Grain market remains challenged by tariffs and weather in Brazil

Despite the enactment of 50% US tariffs on Brazilian products, the Brazilian soybean market remains buoyed by high premiums and strong external demand, while the corn harvest is progressing steadily but faces export challenges due to US competitiveness and unattractive prices for producers. This is what Grão Direto's Expert Analysis points out this week. Check it out: 

How did the soybean market behave?

Start of the tariff hike: 50% tariffs against Brazil went into effect this week. As a result, some Brazilian products will pay the highest tariff in the world to enter the US.

Exports and premiums continued to support: Even with the drop in Chicago, good demand abroad and still high premiums at ports held soybean prices here in Brazil.

US Harvest: projections remained optimistic for the North American harvest and international demand remained weak, caused mainly by the absence of China.

In Chicago, the August 2025 soybean contract closed at US$9,67 per bushel, a slight increase of 0,52% for the week. The March 2026 contract fell to US$10,22 per bushel, a decline of 0,10%. The dollar fell 1,98%, closing the week at R$5,44. The prevailing trend in the physical market was stability, mainly due to port premiums, which remain high.

What to expect from the soybean market?

Exports remain firm: The Brazilian port shipment schedule for August is the highest volume recorded in the last five years, indicating strong demand for the South American grain, according to Anec. By the end of July, Brazil had already exported 77,23 million tons and still needs to ship another 24,87 million by December to reach the annual target of 102,1 million tons. With 19 weeks remaining, this represents a logistical challenge, requiring an average of 1,31 million tons per week: a high pace, but still feasible, especially given China's preference for Brazilian soybeans, while the American harvest has not yet entered the purchasing radar.

Despite soybean's strong performance, corn is beginning to gain ground during this time of year. With the harvest progressing and port terminals beginning to shift to soybean operations, corn's share of shipments is growing, while the oilseed's shipping window is gradually closing.

Brazilian awards on the rise: Despite pressure from declines in Chicago and the appreciation of the real against the dollar, high premiums remain one of the main pillars supporting the soybean market. This scenario has favored the growth of trading, especially for soybeans from the last harvest, which had a very strong week.

The lack of progress in trade negotiations between the United States and China continues to give South American soybeans a leading role in the international market, maintaining their attractiveness and boosting global demand. However, this momentum may slow in the coming weeks, as China is virtually certain to resume purchasing the oilseed from the United States as the new American harvest approaches.

Supply and Demand Report: On the 12th, the USDA will release a new update on global supply and demand data, and the market expects an increase in final stocks of the new crop, reflecting a possible slowdown in US exports. Yields are also expected to be revised upward, increasing total production thanks to good weather conditions that have been favoring crop development.

This expectation of increased supply and recovering inventories should put pressure on prices, especially on the Chicago Board of Trade. Weaker external demand, particularly a reduction in Chinese purchases, could amplify this movement.

Macroeconomic scenario: Bets on a U.S. interest rate cut in September gained momentum after weaker labor market data, even though uncertainty persists until the release of new economic indicators. Meanwhile, members of the Central Bank of Brazil reaffirm that they will not hesitate to keep the country's interest rates at higher levels for longer, or even raise them, if there is no conviction that inflation is sustainably converging toward the target.

Furthermore, the unstable geopolitical environment and tariff wars, which remain on the market's radar, should add an extra dose of volatility to the US currency, but with fewer surprises. The combination of these factors keeps Brazil in a favorable position to continue attracting foreign capital, which, consequently, may continue to pressure the dollar. Chicago prices will remain under pressure due to the positive development of US crops, the projections in the Supply and Demand Report, and China's lack of purchases. In Brazil, premiums may continue to support prices, potentially offering windows of opportunity if there is any positive movement in Chicago.

How did the corn market behave?

Harvest continued to advance: With the weather cooperating, the harvest continued steadily throughout the week and has already surpassed 80% of the harvest in Brazil, according to Conab. The highlights are Piauí, Tocantins, and Mato Grosso, which have already surpassed 90% of the harvest.

Withdrawn producers: Even with the significant progress of the harvest, sales remain slow. The main reason is the lack of attractive prices, which are still below what producers consider viable in the current scenario.

US Exports: Sales of the new crop reached their highest level since October 2024, solidifying the United States as the most competitive supplier at this time. In contrast, Brazil and Argentina have lost ground, with less competitiveness in recent negotiations.

In Chicago, the September 2025 corn contract closed at US$3,83 per bushel, down 1,79% for the week. On the B3 exchange, the September 2025 contract fell 2,72%, closing at R$65,14 per bag. In the physical market, prices were mixed, with some markets recording gains and others falling, while traders await clearer fundamentals to guide negotiations.

What to expect from the corn market?

Exports remain challenging: By the end of July, Brazil had shipped 8,42 million tons, while the target for the year is 43 million. There are still 34,58 million tons to be shipped abroad in the remaining 19 weeks until the end of the year, which would require an average export rate of 1,82 million tons per week. A recovery in exports depends on the smooth progress of the second crop harvest, which has been progressing without major problems, the reopening of ports, which are gradually being redirected to handle corn, and the competitiveness of Brazilian grain compared to US corn, which remains more attractive.

Supply and demand report: On the 12th, the USDA will release a new update on global supply and demand data. Market expectations are for an upward revision in corn yields for the 2025/26 crop in the United States, which would indicate a larger and more efficient harvest than in the previous cycle, as well as higher ending stocks. For Brazil and Argentina, no significant changes are expected in this report. If this productivity projection is further increased, pressure on prices could increase—however, buoyant domestic consumption in the US could act as a containment factor, preventing more significant price drops.

Climate scenario: Over the next 15 days, Brazil's rainfall pattern is expected to remain concentrated in the North and South regions, while the rest of the country will experience low and evenly distributed rainfall. In the United States, the climate scenario remains favorable for crop growth, with a wet period and rainfall covering much of the country. The central-west region of Iowa, including parts of Illinois and Missouri, may receive significant rainfall, with a specific risk of flooding, depending on the intensity of rainfall. Overall, the climate remains within historical averages, with no significant extremes expected in the short term.

Demand for Brazilian corn is expected to remain under pressure due to the increased competitiveness of North American corn. However, the second half of the year is historically marked by a surge in exports, which can boost demand and, consequently, positively influence domestic prices.