Bertrand Oesterle, StoneX VP of Clearing and Execution Sales, explains how currency policy, trade shifts, and weather are weighing on grain markets.
Since April, Donald Trump has pushed for a weaker dollar and 1% interest rates, challenging the Fed’s independence and reshaping currency dynamics. As Bertrand Oesterle noted, “The EUR/USD is hurting EU farmers”. EU grain prices have dropped sharply, and the FX impact is already reflecting a 10% trade cost adjustment ahead of potential new tariffs on July 9.
While focus temporarily shifted to the Middle East, tensions and disruptions in the Black Sea persist. A Turkish decision to raise strait passage fees by 15% could have trade impacts, though the market has yet to react. Meanwhile, a new EU-Ukraine trade deal appears more reciprocal but remains complex and unclear in implementation.
Despite a weaker dollar supporting U.S. exports, corn futures hit new lows. Oesterle attributes this to benign weather and strong crop conditions in the U.S. and better than initially anticipated supply projections in Brazil. The USDA report on June 30 showed little acreage change, while U.S. corn conditions are 73% good to excellent, 10% above the five-year average.
Early French wheat harvest results show high specific weights but low protein levels, potentially hurting export competitiveness. “The bears are in a way, quite happy about those protein levels”, but Bertrand Oesterle cautions these are early cuts. Meanwhile, the coming Paris roll and potential reduction in fertilizer use due to trade restrictions on Russian supply may limit future planting and yield potential.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: Bertrand Oesterle, StoneX VP of Clearing and Execution Sales
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