Latest / The Commodities Economy with Fexingo: Oil, Gold, Wheat, and Raw Material Markets / Why Corn Is Surging While Coffee Crashes in July 2026
Transcript
- Lucas: So here's the split that's caught my eye this week: corn futures are up seven and a half percent over the past five days, sitting at four eighty-seven a bushel — yet coffee has cratered more than ten percent to just under three dollars a pound. Two agricultural commodities, totally different directions. Luna: That's a huge divergence. When I see corn rallying and coffee crashing at the same time, I think supply stories are driving both — but from opposite ends. Lucas: Exactly right. Let's start with corn. The big factor is US weather — we've had intense heat across the Corn Belt over the past two weeks, especially in Iowa and Illinois. That's stressing the crop during the critical pollination phase. The USDA's latest crop condition report showed good-to-excellent ratings dropping by five points. That alone gets traders nervous. Luna: And on the demand side, we're seeing strong ethanol production — I think the last EIA report had output at one point zero six million barrels per day, near record highs. Plus China has been buying US corn aggressively. Lucas: Right. Corn exports to China have been huge this month — more than double the pace from last year. China is rebuilding its hog herd after African swine fever, and corn feed demand is surging. Combine that with ethanol and weather, and you get this rally. Luna: Okay, now coffee. The crash is really about Brazil — they're wrapping up their harvest, and it's a monster. CONAB is estimating a record seventy million bags. That's up maybe eight percent from last year. Global supply is just flooding the market. Lucas: And the Brazilian real has weakened this month — that makes it even more attractive for Brazilian producers to sell their coffee on the international market. They get paid in dollars, so a weaker real boosts their local-currency revenue. They've been dumping supply. Luna: So the same currency story can flip depending on the crop? For corn, the dollar hasn't moved that much — but for coffee, the real is the key. Lucas: Precisely. Corn is mostly us driven, so the dollar index matters for export competitiveness, but the real is the big swing factor for coffee because Brazil grows about a third of the world's supply. And this year, they just have too much. Luna: There's also a demand angle — coffee is more discretionary than corn. With June CPI coming in at three hundred thirty-two point six — down from three thirty-four — and core PCE still creeping up, maybe consumers are trimming little luxuries. Lucas: That's a good point. Corn is a staple and an industrial input for ethanol and livestock feed. Coffee is a daily treat. If people feel pinched, they might skip the second cup. But honestly, the supply story is the dominant force here. Luna: Yeah, you can't ignore that seventy-million-bag harvest. Even if demand were strong, that would take time to absorb. So where do you see these moving from here? Lucas: For corn, it depends on the next two weeks of weather. If the heat persists and crop ratings keep dropping, we could test five dollars. But if rains come, we could see a sharp pullback. For coffee, Brazil's harvest is almost done, so the selling pressure might ease. But stocks are high, so a rally probably needs a frost or drought somewhere else. Luna: It's a real study in contrasts — weather-sensitive versus harvest-driven, staple versus discretionary. And speaking of the show, we cover a lot of these markets because listeners like you find them fascinating. Quick thing — a handful of folks chip in monthly at buy me a coffee dot com slash fexingo, and that support literally keeps this podcast ad-free and going. So if you've gotten something out of these conversations, that's where you can help. Lucas: Yeah, we really appreciate that. It's what lets us dive into these splits without any sponsor noise. Back to the markets — another thing I'm watching is how the corn and coffee divergence fits into the broader commodity picture. Energy is surging too — crude oil up five percent this week, Brent nearly ninety-seven dollars. Luna: That seems to be a different driver — geopolitical with that Ukraine-Iran incident in the Caspian. But the point is, commodities are all over the place right now. Corn up, coffee down, oil up, copper down. Lucas: Exactly. The market is not moving in unison. That tells me we've got strong supply-specific stories rather than a single macro wave. For listeners who want to understand the commodity landscape, the divergence between corn and coffee is a perfect case study of how local factors override global trends. Luna: And if you're trading or just trying to understand your grocery bill — corn feeds into meat and ethanol, coffee hits your morning cup. The same July heat wave that's hurting corn might not hurt coffee at all. Lucas: Right. Corn is Midwest US, coffee is Brazil. Different hemispheres, different seasons, different sensitivities. That's why you can't just paint all 'commodities' with one brush. You really have to look at each market's own fundamentals. Luna: So in terms of concrete takeaway — what's the one thing you'd want a listener to remember about corn and coffee right now? Lucas: That corn is being pulled up by a supply scare and strong demand, while coffee is being pushed down by a supply glut. Same month, opposite forces. If you track weather in the US and the real in Brazil, you've got a good handle on both. Luna: Love that. Thanks for breaking it down, Lucas. Lucas: One last thought — keep an eye on the USDA's August crop report. That'll either confirm the corn stress or ease it. And for coffee, watch Brazilian export data next week. If shipments slow, the price could stabilize. Luna: Perfect. And as always, we'll be here to make sense of it.