Didion Weekly Market Recap

Favorable weather, lower export sales and option expiration weighed heavily on the markets last week, particularly the old crop. July futures ended the week 15 cents lower while September and December futures ended the week 3 and 2 cents lower respectively. The funds are short 194,143 corn contracts and long 48,071 soybean contracts.

Recent weather and favorable forecasts continue to build yield in the minds of the trade as rain remains stacked back-to-back over the next 10 days in the Midwest. The drought monitor continues to show improvements in drier areas as we officially enter summer. Warmer temperatures across the Midwest over the last 5 days should help improve crop conditions in Monday afternoon’s report.

Late last week the tensions in Iran had investors selling stocks and buying oil. Over the weekend the U.S. engaged in the conflict in the Middle East by dropping 14 GBU 30,000 lb. “bunker busters” from stealth B-2’s and also launched 75 precision guided Tomahawk missiles from Naval Assets in the region into Iran’s nuclear facilities at Isfahan, Natanz, and Fordow. The Fordow facility was the main target of concern given its installation deep within a mountainside making it not reachable for most military capabilities. The U.S. “bunker busters” were designed for such scenarios, and given the failed negotiations over Iran’s nuclear program, the Trump Administration made the decision to piggyback Israel’s substantial military campaign and complete the destruction of Iran’s nuclear capabilities.

Iran is OPEC’s third largest producer with roughly 3.4 million barrels of oil per day of capacity. That figure accounts for roughly 4-5% of global production. Of those 3.4 million barrels, approximately 1.7 million barrels is exported with China being a major importer of Iranian crude. Of equal concern is the Strait of Hormuz, a 21-mile-wide stretch of water between Iran and Oman that connects the Persian Gulf to the Gulf of Oman and eventually the Arabian Sea. The actual shipping lane for inbound and outbound ships is only 2-3 miles wide and yet over 20% of the global oil production passes through this lane every day. Iranian parliament has apparently voted to close the shipping lane in response to the U.S. strikes. This should send crude oil higher if maintained for any length of time.

Weekly crop conditions showed 72% of the corn crop in the Good/Excellent category, which is the same as a year ago and 5% above the five-year average. I look for conditions to improve again this week based on last week’s weather.  just below the five-year average and 3% behind last year.

Given the news around the bombings by the US over Iran, there is a lot of interest in how the markets will open Monday when US traders enter the markets.   Most analysts feel that the tensions and potential attacks have already been built into the markets, and we will see a minimal response. As of Sunday night, crude oil was up $2 while the grain markets remained flat. Historically the Crude oil and Corn markets trend the same direction so it will be interesting to see if crude can pull the markets higher in this environment. My expectations are for the markets to start the week of on the downside as crop growing conditions will trump any news out of Iran.

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Old crop corn found some support late in the week following favorable trade negotiations with China a bullish USDA report and a stronger soybean market while new crop prices continued lower. July corn ended the week 2 cents higher while September and December futures were 5 and 6 cents lower for the week. The funds went home short 167,143 corn contracts and long 52,071 soybean contracts.

Early last week there was a meeting between US and Chinese officials that appeared to be positive. A framework was put into place that will further trade and discussion between the two countries. The potential agreement that was discussed and now in the hands of President Trump and Chinese President Xi for decision had nothing to do with grain or Ag products in general. The biggest part of the agreement is that rare earth metals would be provided to the US by China and Chinese students would be able to attend US colleges. The US would collect 55% tariffs on Chinese goods while China would collect 10% tariffs on US goods. Despite no reference to Ag products, the discussions were positive and show potential to move forward.

On Thursday the USDA released their June WASDE which had very few changes from the May report. The corn 2025/26 balance sheet called for lower beginning and ending stocks. Beginning stocks were lowered by 50 million bushels based on an increase in old crop exports. No changes were made to production or new crop use categories. Ending stocks were lowered to 1.750 billion bushels. This was lower than the average pre-report estimate of 1.792 billion bushels but within the range of estimates. Global corn production increased while foreign ending stocks decreased.

USDA 2024/25 US Carryout (Billion Bushels)

USDA 2025/26 US Carryout (Billion Bushels)

USDA 2025/26 World Carryout (Million Tonnes)

Weekly crop conditions showed 71% of the corn crop in the Good/Excellent category which is just below the five-year average and 3% behind last year.

Despite a 2024/25 ending stocks number that is now below 9% stocks to use, the trade appears content with the perception that the 2025/26 US crop is going to refill the pipeline. The USDA’s June 30^th report will give us a lot more information and will most likely result in more market movement than this past week’s report. The June 30^th report will update planted acres as well as yield projections for the 2025 crop.  Will we break the recent trend and return to seasonal patterns or is this year the anomaly is TBD.

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The markets are were mixed this past week as spreads and demand for corn in the east worked on the worked new crop higher while weather remained friendly for those in the west. July futures ended the week a penny lower while September and December futures both closed 10 cents higher. The funds ended the week short 117,979 corn contracts and long 49,604 soybean contracts.

It appears as though the grain markets have found support in the low $4.30 range (CN25) and are content with this as a low for now. We tested this level three times last week before closing about 10 cents off that price. Until we see or know more about weather over the next 30 days and if the rains will continue, this support may hold. The Global Forecast System (GFS) model shows perfect weather for crop development with normal temps and plenty of rain.  Other forecasts show a pattern change starting around June 11th to warmer and drier.  It also looks like we’ll see some extreme weather when the heat starts to come in that could create pop up storms that bring rain.  I think we will need to see a dome form in these weather models before the markets can move higher.

Planting progress came in at 93% complete this past week, which was a small climb from the previous week’s 87% and right in line with the five-year average. The biggest delays are still in the east. With the crop insurance deadline past and coverage dropping daily, some are questioning if the final acres will get planted or go to prevent plant. I won’t bore you with the calculations on what revenue may be and what the insurance coverage levels may be in any given area, but based on my calculations, producers are most likely going to try to plant at least for another week or so. It is currently estimated that 1.9 million acres of corn are unplanted across the US and may end up as prevent plant. This is below last year’s 2.7 million acres and the 15-year average of 2.5 million acres.

Weekly crop conditions showed 69% of the corn crop in the Good/Excellent category which is 3% below the five-year average and 6% behind last year. On Thursday the USDA will give us their June production numbers which will be an update on demand and ending stocks at the end of May. I would not be surprised to see exports and ethanol demand increase and feed demand decrease in this report.

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Favorable US weather, weaker exports and month end weighed on the markets last week. A wet forecast led the way pulling the markets lower all week as the funds added to their short positions. July corn lost 15 cents last week and 31 cents during the month. September corn lost 15 cents last week but only ended 14 cents lower for the month. December futures were the winner, only losing 13 cents last week and 7 for the month. The funds end the month short 120,149 corn contracts and long 46,919 soybean contracts.

A US appeals court temporarily reinstated the Trump administration’s reciprocal tariffs Thursday while it reviews a lower court ruling blocking the new import levies. The latest action came a day after the US Court of International Trade ordered the administration to stop most of its new levies, including a 10% baseline import tariff, on nearly all US trading partners within 10 days. The ruling argued President Trump exceeded his authority by using a 1977 emergency powers law to impose tariffs. Trump has used the tariffs to lure manufacturing back to the US, potentially reduce federal deficits, and gain leverage to negotiate more favorable trade deals. The federal court decision is now stayed through June 9, when the appeals court will hear arguments in the case.

Weekly exports were on the lower end of estimates at 36.1 million bushels. This is well below the 10-week average of 50.2 million bushels. We are 153 million bushels (6%) ahead of the pace needed to hit the USDA’s estimates for the year. I look for exports to begin to tail off over the next few weeks as the South American crop comes to market. Brazil corn is currently $.10/bushel cheaper than US corn for July forward.

The first quarter of the year all we were hearing from weather forecasters was “drought”! We are a long way from being able to say it won’t happen, but the recent weather we are experiencing is far from drought. I would expect to see a slight increase in crop ratings for corn and soybeans tomorrow. In my opinion crop ratings this time of the year are useless as it’s too early to meaningfully rate the crop. As one farmer told me, this time of year it’s either dead or alive!

Last week’s planting progress showed 87% of the country complete compared to 85% on average. Ohio remains the biggest concern at only 54% complete. Given the geographic location of the acres that are not planted, I look for producers in OH to plant well past their insurance deadline of June 5^th if necessary.

Historically June is a bullish month for the grain markets. In the last 20 years, December corn futures have posted their yearly highs in the month of June. The previous contract high for December futures (CZ25) was in February when we reached $4.7975. Since 1973 December futures have always returned to their February price average. This year’s CZ average in February was $4.70. History also tells us that once we hit July, there is a 75% chance that December futures will make new contract lows before expiration.

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Technical price action helped the corn market bounce higher last week. July and September closed 16 cents higher while December futures closed 15 cents higher last week.  The funds ended the week short 115,483 corn contracts and long 46,330 soybean contracts.

The US Good/Excellent ratings will be released Tuesday afternoon due to the holiday week, and they are expected to be better than average, like the planting pace this year. Though initial Good/Excellent ratings have zero correlation to final yields, a good rating only has to be maintained instead of rescued by rains. The USDA’s old yield models place considerable weight on timely planting, which the US has exceeded this year. The next hurdle will be rain in June, followed by July temperatures and moisture.

The weather forecast has heavy rains for the South that extends out in the models for the next 14 days. The Midwest appears to warm up a bit with more chances for rain in the 7–10-day timeframe. While this forecast is on the bearish side but could quickly become an issue if it stays wet.

Last week’s planting progress made another push towards completion with 78% of the crop reported in the ground as of 5/18/25. This is ahead of last year by 11% and the 5-year average by 5%. The Eastern corn belt remains behind average but should have made up some ground last week and early this week.

Coming off a holiday weekend and on the brink of a new month we could see some price action to the higher side this week. Historically June is a bullish month for the grain markets. In the last 20 years, December corn futures have posted their yearly highs in the month of June. The previous contract high for December futures (CZ25) was in February when we reached $4.7975. Once we hit July, there is a 75% chance that December futures will make new contract lows before expiration. Will history repeat itself and give the producer one last chance to market corn at profitable levels or will this year’s large acreage keep history from repeating itself is TBD.

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