Recent precipitation events have improved U.S. soil moisture, but much more is needed to fully replenish reserves. The U.S. corn area is now 44 percent in drought, well above last year’s 24 percent. The U.S. soybean production area drought is now 36 percent of acres, above last year’s 20 percent. Winter wheat drought now stands at 38 percent of area. A year ago, just 16 percent of wheat production was affected by drought. These dry soil conditions may favor the U.S. planting pace, but forecasts for a drier than normal growing season are gaining attention.

While most of the weather focus in the market right now is on the United States and South America, we are seeing another trouble spot in the global market. Mexico is reporting widespread drought in its wheat production area and thoughts are it has cut the crop by 40 percent. This will leave Mexico with a wheat crop of 1.6 million metric tons and a need for 6.5 mmt of imports, an 8 percent increase from last year’s imports. The United States has benefited from this with exports to Mexico at 2.8 mmt for the year with 10 weeks left for sales. Last year Mexico imported a total of 2.4 mmt of U.S. wheat. 

Drought has also impacted Russian grain production and exports this year. The Russian firm SovEcon is now projecting Russian exports for the 2024/25 marketing year of 49.9 mmt, a 1.1 mmt decrease from its prior outlook. Wheat exports are forecast to decline the most, dropping to 40.7 mmt. This is down 1.5 mmt from SovEcon’s last update. The group did increase its 2025/26 wheat export forecast by 200,000 mt but is still seeing a lower total volume of 39.1 mmt.

Ag Rural has joined a list of private estimates that have lowered their Brazilian soybean production forecast as harvest progresses. According to Ag Rural, the Brazilian soybean harvest is nearly complete and they are now forecasting a crop of 165.9 mmt, down from its prior 168.2 mmt. The USDA is currently using a Brazil soybean crop of 169 mmt in global balance sheets. Early flooding and a dry finish to Brazil’s growing season are behind the lower production outlooks.

The USDA attaché in Brazil has released its Brazil soybean production estimates for the 2025/26 marketing year. The attaché sees next year’s Brazilian soybean crop climbing to 173 mmt from this year’s 169.5 mmt crop. Brazil is now forecast to export 108.3 mmt of soybeans this year and 112 mmt for the 2025/26 marketing year.

Markets are starting to pay more attention to the value of the U.S. dollar. The U.S. dollar has become more volatile, which is having more of an impact on markets than in recent history, including commodities. A strong dollar tends to limit U.S. exports as it makes our products more expensive in the global market. Global selling also picks up when the dollar is strong as that is the currency global trade takes place in. While a strong dollar can be negative, it does increase the U.S.’ buying power and favors imports. A strong dollar may also offset some of the increase in costs from tariffs.

This strong U.S. dollar’s impact on global commodity trade has been most noted in Brazil. Brazil’s soybean harvest was slow to start and production was uncertain, causing many farmers to limit selling to a minimum. Soybean harvest is now in its later stages and storage is filling at the same time the U.S. dollar had shown strength. As a result, Brazil farmers and exporter selling has picked up. In turn, China is now reporting a build in domestic soybean reserves, weighing on global soybean basis.

The U.S. dollar has now corrected as buyers flock to the gold market, helping bring U.S. commodities back in line with the global market.

The United Sates has seen less soybean competition than normal from Argentina in the export market this year. Soybean harvest is winding down in Argentina, but farmers have been limited sellers. Farmers in Argentina have only marketed 18 percent of this year’s soybean crop, the lowest volume in 10 years. Unfavorable exchange rates and hopes there will be another tax incentive for soybean sales such as Argentina offered last year are the main factors for the low selling interest. The only slower year for soybean selling in Argentina was in 2014 at 15.7 percent sold.

China was an active buyer of U.S. beef for several months, but this has ground to a halt. All U.S. red meat import registrations with China expired but this had little impact on trade. The U.S. pushed China on these registrations, leading to an approval for pork and poultry facilities for the next five years. Beef facilities were omitted, however.

Chinese importers are now hesitant to book U.S. beef, especially with trade tensions between the two heating up. Chinese importers do not want to purchase U.S. beef to find it does not meet import guidelines and is rejected at port facilities. This follows a statement from the Chinese government that while tariffs may not impact consumer prices as much as initially feared, they will alter future trade patterns. China is now working to expand beef trade with Brazil.

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