Grain Spreads: Weather Improving in June
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Commentary
Grain futures were stronger in the overnight session last night, and while the day trade started on the positive side as well, gains were limited early on and then suffered minor losses by days end. The big story in the market today was the approval of a trade-deal framework between the US and China. Optimism regarding the China trade talks faded as any potential bullish inputs for grains were not announced. The talks mostly focused on rare earths and semiconductor chips rather than Ag purchases. A tariff of 55% on Chinese goods remains in place along with a 10% tariff on US goods by China. Tomorrow morning's USDA June supply and demand report is not expected to be a major market mover as typically USDA does not change yields significantly this early in the season unless there is a major weather event ongoing, which is not the case this year. The average trade guess for tomorrow's USDA WASDE crop report puts 2025-26 marketing year soybean ending stocks at 298 million bushels, up slightly from 295 million bushels in May. Weather crop scouts last week showed amid multiple forecasts that the second half of June would be warmer and dryer in much of the Midwest with a heavy focus of hot/dry in the Western grain belt. Now those forecasts accompany the warmth with better rain chances for a majority of the grain belt, just as planting finishes for corn and beans. From a production standpoint it’s not bullish for new crop prices should the second half of June forecasts verify the moisture. Always a big “if” in my opinion. Outside markets see energy prices surging on potential Mid-East saber rattling with Iran. The US has asked non-essential personnel to evacuate embassies immediately given the time sensitivity of threats in the region. Crude prices rallied $3.00 today and if they rally significantly further, could prod funds out of corn and wheat to some degree in my opinion. Watch this story as funds carry large corn, meal, and wheat positions.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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