Weather has once again become the dominant market driver, and forecasts are now calling for the type of heat many believed would not develop this summer. Record or near record temperatures are expected across portions of the Western United States, with the heat ridge expanding into the Western Corn Belt. If this forecast verifies, it could become a meaningful production threat.

At this point, I would rate the weather risk at roughly 9 out of 10 for soybeans and 7 out of 10 for corn. Soybeans remain the more vulnerable crop, while corn enters this period in generally strong condition. Should temperatures moderate or scattered rainfall develop along the northern edge of the ridge, favorable conditions across the Eastern Corn Belt could help offset losses in western production. The next several days will be critical.

One lesson history has taught is that crop damage is often underestimated in its early stages. Analysts and weather experts frequently downplay stress until yield losses become undeniable. The 2020 growing season was a good example of when concerns were initially dismissed before the market ultimately recognized the impact of drought and the derecho on corn production. By the time the damage becomes obvious, the market has often already begun adjusting.

Seasonal tendencies still favor pressure on grain prices this time of year (after July 17-20), but weather remains the ultimate wildcard. If this heat ridge performs as forecast, traders relying solely on seasonal patterns may find themselves paying closer attention to tightening supply fundamentals than they expected.

Wheat prices softened after another push to new July highs overnight, as Black Sea grain export infrastructure remains concerning, but some movement continues. There have been cumulative missile and drone strikes that are adding up and are causing Black Sea grain loadings to slow. So far, major grain export facilities have not been hit, but it appears that, with the escalation of the war, it is now becoming an economic factor, with Ukraine consistently targeting Russian refining capabilities and now looking to slow revenue flows from its grain production as well. Russia may move for a tit-for-tat on this, with Odessa being threatened. For now, the Azov Sea remains a restricted area and a bottleneck in the Kerch Strait.

Friday’s WASDE data was price-friendly for corn, with the carryout for new crop being pushed under 1.8 Bil Bu, and further reductions are still likely because of strong exports that were not figured in, and a new crop export figure that is not justifiable to be lowered than what has been aggressive for this past year. Seasonal sellers may try to break the market, but if price weaknesses occur, they will bring buying interest into the market in the 440-450 range. China will be on the hunt for another 24 MMTs of beans, and flash export sales will become a weekly observation. The question is how aggressive China must become ahead of the August production weather. On the radar, any further transportation destruction of wheat out of the Black Sea (whether it’s Russia or Ukraine) will be a bullish price powder keg.