Grain market fluctuates with weather, exchange rates and biofuels

The Grão Direto Expert Analysis of this Monday (30/6) highlights that the good weather conditions in the United States maintain expectations of a robust soybean harvest, putting pressure on prices in Chicago. In Brazil, the slow progress of the second-crop harvest and the strong demand help sustain corn prices, despite the scenario of falling prices. The analysis also addresses the effects of the appreciation of the real, the increase in biofuel blends and the new trade agreement between China and the US on the agricultural market. Check it out:

How did the soybean market behave?

American harvest and trade agreement: The weather remained favorable for soybean crops in the United States, with forecasts of regular rainfall and average temperatures, reinforcing expectations of a robust harvest and putting pressure on prices in Chicago, which ended the week below US$ 10,25/bushel in the November contract.

Biofuels E30 and B15: Brazil has strengthened its global leadership in biofuel production with the recent approval of an increase in the ethanol blend in gasoline to 30% (E30) and biodiesel in diesel to 15% (B15), effective August 1, 2025. The measure was approved by the National Energy Policy Council (CNPE). The increase in the biodiesel blend should increase demand for soybean oil by around 150 tons by the end of the year, reflecting in the support of soybean prices in the interior.

Dollar: The commercial dollar closed last Friday at R$5,48, reaching its lowest value since October last year, accumulating a devaluation of 11,26% in the year to June. Despite external trade tensions, such as tariffs between the US and Canada, the US currency remained under pressure in Brazil.

In the international market, the dollar also showed weakness. The appreciation of the real favors the purchase of imported inputs and helps to contain production costs, but reduces the competitiveness of Brazilian agricultural exports.

In the coming weeks, we may see exchange rate volatility linked to fiscal and geopolitical uncertainties and monetary policy decisions in Brazil and the US. This scenario requires producers to pay attention to managing exchange rate risk and taking advantage of windows of opportunity in marketing.

What to expect from the soybean market?

USDA: The market is eagerly awaiting the US planted area and stocks report, which could bring significant volatility, especially if there are surprises in the planted area or stocks. For corn, there is a tendency for a slight increase in the planted area compared to the March intention (considering the history of the latest releases), while for soybeans, there has historically been a reduction (however, there may be divergence regarding the latest releases and there may be an increase in the soybean planted area - which the market may reflect with considerable volatility in prices). Stocks may also surprise, directly impacting international prices and the global sentiment of the agricultural market.

Trade agreement: China and the United States signed a new trade agreement on June 27, suspending bilateral tariffs and restrictive measures, with China guaranteeing supplies of rare earths to the United States in exchange for the suspension of barriers on Chinese products. The trade truce between the United States and China brings immediate relief to the global commodities market, reducing uncertainty and favoring the flow of international trade.

For soybeans, the agreement could pave the way for a resumption of American exports to China, depending on the intensity of the tariff reduction and China's willingness to increase external purchases. In the case of corn, the impact tends to be more indirect, but the stabilization of trade relations could benefit buyer confidence and facilitate future negotiations, especially given China's heavy dependence on agricultural commodities.

In Brazil, the trend is that the country will continue to benefit most if Chinese tariffs on the US remain high, maintaining the competitiveness of Brazilian soybeans and corn in the Asian market. However, any deeper easing of restrictions could increase international competition, putting pressure on prices and requiring producers to pay attention to market volatility.

How did the corn market behave?

2025 Second Harvest: The previous week was marked by clear downward pressure, with contracts on the B3 falling in line with losses in Chicago and expectations of a record second crop in Brazil. The Brazilian harvest continues at a slow pace compared to last year.

Delay in supply and adjustment in freight: Even in the face of a scenario of falling prices on the B3, there is a possible support for domestic corn prices due to the delay in supply (delayed harvests due to rain and low temperatures in some regions). The market may react more intensely as the harvest of a full crop develops. As the harvest progresses, the supply of corn tends to increase and freight rates may be impacted by an increase in the coming weeks.

Internal demand: Brazilian demand for corn, especially from the animal protein sector and ethanol plants, helps to limit more significant drops, but the stronger arrival of the second crop could maintain pressure on prices until the end of the year.

What to expect from the corn market?

Progress of the second crop harvest: The second corn harvest continues at a slow pace in the Center-South of Brazil, well below that recorded in the same period last year and the historical average. The weather will be crucial in determining the progress of the work, and the concentration of the harvest in the coming weeks could put pressure on domestic supply and corn prices.

Weak domestic demand and exports: Domestic demand remains strong, especially from the animal protein sector and ethanol plants, helping to sustain prices and limit declines. However, Brazilian corn exports remain below the same period last year. The market is awaiting a possible resumption of shipments in the second half of the year.

Expectation of record harvest and external volatility: The 2024/25 Brazilian corn harvest is likely to be a record and historic harvest. On the international scene, the market will be paying close attention to the US (USDA) planted area and stocks report, which could bring volatility to prices in Chicago and influence global sentiment on corn. Corn exports have decreased compared to last year, but prices have so far remained higher than the same period last year - despite the recent drop.