AM Market Report – August 7, 2025

GOOD MORNING…HERE IS YOUR MORNING MARKET NEWS

OVERNIGHT GRAIN TRADE

ICE canola futures are trading a modestly higher, up between $1 and $2/tonne to start this morning. But gains remain suspect amid slightly weaker US soyoil. Chicago soybeans are up 4 cents/bu though, which should help canola. Traders in the soybean complex seem to want to use talk of a US-China trade truce as support, but without confirmation, that sentiment seems debatable.

Chicago corn futures are up 3 to 4 cents this morning on bargain hunting, kicking up slightly from the contract lows posted for a third straight session yesterday as ample global supply hung over grain markets. Traders have recently been factoring into prices a monster 2025 US corn crop to be forecast by USDA in its monthly supply/demand report due out Tuesday (Aug 12). Some very big average US corn yield figures are being bandied about in the trade. Hopefully this is setting up the corn market for a “sell the rumor, buy the fact” scenario regarding USDA’s report next week.

US wheat markets are showing some rare bounce this morning…winter wheats up 7 to 6 cents, while spring wheat futures are up 2 to 5 cents on the nearby contracts. But all US wheat are just trying to bounce off contract lows.

Massive global supplies of wheat from recent harvests in the US, Europe and the Black Sea region are flooding the market, while strong export competition and a lack of supply shortfalls have pushed prices to lows. Tumbling corn futures have also exerted spillover pressure on the wheat market as producers turn to lower priced corn to feed poultry and livestock instead of wheat.

In geo-political news… US President Donald Trump and Russian President Vladimir Putin could meet in person as soon as next week, the White House says. Russia and the US have agreed on a venue for the meeting. The announcement came a day after Putin met with Trump’s envoy Steve Witkoff in the Kremlin for nearly three hours of talks as the US pushes for an end to Russia’s war in Ukraine. Trump has threatened to hit purchasers of Russian oil with secondary tariffs unless Putin agrees to a truce with Ukraine.

In Other News

– Trump tariffs kick in today… President Trump’s new tariffs have now taken hold, with higher rates for almost all US trading partners. The tariffs will push the average US tariff rate to 15.2%, according to Bloomberg Economics estimates, with some countries facing duties as high as 50%. Trump said the tariffs will lower US trade deficits with other countries. Critics say the tariffs could cause inflation to rise and cause shortages of some products on store shelves.

– Carney hints at dropping some US tariffs if it will help Canadian industries hit by trade war… Prime Minister Mark Carney showed no signs of retaliating against US President Donald Trump’s increased tariffs…and even suggested he’s open to removing existing tariffs if it would help Canadian industries.

Carney faced questions this week about Canada’s next steps after the two countries failed to reach a trade deal by the Aug. 1 deadline, resulting in a 35% import tax on some Canadian goods. The rate applies to goods not covered by the Canada-US-Mexico Agreement, which governs trade between the three countries.

The Trump administration absurdly said Canada’s higher rate was a response to fentanyl trafficking and its decision earlier this year to hit back with counter-tariffs. In March, Canada imposed 25% retaliatory tariffs on a list of US products totalling $29.8 billion.

“We’ve always said we will apply tariffs where they had the maximum impact on the United States and minimum impact in Canada,” said Carney when asked why Canada hasn’t fired back more against the new Trump tariff rate. “So we don’t automatically adjust. We look at what we can do for our industry that’s most effective. In some cases that will be to remove tariffs.”

The Prime Minister said his government will “look at opportunities to do so because in the end, we’re looking at having the best impact in Canada.”

His next steps will be closely watched as he juggles expectations from Canadians and a chaotic US President. Carney has the unenviable task of Managing a president who has a history of hitting Canada hard despite the two countries’ long relationship and a trade agreement updated during Trump’s first term.

In related news… Ontario Doug Ford says he expects Trump to target CUSMA and says Ottawa should prepare for early negotiations

– US President Donald Trump imposed an additional 25% tariff on Indian goods yesterday citing India’s ongoing import of Russian oil. The new Indian tariffs have soybean traders wondering if like tariff increase will be applied to China before the end of the week. China is Russia’s largest oil importer. India now faces a collective tariff rate of 50%. The US tariff rate on China is 55%. Russian President Putin and U.S. special envoy witkoff hill talks today is U.S. President Trump’s deadline for sanctions looms on Friday. Bloomberg is reporting that Russia is offering a pause in its air assault of Ukraine. The political stakes are high and world financial markets will be paying close attention to the actions of U.S. President trump later this week. If the US were to raise tariffs on China, he would slow future negotiations.

– Imperial renewable diesel facility now operational… Imperial Oil Ltd. has officially completed construction and commenced production at its new renewable diesel facility at the Strathcona refinery near Edmonton…just in time for the start of the 2025-26 canola marketing year. At full capacity, the facility will require about 2.5 MMT of canola seed annually…nearly half of Alberta’s total production…to produce 1 MMT of canola oil for use as feedstock. The plant is poised to become the country’s largest renewable diesel production facility, with a full capacity of up to 20,000 barrels/day.

– China soybean imports hit record July high… China’s soybean imports rose to the highest ever for the month of July, a Reuters calculation showed, driven by strong Brazilian exports and China’s advanced preparation amid ongoing China-US trade tensions that have raised supply concerns. The world’s largest soybean consumer brought in 11.67 MMT in July, data from the General Administration of Customs showed, up 18.5% from 9.85 MMT a year earlier, and above analysts’ expectations of 10.48 MMT.

Brazil’s record soybean production has provided a strong supply foundation. Due to its bumper harvest, the peak supply period for Brazilian soybeans is expected to be longer than in previous years, remaining at a high level leading up to the fourth quarter. Shipments for the first seven months of 2025 totaled 61.04 MMT, up 4.6% year-on-year, the Customs data showed.

China has yet to book any US soybean cargoes for the fourth quarter as buyers await the outcome of China-US trade negotiations.

– Global diesel fuel crunch… Crude oil traders are trying to ease a global diesel fuel crunch, but the window to replenish stockpiles is narrowing due to upcoming hurricanes and refinery maintenance, according to a Bloomberg report. Oil traders say it’s going to be a tight race to refill storage tanks, which have only recently started rising from dramatically low levels, with most expecting no major easing of prices.

“Higher diesel prices can have wide-reaching ramifications for the global economy, including rippling through inflation readings and denting consumer and business confidence, according to warnings from Goldman Sachs Group Inc. and energy giant TotalEnergies SE,” said the Bloomberg report.

North American farmers will need large volumes of diesel to power their equipment during harvesting season in the fall, and truck drivers are already paying the most at the pump in about a year, said the report.

Outside Markets

The Dow Jones Industrial Average gained 81.38 points on Wednesday to settle at 44,193.12, while the S&P 500 Index rose 45.87 points to 6,345.06. Early Thursday, September Dow Jones futures are up 240 points.

Global markets climbed as tech-led gains on Wall Street, upbeat earnings and growing expectations for US interest rate cuts boosted sentiment. Wall Street futures were in positive territory after US markets rose yesterday, led by Nasdaq’s more than 1% gain as Apple shares climbed.

TSX futures followed sentiment higher after Shopify shares helped boost Canada’s main index to another record close yesterday.

Markets largely shook off U.S. President Donald Trump’s latest tariff moves, including an additional 25% tariff on India over purchases of Russian oil. Trump’s threatened 100% duty on computer chips was also taken in stride.

The September US Dollar Index is up 0.017 at 98.0. The Canadian dollar strengthened against its US counterpart…currently quoted at 72.95 US cents.

Sept crude oil future are up a very modest $0.01 at US $64.36/barrel. Oil is steady…finding support from a higher crude draw in the US, higher Saudi prices for Asia and solid Chinese crude imports in July. But gains are limited on news Russian President Vladimir Putin will meet Trump in the coming days, raising expectations for a diplomatic end to the war in Ukraine.

Grain Markets

Chicago soybean futures are trending 4 cents/bu higher this morning, which is close to the overnight highs. Bean futures closed with losses of 6 to 7 cents across the front months on Wednesday. Soymeal futures are rising $2/ton this morning after losing $2 to $4/ton yesterday. Soyoil futures are a slight 10 to 18 points weaker this morning.

The trade is expecting a big US soy crop and there are a lot of questions about export demand. Near-term US crop development conditions remain largely favorable, but there is still the chance for a turn to hotter, drier conditions in some areas later this month, potentially trimming the top end yield.

USDA this morning reported old crop US soybean export sales of 467,800 tonnes for the week ended July 31, which beat the trade of trade expectations of between 100,000 and 300,000 tonnes. US new crop bean sales were recorded for this latest week at 545,000 tonnes…top end of the trade range (200,000 to 500,000 tonnes. The lack of Chinese buying interest from the US for new crop remains a key trade concern as trade tensions remain ongoing.

Brazil’s trade ministry pegged its July soybean export total at 12.257 MMT, which was a record for the month, 8.95% above last year but a drop of 8.67% from June. Brazil’s record crop is extending their shipping season.

Chicago corn futures are rebounding 3 to 4 cents higher this morning. Bulls were battling back from Wednesday’s session, as contracts closed out with fractional to almost 2 cent losses in most nearbys. Dec corn is trading 4.75 cents higher at $4.06/bu…staying above the psychologically important line at $4.00. But it’s still a very weak chart.

USDA this morning reported old crop US corn export sales of 170,400 tonnes for the week ended July 31, which came in below the trade range of between 200,000 and 400,000 tonnes. US new crop corn sales were recorded for this latest week at a very strong 3.163 MMT, beating trade expectations of 1.3 to 2.5 MMT.

The weekly EIA data showed an average total of 1.081 million barrels per day of US ethanol was produced during the week ending on August 1, a drop of 15,000 bpd from the previous week. With the drop in output, stocks saw a draw of 960,000 barrels to 23.756 million barrels.

Traders, having digested big US corn yield estimates, favorable crop weather, and trade tariff news, may use pre-report estimates for USDA’s August 12 supply/demand reports for price direction. The corn market is technically oversold from a chart perspective, and overall demand continues to be bullish, but that big supply expectation continues to limit price rebound potential.

US wheat markets are finally seeing some bounce this morning…winter wheats up 7 to 8 cents, while spring wheat futures are 2 to 5 cents higher…but only just coming up off contract lows and steep sell-off over the past month. Wheat price charts remain ugly.

USDA this morning reported US wheat export sales of 737,800 tonnes for the week ended July 31, above the highest of trade expectations which ranged between 350,000 and 600,000 tonnes.

The weekly International Grains Council (IGC) report on Wednesday showed improved yield prospects in Russia as harvest moves to the heart of the growing area. Still, there’s potential for quality issues, namely low test weights. Private group SovEcon lowered its production forecast to 83.3 MMT, compared with the USDA July estimate of 83.5 MMT.

CANADIAN GRAIN MARKET

ICE canola futures fell for the fifth straight day on Wednesday, amid some Prairie rainfall and weakness in other vegoils.

Scattered showers and thunderstorms were reported in parts of Saskatchewan, Manitoba, and eastern Alberta Tuesday and Wednesday. More rain is forecast for the northeastern production regions over the next week or so.

Chicago soyoil did close higher yesterday, but European rapeseed and palm oil were both lower. Gains in the Canadian dollar were also bearish for canola.

November and January canola each closed $2.50 lower on Wednesday at $669.70 and $681.70/tonne, respectively.

For today… canola futures are edging up between $1 and $2/tonne this morning, which nicely up from the lows posted overnight, the market feels fragile at 2-month lows. Nov canola is up $2.10 this morning at $671.80/tonne, as it tries to hold the line at its 100-day moving average ($671). A fall below this line opens up a move down to the $650/t around the 200-day average.

Markets generally…tough to be enthusiastic about any crop market at the present time. I see little financial incentive to be an active grain marketer for the time being. Fact is…we need a credible crop production threat…preferably south of the border to see markets rally in any sustained fashion near-term. But that’s not the case today…trade sentiment is built on big crops coming all around. All markets…canola, corn, soy, wheat are in many cases down at their lows on thoughts of ample supply coming. But in my opinion, we are into oversold conditions now, so I prefer to stay out of it as a cash seller…unless some extraordinary one-off price/basis special is presented.

Canola…fundamentals actually are generally positive…strong ongoing demand amid tightening supply. Even with a normal yielding crop this year, we won’t have enough for all export markets in 2025-26. But the threat of China/US tariffs are still hanging out there, which would be bad news…but so far so good on that front for canola.

Soybeans…big US crop after a record large Brazil crop. Plus, China is not yet buying US new crop for fall delivery…and that has the trade worried. Trump’s radical tariff agenda is sacrificing US soy business to its largest export market. Hopefully demand for the US biofuel sector can displace it as demand route.

Wheat…world has plenty of it right now…especially with the northern hemisphere winter wheat harvest well under way…so prices have sagged considerably. There is a seasonal tendency for spring wheat to rebound in some fashion in the late Sept into Oct period. That would be my next target timeframe to sell an increment.

China continues to be the lead destination for Canadian ag exports generally, with total exports this crop year hitting 9.23 MMT at the end of June. This was fifth largest crop year exports to China in the past 10 years. Canola exports to China in 2024-25 were slightly higher than last year at 4.57 MMT. China remains a key component of Canadian demand.