CHICAGO, ILL. (RFD NEWS) — Grain markets are balancing geopolitical uncertainty, favorable growing conditions, and shifting trade forecasts as the growing season advances.
Market analyst Brian Hoops with Midwest Market Solutions says ongoing tensions involving Iran and the United States have added support to crude oil prices, which can provide some spillover strength to grain markets.
“First of all, what’s happening overseas with Iran and the United States — the path to a successful trade agreement is getting narrower and narrower,” Hoops told RFD News. “It seems like there are still five bombs going off. There are still drones being shot at each other — a lot of war effects are still going on during this negotiation period — where it’s supposed to be a ceasefire. So it doesn’t give the trade a lot of confidence that we’re going to see an agreement. We’re putting a lot of premium back into that crude oil market. It should help support the grains to a small extent.”
However, Hoops says crop conditions across much of the country are limiting rally attempts.
Crop Progress Shows Strong Planting Pace, Mixed Conditions
Spring planting is nearing completion across much of farm country, with 93 percent of the corn crop now in the ground according to the USDA’s latest Crop Progress report, with 67 percent rated good to excellent.
Soybean planting reached 87 percent, with 66 percent of the crop rated in good condition.
Winter wheat development also continues, with 87 percent of the crop headed. However, winter wheat conditions remain a concern, with 44 percent rated poor to very poor and just 26 percent rated good to excellent.
As attention shifts from planting to crop development, market analysts are watching weather, demand trends, and policy-driven biofuel consumption as key drivers heading into the heart of the growing season. Lewis Williamson with HTS Commodities joined us on Tuesday’s Market Day Report to discuss what he is monitoring as the season progresses and how demand-side policy shifts are influencing commodity markets.
In his interview with RFD News, Williamson outlined the key factors he is watching moving forward, including weather patterns during critical growing stages, export demand trends, and the pace of crop condition ratings as the season develops.
He also addressed soybean crush demand and the impact of federal biofuel policy, noting that updated Renewable Fuel Standard (RFS) targets are tightening the soybean oil balance sheet and supporting domestic processing demand. He discussed how those policy signals are shaping expectations for soybean markets and crush margins.
Trade Outlook Improves as Ethanol Export Demand Forecasts Strengthen
On trade, USDA projects U.S. agricultural exports at $176.5 billion this year, narrowing the trade deficit to about $29 billion, down from more than $43 billion last year. Strong corn exports are expected to support the outlook, while lower soybean shipments to China continue to pressure demand. Mexico is projected to remain the largest market for U.S. agricultural exports.
Ethanol demand is also supporting corn use. The Renewable Fuels Association reports ethanol blending hit a 52-week high in late May as gasoline demand reached its highest level in nearly a year. Current production trends suggest the industry is on pace to use nearly 5.9 billion bushels of corn annually.
EPA Administrator Lee Zeldin says the agency is evaluating changes to the Renewable Fuel Standard that could expand eligibility to additional marine fuels, a move supporters say could boost demand for low-carbon fuels.
He also says the agency is working to finalize a new Waters of the United States (WOTUS) rule and expects a decision later this year on its review of glyphosate.
Domestic ethanol demand is also supporting corn usage. According to the Renewable Fuels Association, ethanol blending reached a 52-week high during the final week of May as gasoline demand climbed to its strongest level in nearly a year. Current production levels put the industry on pace to consume nearly 5.9 billion bushels of corn annually.
USDA’s latest agricultural trade outlook projects exports will reach $176.5 billion this year, helping narrow the agricultural trade deficit to approximately $29 billion, down from more than $43 billion last year.
EPA Policy Updates Under Review May Expand Renewable Marine Fuel Markets
Meanwhile, EPA Administrator Lee Zeldin says the agency is considering updates to the Renewable Fuel Standard that could expand eligibility to certain marine fuels, potentially creating new demand for renewable fuel production.
Zeldin also says the EPA is working to finalize a new Waters of the United States (WOTUS) rule and expects a decision on its ongoing review of glyphosate later this year.
Separately, the EPA is continuing efforts to address concerns over diesel exhaust fluid (DEF) requirements. Following meetings with farmers, Zeldin said the agency has gathered data from major engine manufacturers and is reviewing additional steps to reduce equipment disruptions in the field.
“When a tractor goes down in the middle of a harvest, it results in lost time and lost money, great frustration, and a lot of these farmers are working to survive and working very hard to survive on extremely low margins,” Zelden said this week. “Sometimes the good years are shockingly lower margins than Americans who are not farmers may realize, and many of the bad years, you’re looking at farmers, really all across the country and here in Oklahoma, who actually don’t get a chance to pay themselves at all.”
Officials and manufacturers also say DEF requirements will reduce wear and tear on high-dollar machinery.
“We then also issued a demand letter to 14 engine manufacturers that have 80 percent of the market to give us the information that they have on the DEF system failures,” Zeldin continues. “We received information from all 14 manufacturers. Using that information, we are now able to go further. In the meantime, at the end of March, President Trump announced new guidance issued that day to get rid of the requirement for diesel exhaust fluid sensors altogether.>
Zeldin says additional regulatory actions are still under review, with the agency aiming to roll back rules where legally possible. Today, the Trump Administration announced reductions in import tariffs for certain farm machinery through the end of 2027.
