Trade, Weather, and Farmer Moves Shape Market Mood After USDA Data
Key Takeaways
- Inflation signals remain mixed, with producer prices rising even as consumer prices hold steady
- China’s lack of soybean purchases and an approaching tariff deadline are adding export uncertainty
- Weather during peak corn pollination will be critical in shaping yield and market direction
Arlan Suderman, Chief Commodities Economist at StoneX, saw few surprises in the USDA’s June 30 report. But beneath the surface, he flagged several storylines worth watching – some already affecting markets and others still in motion.
Inflation’s Signals Leave Room for Interpretation
Prices at the consumer level haven’t moved much lately says Suderman. Producer costs, on the other hand, are creeping up. The gap between the two groups has traders on edge.
“There’s a disconnect,” Suderman said. The Fed insists inflation is cooling. Markets aren’t so sure.
Chart of the StoneX Commodity Tracker Compared to the US 5-Year Breakeven Rate
Source: Arlan Suderman, StoneX Calculation, FRED
The Fed appears content to wait. But investors are already eyeing the next few rate decisions, especially if employment data indicates weakness later this summer.
No Progress With China, and the Clock Is Ticking
A 90-day pause on U.S. reciprocal tariffs – China not included – ends July 8. That’s soon. And it’s unclear what comes next. There’s been talk of trade deals. But so far, nothing concrete has emerged with the most important trade partners. And China’s lack of soybean purchases for Q4 isn’t helping the outlook. Tariffs on U.S. ag exports to China are still in effect. The image below highlights what’s at stake.
Table of Tariff Rates on Key Crops
Source: Arlan Suderman, China Customs & StoneX Calculations
Elsewhere, demand for U.S. grains is soft. Adding to that is Brazil’s stepping up exports, helped by a weak currency and strong growing conditions.
Farmers Adjust. Now Weather Gets a Say.
Farmer behavior varies. In Iowa, growers sold more of their corn and soybeans early. In Minnesota, much of last year’s crop remains unsold. The next two weeks will be critical. Corn pollination is peaking. Yield potential could swing based on short-term weather. The map below shows when key regions hit peak pollination: timing that matters for yield.
US Corn Pollination and Production Chart
Source: Arland Suderman / USDA & Commodity Weather Group
The market isn’t moving much for now. But that could change fast if July turns dry or trade headlines shift.
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–– Written by: Andy Catsimanes
–– Expert: Arlan Suderman, StoneX Chief Commodities Economist
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