Latest / The Commodities Economy with Fexingo: Oil, Gold, Wheat, and Raw Material Markets / Why Corn Is Surging While Wheat Stalls in June 2026
Transcript
- Lucas: If you glance at the ag commodity board this morning, the story is not a uniform rally or a broad sell-off. It's a divergence. Corn is up more than 4 percent over the past five days, while wheat is down about 1.3 percent. That gap is worth unpacking. Luna: Yeah, and those two grains usually move together more than they move apart. So what's driving the split right now? Lucas: A few things. First, the supply picture for each is very different. U.S. corn is coming into the summer with fairly tight stocks after strong export demand and a big chunk of the crop going into ethanol production. Ethanol margins have been solid, and the blending mandates aren't going anywhere. Meanwhile, global wheat stocks are actually pretty comfortable. Luna: And the Black Sea situation — I know there have been some headlines about Ukraine exports, but it hasn't really disrupted the market the way it did two years ago. Lucas: Exactly. The Black Sea grain corridor is functioning, even if not at full capacity. Russia is exporting wheat at a strong pace. So wheat doesn't have that supply-risk premium baked in. Corn, on the other hand, has been supported by robust U.S. export sales — China has been a steady buyer, and other Asian markets are picking up tonnage too. Luna: And weather? I know the planting season was a bit uneven in parts of the Midwest. Is that showing up in the numbers? Lucas: It is. The USDA's acreage report — which came out last week — showed corn plantings slightly below the March intentions, while wheat plantings actually came in a touch above expectations. So you've got a smaller planted area for corn, plus some concerns about dryness in parts of Iowa and Illinois during the early growing stage. That's giving the market a reason to add a weather premium. Luna: So corn gets the weather premium and the demand story, while wheat has plentiful supply and no real catalyst. That explains the divergence. Lucas: Right. And then there's the macro element. Commodities broadly have been under pressure this month — crude oil is down, metals have been choppy. But corn is holding up because its demand is relatively inelastic and domestic. Ethanol is a steady consumer regardless of what the GDP numbers do. Wheat is more exposed to global trade flows and currency moves, and with the dollar still firm, that's a headwind. Luna: Let's talk about the numbers. Corn futures are around 432 cents per bushel today. Where do you see that heading as we move into July? Lucas: A lot depends on whether we get rain in the next two weeks. The crop is entering the pollination phase, which is the most sensitive period for yield determination. If the weather maps stay dry, you could see corn push toward 450. If we get a normal rain pattern, we might settle back toward 420. The market is pricing in some risk right now. Luna: And wheat — trading around 583 cents. That's down from over 600 earlier this spring. Is there any scenario where wheat catches a bid? Lucas: Sure — if there's a sudden disruption in the Black Sea corridor, or if a major importer like Egypt steps in with a big tender. But right now, the path of least resistance is lower. The global balance sheet is ample. Even with some quality issues in parts of Europe, the sheer volume of wheat available is keeping a lid on prices. Luna: Speaking of staying grounded in the data — we're able to dig into these numbers every day because listeners support the show. A couple of dollars a month really does keep these episodes ad-free and independent. If you've gotten something out of the breakdowns, buy me a coffee dot com slash fexingo, it makes a real difference. Lucas: Yeah, genuinely. And it lets us keep doing deep dives like this without any sponsor pressure. So thanks to anyone who's chipped in. Luna: Alright, back to the grains. You mentioned soybeans earlier — they've been relatively flat, up about 1 percent. What's their story? Lucas: Soybeans are kind of caught in the middle. They've had strong export demand too, especially from China, but the South American crop was huge. Brazil's soybean harvest was record-large, and that's weighing on the market. So soybeans are hovering around 1140 cents, not really breaking out in either direction. Luna: And cotton? That's been the underperformer in ag for a while now. Lucas: Cotton is down nearly 2 percent this week, trading around 76.66 cents. The demand picture for cotton is weak — global textile demand has been sluggish, and inventories are high. Plus, the dollar strength hurts U.S. cotton exports. There's really no bullish catalyst on the horizon. Luna: So if you're a farmer deciding what to plant for 2027, the price signals are pretty clear: corn looks attractive, wheat less so. Lucas: Absolutely. And that's exactly what the market is trying to signal — allocate more acres to corn next spring. But it's not just about price. Input costs for corn are higher because it requires more fertilizer and fuel. So the net margin calculation is tighter. But at current levels, corn is the winner among the row crops. Luna: And for traders — is this a pairs trade? Long corn, short wheat? Lucas: It's been a popular one. The corn-wheat spread has widened significantly. But you have to be careful — if weather shifts or a geopolitical event hits, that spread can snap back quickly. It's not a set-and-forget trade. Luna: Makes sense. So to wrap up: corn is the standout in ag right now, driven by tight supplies and steady demand, while wheat struggles with ample stocks and no weather premium. Soybeans are stuck in the middle, and cotton is in a bearish trend. Lucas: That sums it up. We'll keep an eye on the weather maps and the export sales reports. This is a dynamic market, and things can change fast. But for now, corn is king in the grain complex.