Sunday night’s firm start turned into a sharply higher run for the grain trade during the overnight session, as weather forecasts are no longer conducive to achieving a national corn yield of 183 BPA. Even soybean yield potential is beginning to come into question. There are growing indications that a large, intense, and perhaps record-breaking mid-atmospheric high-pressure system, commonly referred to as a heat dome, will develop somewhere between the Rockies and Central Plains by mid-July. This could bring a widespread and severe heat wave across much of the United States.

Last week’s heat stressed corn and soybeans in areas that missed rainfall, while other regions continued to receive flooding rains. One thing becoming increasingly apparent in this year’s crop is the greater variability than in recent years. That raises additional doubt about the size of the US crop as we head into Friday’s July WASDE report. While July is often considered a quieter month for USDA reports, this release will incorporate the quarterly Stocks and Acreage updates, making it more meaningful than a typical July report.

At the forefront once again will likely be news that the United States and China are expected to hold trade talks later this week. While details remain limited, there is growing speculation that these discussions could improve demand prospects for US soybeans.

Over in Europe, intense heat across France is expected to continue into mid-July, with temperatures once again projected to exceed 100 degrees later this week. French corn crop ratings have fallen a historic 26 points in just two weeks and now stand at their lowest level since 2013. European corn production is expected to fall by 10 MMTs, with France seeing a cut of up to 6 MMTs of this total..

In India, after a decent week of rainfall, the monsoon is beginning to weaken. While temperatures remain relatively cool, the trade is expected to focus on the country’s growing cumulative moisture deficit later this week.

Ukraine continues to successfully strike energy targets around Moscow, while Kyiv braces for another round of Russian ballistic missile attacks. The geopolitical backdrop remains increasingly unstable, with intelligence reports suggesting Russia could pursue provocations in the Baltic States or Poland in an effort to force a direct standoff with NATO. Time is not on Putin’s side. Russia is now actively importing fuel, raising questions about whether domestic harvest logistics could eventually be constrained by diesel shortages. It takes enormous volumes of fuel to move crops across the Russian interior, and refined products have historically never been in short supply until now.

US weather forecasts will be traded as they come out, with the next GFS update at 11:00 a.m. CT, followed by the Euro at 1:00 p.m. CT. Currently, the concern is that corn pollination will soon struggle in the Plains and Western Midwest, where heat and dryness are now expected to persist beyond July 24. Ridging of this high-pressure system looks to be locking in. We’ll see highs in the 90s spread across much of the Central US again by July 14, according to the EU models.