AM Market Report – July 8, 2025 | The Western Producer

GOOD MORNING…HERE IS YOUR MORNING MARKET NEWS

OVERNIGHT GRAIN TRADE

ICE canola futures are seeing some modest bounce this morning after posting sharp declines on Monday…currently trading $1 to $2/tonne higher. But that’s coming after registering $22/t losses yesterday.

We are seeing follow-through selling across US grain markets this morning. Chicago corn, soybean and US wheat futures are adding to Monday’s sharp losses. Corn futures are trading mostly 2 to 3 cents/bu lower right now, soybeans are 3 to 6 cents lower and wheat futures are mostly 3 to 6 cents lower.

Monday was a big, bad bearish session for grain/oilseed markets on forecasts for favorable US crop weather. Markets also weakened after US President Donald Trump failed to announce a trade agreement with China, after trader anticipation built up on such prospects before US markets closed for the Independence Day holiday on Friday.

Wheat markets took a hit on news that Russian wheat exports are expected to get a boost following an axe to its wheat export tax to zero.

Most markets will be butting down against recent chart support very soon, which will be pivotal levels to hold given the increasingly bearish fundamental outlook traders hold currently.

US trade policy will remain in market focus for the remainder of the month following the Trump administration’s extension of the tariff pause to Aug. 1, but also the largest escalation in some time as several letters were sent to countries on Monday outlining increased tariff rates beginning Aug. 1 if deals are not reached.

US Crop Progress

After the close of trade on Monday, USDA updated its weekly rating of the corn crop to 74% good to excellent as of Sunday, up one percentage point from last week and unexpectedly better than expected. Analysts expected no change. This is the second best rated corn crop at this time of year in the past seven years.

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

USDA rated the US spring wheat crop as 50% good to excellent, unexpectedly down three points from last week, with all of the decline in the good category. Analysts expected no change. The poor to very poor rating increased one point to 15%. This is the third lowest rated US spring wheat crop in the past 10 years.

The US winter wheat harvest advanced 16 points to 53%, though that was still one point behind the five-year average.

In Other News

– Trump’s trade carousel update… US President Donald Trump signed an Executive Order (EO) that extends the effective date on the tariffs announced April 2 to now Aug. 1. The tariffs initially were to take effect July 9. The brief order formalizes what Trump and other officials had signaled over the weekend. However, it is not yet clear that Aug. 1 will be a hard and fast deadline. Asked if Aug. 1 was now a firm deadline, Trump again indicated it may not necessarily be the final date. “I would say firm but not 100% firm.” So, you know, erratic uncertainty from the White House prevails.

Reciprocal tariff letters were sent Monday to 14 countries, outlining new tariffs ranging from 25% to 40% set to take effect on Aug. 1 if agreements aren’t finalized. Those facing 25% tariffs include Japan, South Korea, Malaysia, Kazakhstan and Tunisia. Those facing tariffs of 30% to 36% include South Africa, Bosnia, Indonesia, Bangladesh, Serbia, Thailand and Cambodia. Those facing 40% tariffs include Myanmar and Laos.

Steel and aluminum tariffs, currently set at a 50% rate…and currently apply to Canada…as part of the Section 232 sectoral rates, will remain in place but will not stack on top of new rates. Several other sectoral tariffs are also under investigation but have not yet taken effect. Trump hinted on Truth Social that any retaliatory tariffs would be matched one-for-one.

Canada and the US are working towards establishing a new trade arrangement by July 21.

– China warns US on tariffs, threatens retaliation on supply chain deals...China warned the Trump administration against reigniting trade tension by restoring tariffs on its goods next month and threatened to retaliate against nations that strike deals with the US to cut China out of supply chains. China has until Aug. 12 to reach an agreement with the US to avoid additional tariffs. “One conclusion is abundantly clear: dialogue and cooperation are the only correct path,” the official People’s Daily said in a commentary.

The paper also took a swipe at regional economies that are considering striking tariff reduction deals with the US that cut China out of their supply chains. “China firmly opposes any side striking a deal that sacrifices Chinese interests in exchange for tariff concessions,” the paper said. “If such a situation arises, China will not accept it and will respond resolutely to protect its legitimate interests.”

– Indonesia palm oil exports to US may fall due to tariffs… Indonesian palm oil exports to the United States may fall due to the 32% tariffs threatened on Indonesian goods, Hadi Sugeng, secretary general of the Indonesia Palm Oil Association (GAPKI), told Reuters. Palm oil products are among Indonesia’s top exports to the United States. If implemented, the tariff could lead to a 15%-20% drop in Indonesian palm oil shipments to the US, which stood at an average of 2.25 MMT per year over the past three years. Overall, Indonesia exported 29.5 MMT of palm oil products in 2024. “The competitiveness of palm oil will decline against other vegetable oils such as soybean oil and rapeseed oil, especially if countries exporting these vegetable oils receive lower tariffs,” he added.

– Fertilizer market volatility continues… The senior economist for The Fertilizer Institute says farmers continue to face a challenging fertilizer market. Veronic Nigh says some fertilizers were up again during the last week of June. “This time of year is typically when we see the lowest fertilizer prices. That’s just not what’s happening this year because of a number of different policy and geopolitical issues that are happening both in North America and other parts of the world that are impacting fertilizer markets.”

She says some producers have had to make difficult spending decisions. “It’s a rough place to be, especially when we consider what commodity prices are today. Certainly, farmer affordability is at some of the lowest levels it’s been for many years.”

Nigh says the market is expected to remain volatile. “We’re looking at ammonia prices that are up about a third in June of this year compared to June of last year. MAP prices are up by a quarter. Urea prices are up by almost 50%. Nitrogen solutions, or UAN, are up over 50%.”

She says it’s been challenging for producers to plan for their fall fertilizer needs.

– Canadian trade diversifying away from US… The Canadian economy showed signs that it has been working to pivot away from doing business with the United States, according to new data from Statistics Canada, reports Global News. That comes as US President Donald Trump’s tariffs and trade war have forced many businesses to seek alternative trading partners to avoid impacts and higher costs.

“Trade diversification is still advancing, and we’re seeing encouraging gains in other markets,” says principal economist Andrew DiCapua at the Canadian Chamber of Commerce. “The worst may be behind us, but the road back will likely be uneven.”

In May, Statistics Canada reports the total amount of merchandise exported increased by 1.1% compared with April, led by metals including gold, silver and platinum to countries like the United Kingdom, as well as non-metallic mineral products. Imports fell 1.6%, marking the third straight monthly decline, the agency said, which helped narrow the overall trade deficit from $7.6 billion in April to $5.9 billion in May.

The agency also reports that in May, the amount Canada exported, specifically to the US fell by 0.9%, marking the fourth consecutive monthly decline, and exports to countries other than the US rose 5.7% to reach a record high.

Although expectations of higher costs from Trump’s tariff policies may have motivated businesses to look away from the US, economists note that the numbers show these higher costs from tariffs haven’t yet fully materialized.

“Ninety-one per cent of Canadian exports to the US crossed the border duty-free, consistent with the view that the exemption for CUSMA-compliant trade from blanket US tariffs imposed in March is working effectively,” economist Nathan Janzen at Royal Bank of Canada says.

“We continue to expect that current rules, if maintained as currently in place, would leave Canada with the lowest tariff rate of any major US trade partner…putting Canadian exporters in a stronger relative position to compete for US import market share than other countries.”

Outside Markets

The Dow Jones Industrial Average tumbled 422.17 points lower on Monday to settle at 44,406.36, while the S&P 500 Index dropped 49.37 points to 6,229.98. Early Tuesday, September Dow Jones futures are down 76 points.

US and European stock market indexes are mixed tis morning in cautious trading as investors assessed the latest erratic twists in US President Donald Trump’s reckless tariff rollout.

Trump sent letters to 14 countries yesterday, including top Asian trade partners such as Japan and South Korea, unveiling sharply higher tariffs on imports into the United States with a new Aug. 1 deadline.

Dow stock futures are slightly weaker this morning, while S&P 500 and Nasdaq futures are slightly higher after all major US markets closed lower yesterday. Canada’s TSX stock futures are in positive territory this morning after only minor losses yesterday with the help of a rally in materials stocks.

“While a comprehensive trade deal is unlikely before the deadline, there is cautious optimism that a preliminary agreement can be reached to avert the immediate imposition of higher tariffs,” Daniela Hathorn, a senior market analyst at Capital.com said. “Such an agreement would provide a foundation for continued negotiations aimed at resolving the broader trade disputes between the EU and the US, improving risk appetite in European stocks and the euro.”

The September US Dollar Index is up 0.154 at 97.295. The Canadian dollar strengthened against its US counterpart…currently quoted at 73.30 US cents.

August crude oil futures are down $0.23 at US $67.70/barrel. Oil prices softened this morning after rising almost 2% yesterday as investors assessed new developments on US tariffs and a higher-than-expected OPEC+ output hike for August. “Prompt demand remains healthy on the back of seasonal factors. The question remains if forward demand will maintain to absorb the larger-than-expected supply from OPEC+,” said Emril Jamil, a senior analyst at LSEG Oil Research.

Grain Markets

Chicago soybean futures are trading 3 to 6 cents/bu lower this morning, expending yesterday’s sharp declines. Bean futures collapsed on Monday, closing with losses of 24 to 29 cents. Soymeal futures are $1 to $2/ton weaker this morning after losing $5 to $6/ton yesterday. Soyoil futures re down a modest 7 to 9 points after declining 61 to 82 points on Monday.

Yesterday we talked about the November bean contract quickly approaching important technical chart support in the range of $10.15 to $10.20/bu, a pivotal area. Nov bean yesterday dropped 28.5 cents, and is down another 3.23 cents this morning to $10.17/bu.

US soybean crop conditions are steady to solid to start the new week at 66% good/excellent, with generally crop weather in the immediate forecast.

Traders are waiting anxiously for an positive news from China…hoping US-Sino trade relations will soon improve and prompt Beijing to restart buying of US beans for the new crop timeframe. But the Trump administration’s hostile trade politics continues to shoot such demand prospects down. Hard to understate the importance of China to US soy export business…they are the world’s biggest soy buyer after all…but it should also be noted that as of the most recent report new crop 2025-26 US soybean sales are 15% ahead of new crop sales at the same point in 2024.

Weekly Commitment of Traders data out yesterday afternoon indicated managed money taking their net long position in CBOT soybean futures to just 425 contracts as of last Tuesday (July 1), a 23,023 contract reduction on the week. In soymeal, spec fund traders were a record net short of 131,938 contracts.

Chicago corn futures are down another 2 to 3 cents/bu this morning. Futures posted Monday steep losses of 13 to 17 cents across the front months following a gap lower at the open. Sept corn futures are down 2.5 cents this morning at $4.01/bu…sitting perilously close to the $4.00 level, which holds significant psychological value in the eyes of market participants.

Weekly US crop progress data showed corn condition ratings were up 1% to 74% good/excellent.

On Monday, Trump announced US tariffs on goods from South Korea and Japan will be raised to 25% on August 1…both major destinations for US exports.

USDA tallied US corn export shipments at 1.491 MMT during the week ending on July 3. That was up 7.97% from last week and 45.63% above the same week last year. Marketing year US corn exports have totaled 56.446 MMT, which is 29.69% above the same period last year.

CFTC data showed spec funds adding 24,181 contracts to their growing net short position in corn futures as of July 1. That net short was 206,463 contracts as of last Tuesday.

US wheat markets are also trending weaker again this morning… Minnie spring wheat futures are down 5 to 6 cents, HRW losing 5 cents and SRW wheat slipping 3 to 4 cents lower. The wheat complex fell on Monday, coming out of the US long weekend on a sour note…spring wheat dropping 9 to 10 cents.

USDA’s Crop Progress data showed the US winter wheat crop at 53% harvested, one point behind the 5-year average. Harvest has advanced considerably over the past two weeks to catch up after a slow start to the season. Conditions were unchanged at 48% good/excellent. The US spring wheat crop was 61% headed, ahead of the 58% average. US spring wheat conditions declined for a third consecutive week…down 3 points to 50% good/excellent.

Trader attention is also focused on broader world wheat prospects as conditions turn more favorable for advancing harvest through Europe and Russia.

CANADIAN GRAIN MARKET

ICE canola futures fell heavily on Monday, plunging alongside Chicago soy futures. Chicago soybeans saw particularly sharp losses amid growing US production ideas in the wake of good Midwest rainfall over the weekend and generally benign forecasts for the next couple of weeks. Soyoil and meal were lower as well.

Losses in European rapeseed pressured canola as well, while palm oil provided little direction.

On the other hand, large portions of the Prairie canola crop are still in need of rain.

November canola dropped $22.90 yesterday to close at $696.80/tonne, and January lost $22.70 to $704.70.

For today… canola futures are showing some modest bounce this morning in the face of continued bearish influence from US grain markets. Canola futures are up around $2/t this morning…perhaps some bargain hunt shopping.

Questions continue to arise over the current state of the Canadian canola crop…lower than expected acres and now expanding dry/drought conditions for Western Canada. That’s giving futures some underlying chart support. Roughly half of the Canadian Prairies missed out on recent rains…precip that is needed during the critical flowering stage.

The benchmark Nov contract is a modest $1.90 higher at $698.70/tonne, but comes after Monday’s gap lower loss (-$22.90/t) below its 20-day moving average ($717). The 50-day was tested at the overnight session low ($692), but found chart support there so far.

Still a battle for canola to fight off the bearish influence of the US soy complex of late. And traders remain confused by ongoing and ever-changing geo-political influences…potential support from the US biofuel industry following the passage of the US budget bill, but wary of currently unknown ill-affects of Trump’s trade war with the world.

In other related markets… Malaysian palm oil jumped higher overnight on increased demand from India and lower production growth expectations. But European rapeseed futures are only narrowly mixed this morning, and trending down the past weeks.

CFTC data showed spec funds subtracting 3,688 contracts from what was their record large net long position in canola futures as of July 1. That net long as of last Tuesday date stood at 138,219 contracts.