AM Market Report – July 2, 2025 | The Western Producer

WORDS OF WISDOM

1. When you find someone doing small things well, put him or her in charge of bigger things.
2. Read more books.
3. Watch less TV.
4. Remember that a good price is not necessarily what an object is marked, but what it is worth to you.
5. When opportunity knocks, invite it to stay for dinner.

GOOD MORNING…HERE IS YOUR MORNING MARKET NEWS

OVERNIGHT GRAIN TRADE

Coming out of Tuesday’s Canada Day holiday break, ICE canola futures are running impressively higher…up $12 to $15/tonne this morning. That’s building on Monday’s $15 to $16/tonne surge higher coming after weekend news that Canada-US trade negotiations were once again restarted.

Talks were paused briefly last Friday following US President Donald Trump’s latest tantrum of a scheduled start Monday (June 30) to a new Canadian government digital services tax (DST) on big tech companies doing business in Canada. Canola plunged Friday on the Trump threats, but recovered this week after Prime Minister Mark Carney on Sunday scrapped the DST. Actually, I’m OK with that…would have been a tax inevitably added to consumer fees for services like Netflix, Amazon, etc.

Meanwhile Chicago soybean futures are rising this morning…up 4 to 9 cents/bu, after holding close to unchanged on Tuesday. Soyoil though is rallying higher again this morning after posting 100 point gains on Tuesday. That’s also supporting our canola market.

Chicago corn futures are seeing some light follow-through selling this morning…down around 3 cents/bu. The corn market lost 3 cents on Tuesday as well on more technical selling pressure as the charts remain firmly bearish. Also, weather in the US Corn Belt remains price-bearish and conducive for good corn yields this fall.

US wheat markets are mixed…winter wheats are losing 2 to 3 cents this morning, while spring wheat futures are mixed, though leaning weaker. The wheats ended higher on Tuesday. Prices were supported by reports that grain exports out of Ukraine are well below a year ago. Exports are likely to continue to be hindered given Russia’s control over portions of Ukrainian production areas.

No big fireworks from USDA reports

Monday’s two big reports on Monday (June 30) didn’t offer much market fireworks. US corn acres were slightly lower than expected and US soybean acres weren’t too far off the USDA’s March estimate. US quarterly stocks data was near the average report expectations. Nothing really new fundamentally for the market to sink its teeth into and create a big, dramatic price moves higher or lower.

So, it’s back to watching North American weather, with a particular near-term focus on how temps/precip affect US corn as it hits pollination. The US Independence Day holiday is Friday (July 4). When US grain traders get back from that upcoming 3-day holiday weekend…if the US Midwest weather forecast is mild and wet through corn pollination, the market tends to sell-off. If the weather forecast is hot and dry, traders tend to want to buy and run up prices to ration demand.

On Tuesday, USDA reported that the US corn crop was 73% good to excellent as of Sunday, up three percentage points from last week, and the best crop condition rating since 2018 at this point in the growing season. The poor to very poor rating declined one point to 5%.

USDA rated the US soybean crop at 66% good to excellent, unchanged from last week, though there was a one-point increase in the top category. Analysts expected a one-point uptick in the good/excellent rating. The poor to very poor rating held at 7%.

USDA rated the US spring wheat crop as 53% good to excellent, down one point from last week. Analysts expected no change. The poor to very poor rating dropped one point to 14%.

The US winter wheat harvest nearly doubled to 37% as of Sunday, though that remained five points behind the five-year average.

In Other News

– Trade partners scramble as chaotic US tariff deadline nears… With the July 9 extension deadline for US tariffs rapidly approaching, major American trading partners are facing heightened uncertainty over economic prospects. Not surprising, despite months of negotiations, dozens of country-specific trade deals with the US remain unresolved, including high-stakes talks with the “key 18” nations highlighted by US Treasury Secretary Scott Bessent.

Negotiations with major economies…including China, Japan, India and the European Union…are ongoing, each complicated by unique demands and domestic constraints. Trump and his officials have repeatedly warned that failure to reach deals by July 9 could trigger the snapback of tariffs to the steep levels set on April 2…some reaching as high as 50%. Such a scenario risks significant economic and market disruption. Bessent has suggested some flexibility on the deadline, but only Trump can grant extensions.

Even if agreements are reached, a baseline 10% tariff is expected to persist for most imports, with only substantial concessions potentially lowering rates further for select nations. Economists warn that if the bulk of tariffs are re-imposed, the risk of a major supply shock…with attendant inflation, job losses, and strained global alliances…remains significant.

Meanwhile, Canada’s trade negotiations seem back on track (we think) following Sunday’s cancellation of a new digital services tax on large foreign tech companies doing business in Canada. By quashing it, Canadian negotiators paid a kind of toll on the road to a trade deal with the US…in that it kept talks rolling. But the move could back Canada against the wall on the far thornier issue of supply management.

– Russian wheat export prices down last week… Russian wheat export prices fell last week, reflecting global market trends and improved harvest forecasts, and analysts expect the downward trend to continue. The price for new crop Russian wheat with 12.5% protein content for free-on-board (FOB) delivery by July-end was US $224/tonne at the end of last week, down $3 from the previous week’s prices, said the IKAR consultancy. Wheat for delivery in August is priced at $222/tonne FOB.

“There was a short-term surge in the markets related to the Middle East conflict. Now this factor has been played out and everything is returning to the usual rails, to the previous downtrend,” said IKAR. The SovEcon consultancy estimated new crop offers at $225-$228/t, compared with $226–$230 the week before.

– Ukraine’s grain exports plunge more than 20% in 2024-25… Ukraine exported 40.6 MMT of grain in 2024-25, down 10.5 MMT (20.5%) from the previous year. Grain exports included 21.96 MMT of corn (down 25.6%), 15.72 MMT of wheat (down 15.0%) and 2.32 MMT of barley (down 8.3%).

– US soybean crush rises less than expected in May… US processors crushed 203.7 million bu of soybeans in May, up 1.3 million bu (0.6%) from April and 12.1 million bu (6.3%) more than last year. Analysts expected soybean crush to total 204.9 million bu.

Through the first nine months of 2024-25, the US soybean crush totaled 1.844 billion bu, up 5.9% from the same period last year. To hit USDA’s target of 2.420 billion bu, crush must run 5.8% above last year’s pace over the final three months of the marketing year.

– US corn-for-ethanol use stronger than expected in May… Corn-for-ethanol use in the US totaled 449.4 million bu in May, up 26.2 million bu (6.2%) from April, but 10.6 million bu (2.3%) less than last year. Analysts expected corn-for-ethanol use of 447.4 million bu.

Through the first nine months of 2024-25, US corn-for-ethanol use totaled 4.080 billion bu, up 0.3% from the same period last year. To reach USDA’s forecast of 5.500 billion bu, ethanol use must run 0.7% above year-ago for the final three months of the marketing year.

– Argentina’s agricultural exports break record ahead of tax hike…Argentina’s agricultural exports broke fresh records in June, data shows, as farmers in the key grains supplying nation ramped up shipments ahead of a tax hike that took effect on July 1. Argentina exported a record 64.5 MMT of grains and their derivatives in the first six months of this year, according to data from the Rosario grains exchange. Exports for the month of June also broke records for the largest amount ever shipped in a single month at 23.53 MMT…36% of the total exported in the first half of 2025.

– StoneX raises forecasts for Brazil corn, soybean crops… Brazil’s total corn output in the 2024-2025 season is expected to hit 136.1 MMT, consultancy StoneX said, raising its outlook from a previous forecast of 134 MMT. Within that estimate, StoneX also hiked its forecast for the second corn crop to 108.2 MMT, from 106.1 MMT in the last published forecast.

StoneX also raised its forecast for Brazil’s soybean crop to 168.75 MMT, up slightly from a previous estimate of 168.25 MMT.

– US pulse area up in 2025… US farmers expect to grow more pulses in 2025, with areas planted to peas, lentils, chickpeas and edible beans all up on the year in the latest acreage data from the USDA released June 30.

Edible peas were forecast to see the largest increase on the year, with total area up 9.6% from 2024 at 1.070 million acres. That compares with the March forecast of 895,000 acres.

Lentil area was estimated at 1.010 million acres, which was down by 90,000 from the March estimate but still up 7.9% on the year.

An estimated 540,000 acres of chickpeas were planted in the US in 2025, which compares with 502,000 the previous year.

Edible bean area, at 1.600 million acres, compares with the March forecast of 1.470 million acres and the 1.533 million acres of edible beans planted in 2024.

Stocks

US quarterly stocks of the major pulses were also up on the year, with 167,000 tonnes of peas on hand as of June 1 compared to 130,600 tonnes the same time the previous year. Lentil stocks were roughly doubled from 2024, at 81,800 tonnes. Chickpeas were up 36.1% at 97,200 tonnes. Edible bean stocks data was not included in the latest report.

Outside Markets

The Dow Jones Industrial Average rallied 400.17 points higher on Tuesday to settle at 44,494.94, but the S&P 500 Index ended down 6.94 points at 6,198.01. Early Wednesday, September Dow Jones futures are down 29 points.

US stock index futures are slightly weaker to start this morning as investors considered the prospect of US interest rate cuts and the scramble for trade deals ahead of President Donald Trump’s July 9 tariffs deadline. Canada’s TSX futures are higher this morning after our main stock market was closed yesterday for the Canada Day holiday.

Trump said he was not considering extending the deadline for countries to negotiate trade deals with the United States…or so he days today…and cast doubts again that an agreement could be reached with Japan, although he expects a deal with India.

“You’ve seen it with other trade negotiations that they take years if you want to do them properly,” said Matthias Scheiber, senior portfolio manager and the head of the multi-asset solutions team at Allspring Global Investments. “It’s not something you negotiate within a week. I think that’s also what the US is realizing now. If the tariffs get ramped up again and the situation sours, short-term, we can definitely see some volatility.”

The September US Dollar Index is up 0.203 at 96.670. The Canadian dollar was little changed against its US counterpart…currently quoted at 73.51 US cents.

August crude oil futures are up $0.65 at US $66.10/barrel. Oil futures edged up as Iran suspended co-operation with the UN nuclear watchdog and markets weighed expectations of more oil supply coming out from major producers next month

“The market is pricing in some geopolitical risk premium from Iran’s move on the IAEA,” said Giovanni Staunovo, commodity analyst at UBS. “But this is about sentiment, there are no disruptions to oil.”

Grain Markets

Chicago soybean futures are mostly trading 4 to 9 cents/bu higher this morning…formulating a small rally over the past four sessions and lifting off chart support tested around the end of last week. Nov bean futures are up 6.5 cents at $10.34/bu, attempting to close back above its 100- and 200-day moving averages in the $10.31 to $10.33 range.

USDA on Tuesday released its monthly US soybean crush data. The agency that in total 203.68 million bu of soybeans were crushed in May, up 6% for May 2024 and a record for the month. Despite the higher crush, US crude soyoil stocks declined for a second straight month and were among the lowest May totals in several years. Soyoil futures are pushing higher again early Wednesday, offering bullish influence to soybean futures.

The USDA’s national US soy crop rating held steady for the latest week, and near-term development conditions remain mostly favorable, which may be limiting price gains. But the higher move in bean oil given expanded US biofuel demand expectations is overriding to lift bean futures.

Traders in general continue to wait for updates on Trump tariff talks with key trading partners.

Chicago corn futures are trading mostly 3 cents lower this morning. Futures climbed out of their overnight hole on Tuesday, though contracts still closed with fractional to 3 cent losses. Sept corn futures are down 2.75 cents at $4.03/bu, threatening to drop below the $4.00 mark.

The US national corn crop condition rating was up for the latest week and early development is mostly on schedule. US crop weather forecasts remain generally non-threatening until at least mid-July.

US corn crushing data showed a total of 449.44 million bu used for ethanol production in May. That was a jump of 6.2% from April, but still down 1.31% from the same month in 2024. The total for the marketing year through the first 3 quarters is at 4.08 billion bu, which is 11 million bu above the same period last year.

Demand continues to be favorable, but there could be more export competition from South America in the near future.

US wheat markets are weaker this morning…winter wheats dipping 2 to 3 cents lower, while spring wheat futures are mixed though leaning more 1 to 2 cents lower. The wheat market snuck out some gains on Tuesday’s session, with contracts closing higher across the three US exchanges…spring wheat finishing was up 7 to 8 cents across most contracts.

Weekly USDA crop progress data tallied 37% of the US winter wheat crop as harvested by June 29, which is lagging the average pace by 5%. Conditions were down 1% to 48% good/excellent. The US spring wheat crop was 38% headed, 1% behind average. Conditions were 1% lower to 53% good/excellent.

Futures found support yesterday on a mixture of technical reasoning, especially on winter wheat prices, as well as drops in conditions through the last week offering reason for some added risk premium. But it remains likely that winter wheat harvest pressure, both in the US and abroad will act as a steady pressure to prices.

But noteworthy…Europe is experiencing a heat wave which has led to safety protocols being put in place for outdoor workers. Perhaps the winter wheat crop over there, particularly in France, is past being overly vulnerable…but the situation is worth keeping tabs on as harvest is in the early stages.

CANADIAN GRAIN MARKET

ICE canola futures rebounded sharply on Monday, buoyed by strength in global vegetable oil markets and ongoing crop concerns in parts of the Prairies. Canadian markets were closed Tuesday for Canada Day.

Soyoil posted modest gains on Monday, offering underlying support to canola. While crude oil futures softened slightly, the energy complex remained relatively steady, helping to stabilize vegoil sentiment.

On the Prairies, crop conditions remain mixed. Weekend rainfall helped some areas, but recent heat and ongoing variability in moisture distribution continue to raise questions about yield potential, particularly in central Alberta and parts of Saskatchewan.

November canola climbed $16.80 on Monday to $709.70/tonne, while January gained $16.20 to $718.30.

For today… canola futures are posting solid $12 to $15/tonne gains this morning, adding to a similar rebound rally on Monday…Canadian markets were closed Tuesday for Canada Day. Nov canola is up $15.60 this morning at $725.30/tonne, building on what appears a bullish chart reversal posted on Monday. Nov has quickly cleared back above its 20-day moving average ($712) after testing as low as its 50-day average ($688) just on Monday. Quite a rebound!

Our canola market is being supported by the on-again/off-again…now on-again…Canada trade talks with the Americans (issues noted at the top of this report). Also price supportive…resurgent gains in CBOT soyoil, which has led the charge higher to start the month and taking canola with it amid a combination of bullish developments. US monthly soybean crush data for May was reported strong yesterday, but still, bean oil stocks are falling…suggestive of strong vegoil demand.

And re-stating…the US budget bill is controversially working its way through the US Congress…still contains language making US biofuel feedstock eligible for blending credits only if produced in North America. That fully allows the use of Canadian canola oil, while conversely making the use of used cooking oil (UCO) from China ineligible. That is very significant given the high level of UCO imports in the past few years.

Weather market conditions are in play…with some Canada Prairie and northern US Plains heat for the next couple of days before a weekend cool down. Drought conditions could worsen quickly at the critical flowering stage for this canola crop. With Canadian canola acreage being below last year, inadequate supplies were already a concern for the next year with low yield potential only making matters worse.

Other related markets this morning…CBOT soybeans/soyoil and Malaysian palm oil futures are higher. EU rapeseed futures are showing modest gains, but comes after a sharp sell-off over the past two weeks.