Grain markets lift as dollar eases and Argentine heat bites

Soybeans led the advance, with prices supported by currency moves that made US shipments more attractive to overseas buyers and by weather maps pointing to prolonged hot conditions across key Argentine growing regions. Corn followed, drawing strength from the same macro and weather signals, while wheat was steadier, constrained by sizeable inventories and subdued demand from major importers.

The broader backdrop remains one of abundance. Large harvests in North and South America over the past year have rebuilt global stocks of soybeans, corn and wheat, easing concerns that dominated markets during the supply shocks of the pandemic period and the early stages of the war in Ukraine. This surplus has weighed on prices, leaving benchmark contracts far below their peaks from three years ago despite intermittent rallies tied to currency swings or regional weather stress.

Against that setting, the US dollar’s pullback has taken on added significance. A weaker dollar tends to boost demand for US agricultural exports by lowering costs for foreign buyers, and traders have been quick to factor that into near-term pricing. Analysts say currency-driven demand is particularly important when supply fundamentals are otherwise comfortable, as it can provide incremental support without changing the longer-term balance.

Weather in Argentina has emerged as the key supply-side variable. The country is a major exporter of soybean products and corn, and forecasts showing above-normal temperatures during critical crop development stages have sharpened market attention. While rainfall earlier in the season helped stabilise fields after a slow start, persistent heat risks trimming yields if it coincides with flowering and grain-fill phases. Market participants are watching soil moisture levels closely to gauge whether crops can withstand the stress.

Brazil, by contrast, continues to exert a moderating influence. The country’s soybean output has been robust, reinforcing its position as the world’s largest exporter and offsetting potential shortfalls elsewhere. Brazilian corn production has also been strong, particularly from the second safrinha crop, adding to global availability. These volumes have helped keep international buyers well supplied and limited the scope for sustained price rallies.

Wheat markets have been comparatively subdued. Supplies remain plentiful following solid harvests across the Black Sea region, Europe and parts of Australia. Although logistical risks and policy decisions can still create volatility, the underlying stock position has reduced the urgency that characterised earlier years. Demand growth has also been restrained by cautious purchasing from importers managing budgets amid uneven economic conditions.

From a demand perspective, feed and biofuel sectors continue to shape price dynamics. Corn demand for ethanol has shown resilience, though margins fluctuate with energy prices and policy signals. Soybean demand is underpinned by crush activity for meal and oil, linked to livestock feed needs and renewable fuel mandates, but competition among exporters has kept margins tight.

Market strategists note that speculative positioning has been relatively light, reflecting confidence in supply and a lack of strong bullish catalysts. This has made prices more sensitive to short-term factors such as currency movements or weather headlines, rather than structural shifts in production or consumption.

Logistics and trade policy also remain part of the equation. Freight rates have eased from earlier peaks, improving trade flows, while the absence of major export restrictions has allowed supplies to move freely. Any disruption on these fronts could quickly alter sentiment, though none has materialised at scale.

For now, the balance of forces suggests a market searching for direction. The lift from a weaker dollar and Argentine heat has provided near-term support, but the weight of global inventories continues to loom large. As one trader put it, the market is “reacting to weather and currencies, not fearing shortages”.