodity markets. Traders remain cautious as higher borrowing costs could slow economic growth and reduce demand for raw materials. Stock markets in the U.S. saw declines late last week amid speculation that interest rates may remain elevated for an extended period.
Overall, grain markets remain highly sensitive to export trends, weather patterns, and macroeconomic conditions. Traders will continue to monitor South American harvest progress, U.S. planting expectations, and global trade developments for further direction.