Agri- Commodities: 01-05/06/26

Monday

Grain markets started June on a weak footing and struggled to follow the sharp rally in oil prices. While energy markets reacted strongly to renewed uncertainty surrounding the Strait of Hormuz, agricultural markets remained focused on harvest pressure and improving global supply prospects.

The fundamental picture was mixed. Australia projected a significantly smaller wheat crop, while Russia continued moving in the opposite direction, with IKAR raising its wheat production estimate again. Trade flows also remained a key focus, with US corn exports continuing to run ahead of USDA expectations while Morocco's improving harvest outlook pointed to lower wheat import demand later in the year.

Tuesday

Grain prices remained under pressure as harvest activity accelerated and markets increasingly disconnected from oil price movements. Kansas wheat continued to lead losses, posting another lower close as harvest pressure built and improved rainfall prospects eased concerns in Europe.

The latest EU export data showed wheat shipments continuing to outpace last year, while Morocco announced plans to suspend its wheat import duty from August. However, improved rainfall in Morocco is expected to sharply reduce import demand compared with previous seasons. Inflation concerns also returned to the forefront after Eurozone inflation reached its highest level since 2023, increasing expectations of further ECB tightening.

Wednesday

The sell-off intensified midweek as momentum-driven liquidation continued across grain markets. Corn joined wheat in falling back to levels seen before the Iran conflict, while funds aggressively reduced long positions in European wheat.

Supply-side developments remained largely bearish. Russia increased its wheat production forecast above 91 million tons, while Tunisia and Jordan remained active buyers in the physical market. Meanwhile, attention shifted to the first confirmed US screwworm case since 1966, raising concerns for livestock production and potentially reducing future feed demand if the outbreak expands. At the macro level, the OECD warned that prolonged Middle East disruptions could significantly slow global growth while increasing inflation pressures.

Thursday

Bearish sentiment remained dominant as soybeans led losses on favorable US weather forecasts and fading optimism over Chinese demand. Traders also continued to monitor the screwworm situation, although no additional outbreaks had yet been reported.

Crop conditions remained relatively stable despite drought concerns. Argentina continued reporting strong harvest progress and favorable wheat planting conditions, while drought coverage in US corn and soybean areas increased modestly. Export demand remained disappointing, with weekly US sales failing to show any meaningful improvement despite ongoing trade discussions.

Friday

Grain markets ended another difficult week lower as funds continued liquidating positions across corn, soybeans, and wheat. MATIF wheat managed to outperform slightly thanks to currency movements, but overall sentiment remained weak.

French wheat ratings declined again but remained above both last year and the five-year average. The USDA also confirmed a second Texas screwworm case, prompting expanded containment efforts and increasing concerns about potential impacts on livestock production and feed demand if the outbreak spreads. Positioning data confirmed heavy speculative selling, with corn longs reduced sharply and Chicago wheat shorts climbing to their highest level since February.