Markets turn their attention to weather

By Doug Tenney, Leist Mercantile

Last month, I strung together a series of early morning cycling rides near my home in Fairfield County. I experienced fantastic sunrises with scenes I had never experienced before. Cycling for decades, and again last month, has given me the opportunity to see things I likely would never see while driving my truck. I have always been thrilled to see barns, or even newer pole barns, with a cupola adorning the roofline; it’s just something you don’t see that often. One morning, I even noticed a hay hook at the very end of the building, perhaps to be a bit different, just like the ones used 80-plus years ago. I’ve cycled past that barn dozens of times, never seeing that hay hook earlier. It just goes to show that there is something new to see when we look and pay attention. What new things will you observe in the coming months wherever you go?

I have commented in recent months that it would take either demand or weather concerns to push grains higher. Guess what? Demand and weather have combined since late June to push corn, soybeans, and wheat higher. Inconsistent weather across the Corn Belt in July has brought several extremes. In mid-July, corn pollination in Illinois and Iowa occurred during above-normal temperatures. In Ohio, daily highs reached 90 degrees or higher from July 13–17, following a similar stretch of heat just two weeks earlier. This pattern appears entrenched and could return during the last week of July.

Pickaway County received much-needed rain during the second weekend of July, with totals often exceeding 1.5 inches. Many customers described it as a “million-dollar rain event.” The 2024 drought remains fresh in producers’ minds; Pickaway County endured its worst drought in decades, with severe losses in corn and soybean production. It ranked among the top for yield reductions in all of Ohio that year. Weather uncertainties are gaining momentum with this writing.

Despite the July 13 USDA Weekly Crop Progress Report detailing improving crop ratings for both corn and soybeans, when traders had expected a slight decline, that negative tone quickly evaporated. July 2026 compared to July 2025 is vastly different. Weather this July is not ideal for the huge yields seen in 2025. U.S. corn and soybean production has been affected in numerous states, including Illinois, which experienced hail damage in mid-July. South Dakota is a tale of “too,” with the northern half “too wet” while the southern half is “too dry.” Illinois and Iowa are experiencing above-normal temperatures during the week of July 12, while corn pollination is taking place. The southern United States is experiencing a 100-year drought.

China in recent weeks has purchased at least five new crop U.S. soybean boats or 10 million bushels. Last October, they agreed to buy 25 million tons of U.S. soybeans for delivery in 2026. It is expected that in the months ahead they will indeed reach that number of U.S. soybean purchases. The July 15 U.S. Energy Report detailed only 102 million bushels of corn were used for ethanol production the previous week. It was the lowest weekly total of the previous ten weeks. While margins continue to be impressive at 38 cents per gallon, that low weekly usage number provides further evidence that the 5.550 billion bushels of corn used for ethanol in the current marketing year, which ends Aug. 31, could easily be too high. El Niño continues to strengthen and is intensifying across South America. It is bringing above-average temperatures and below-normal rains. Australia’s wheat production looks to be dropping as a result. Expect U.S. weather uncertainties to continue into September, with price volatility and demand uncertainty at extreme levels. Put another notch in that seat belt.

Thought for the day. “The character you possess during the drought is what your team will remember during the harvest.” – Jon Gordon.