In the days leading up to the U.S.-China trade meeting in Beijing, the soy market added premium on the hope a new trade deal could be consummated. There was a new deal, though not yet confirmed in detail by China, but that deal was comprised of a plan to buy $17 billion of non-soybean ag products from the U.S. That led to a bit of disappointment from soybean bulls. However, China is never quick to confirm in written detail a trading accord with the U.S., as we saw last October. However, they did perform on the promise to buy an additional 12 million metric tons (mmt) of 2025-26 U.S. beans. In that same October meeting, a verbal commitment was reported that China would buy 25 mmt per year for 2026 through 2028. That has still not been confirmed by China and traders are anxiously awaiting some flash morning sales to confirm China's adherence to that pledge.

In the meantime, July soybeans have been floundering, having risen to new heights before falling to -- and bouncing off -- a trend line that dates back to January. With Brazil having come off a record-by-far large soy harvest, Argentina in the middle of their own large harvest, and U.S. managed money funds carrying a monstrously large net long in the soy complex, the next several weeks and months will provide a highly volatile time. Add to the uncertainty of both the Iran war and China buying intentions, a general feeling that soy acres could be on the move higher, soybean futures are being pulled in opposite directions. Oh, and a record-fast soybean planting pace -- now over 70% done -- followed up by plentiful rain, could also weigh on this spec-heavy market.

It appears a solid close below the $11.75-$11.80 area on July could result in some serious liquidation of those longs. However, China's moves and developments in the Iran conflict could each have something to say about that. Expect uncertain and volatile times ahead. It's anybody's guess as to where we go from here, but funds are sure hoping China puts on their buying shoes.

KANSAS CITY JULY FUTURES:

The May USDA Crop Production report revealed an estimated winter wheat crop that turned out to be far smaller than trade experts had envisioned. Impacted by a severe drought in the Western and Southern Plains, along with several frost-freeze events, the winter wheat crop -- especially hard winter -- was decimated. The result was an all-wheat production estimate of 1.561 billion bushels (bb) that figured to be 424 million bushels (mb) lower than last year on reduced area and yield. Abandonment rates shot higher for hard winter fields. Since that bullish report, which saw Chicago and KC futures go up the daily limit, KC July has given back close to 60 cents per bushel.

While there is certainly a shortage of high quality, high protein hard wheat ahead in the U.S., the rest of the world is awash in wheat, and U.S. wheat has priced itself out of many markets. So, has Kansas City gone high enough? Only time will tell, but the sharp fall in wheat seeding that is expected in the coming year as farmers favor other crops, could possibly ignite a renewed fire in wheat markets. For now, wheat is still in a bullish trend and would have to fall another 35 to 40 cents to breach the 50-day moving average.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Dana Mantini can be reached at Dana.Mantini@dtn.com

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