Grain and oilseed futures prices moved higher over the last week, driven by weather issues around the globe. Futures prices emerged from the long holiday weekend in a bullish mood, fueled by speculation on crop potential amid a major heat wave in Europe, a delayed monsoon in India, and localized issues in the United States. The near-term upward trajectory of the agricultural complex remains heavily dependent on Northern Hemisphere weather outcomes. Factoring in rallies of this magnitude with sales is a pricing strategy that should be considered.
Wheat Market Outlook
Hard Red Winter (HRW) wheat futures markets have closed higher every day the market has been open since the release of the USDA June Acreage and Stocks reports on June 30. Spot markets have rolled forward to the September contract for basis price discovery. The September contract gained more than 25 cents during the week to close at $6.45, sitting in the middle of the range established in March and early April. Basis remains at -45 to -55 cents across the state.
The potential for a price floor to be established is high, given ongoing production concerns for the European Union’s wheat crop. A definitive link between European weather problems and the U.S. wheat crop is increasingly visible in the Soft Red Winter (SRW) market. While domestic supplies do not point toward a U.S. shortfall, lower European production could translate into stronger export demand for U.S. wheat.
Wheat exports for the current marketing year are off to a decent start despite a poor winter wheat crop. Outstanding sales for all wheat stand at 161 million bushels, down from 217 million bushels at this point last year. Total wheat commitments through June 25 stand at 213 million bushels, representing 28 percent of the USDA forecast and tracking 2 percent below the five-year average at this early stage.
HRW total commitments for the 2026-27 marketing year sit at 52 million bushels, down from 100 million bushels at the same time last year. Mexico and Japan currently dominate HRW export destinations, taking 16 million and 14 million bushels, respectively. Currently, a forecast of 175 million bushels for HRW during the 2026-27 marketing year serves as the baseline for pace calculations.
The recent run-up in wheat prices has put U.S. port prices well above those of major global competitors. Despite weather issues in Europe, Gulf port prices for HRW sit more than a dollar per bushel above key reference prices in the EU and the Black Sea region. Reports from Europe present a mixed outlook, with some consulting services speculating about a major crop production downgrade. Early harvest data from France reveals decent quality but slightly disappointing yields in southern regions, while higher yields and good quality are still expected in the north and east. Dry and warm conditions forecast over the next two weeks will set the stage for a rapid harvest in Western Europe, further clarifying short-run market expectations.
In Canada, Statistics Canada reported that total wheat area dropped by 1.2 million acres from the March estimate down to 25.45 million acres. Spring wheat acreage fell by 0.7 million acres to 18 million. Despite decent precipitation across the Prairie provinces, crop conditions remain varied in Manitoba and Alberta due to heavy localized rains contrasted against continued dryness in southwestern Manitoba. While uncertainty over Northern Hemisphere crops continues, Black Sea supplies remain strong and highly competitive despite increasingly fractious wartime developments between Russia and Ukraine.
Soybean Market Outlook
Soybean futures prices moved sharply higher after the holiday weekend. September futures climbed over 50 cents per bushel during the week, closing at $11.81 on Monday, while the November contract settled at $11.92, reaching levels last seen in May. Cash prices in Oklahoma are trading around $11.19 to $11.34 with a -75 to -85 basis. New-crop harvest prices came in near $11.07, with a basis of 90 cents under the November contract.
Crop conditions were rated at 64 percent good-to-excellent, down one percent from last week and slightly below last year’s 66 percent. The crop is fully planted with minimal concerns at this early stage. Current conditions mirror data from the U.S. Drought Monitor, which indicates that 19 percent of the soybean crop is experiencing drought, primarily in the western Corn Belt and the Delta region. Total soybean acreage in drought dropped nine percent during June.
The USDA released domestic soybean crush data for May on July 1, showing a monthly total of 213.1 million bushels. Cumulative crush through May stands at 1,996 million bushels, tracking 151 million bushels ahead of last year’s pace. To reach the USDA’s full-year forecast of 2,650 million bushels, crush needs to average 218 million bushels per month over the remainder of the marketing year. The current monthly average is tracking ahead at 222 million bushels. Soybean crushers continue to enjoy strong margins, keeping the probability of hitting the USDA’s record forecast quite high.
Soybean meal demand remains a strong pillar supporting these high crush levels. Export sales data puts total commitments through June 25 at 18,762 thousand short tons, leaving the market on track to meet USDA projections. Meal futures moved $15 per short ton higher to close at $315. U.S. soybean meal remains highly competitive with major global suppliers.
Conversely, soybean oil (SBO) prices have fallen over 10 cents per pound since the start of June, closing at 67.5 cents. Market speculation regarding potential revisions to volume obligations under the Renewable Fuel Standard (RFS) should be heavily discounted at this stage. Prospects for expanded SBO usage in biomass-based diesel remain secure. The Energy Information Administration (EIA) released feedstock usage data for April, showing SBO utilization at 1,223 million pounds, below market expectations. Seven months into the SBO marketing year, biomass-based diesel usage stands at 7,338 million pounds. To hit the USDA’s full-year forecast of 14,550 million pounds, biofuel usage must average 1,442 million pounds per month. While meeting those high targets may be challenging, a recovery in both utilization and pricing is expected moving forward.
Soybean export sales through June 25 place total U.S. commitments at 1.509 billion bushels, down 323 million bushels compared to the same period last marketing year. New weekly sales improved slightly over the prior two weeks following a disappointing sales report. A recent price drop briefly allowed U.S. Gulf soybean prices to converge with port prices in Paranaguá, Brazil, though the recent upward price turn may have created a new differential. Exports exceeding current expectations remain a low-probability event, given aggressive competition from South America.
