Better-than-expected production potentials from China and India are contributing to a favorable outlook, even though Western Europe is struggling with chronic dryness and eastern parts of the continent are drying notably as well. Some speculators have put all of their bets on “super” El Niño and the media hype that came ahead of it in the spring.
A wet and cool spring worried many producers and traders in the US Midwest earlier this growing season, but weather conditions have managed to perk along relatively well. Rain has occurred routinely, and temperatures have not been at an extreme for long enough periods of time to cut deeply into production.
There was worry about hot, dry weather in the northwestern Corn and Soybean Belt in July, but just enough timely rain events kept the crop viable. Much of the excessive heat in the north-central United States ended up occurring just slightly too far to the west to have a deep impact on this year’s production.
There will be a decrease in yield in the northwestern US Corn and Soybean Belt, but the loss will not be significant enough to throw off the balance sheet and force the market into a panic. This kind of reaction is not likely with the majority of the US Midwest working on an average to slightly better-than-average crop. The growing season is far from over, but the prospects for adversity through the end of August are low, except for some soybean, sorghum and cotton areas in the Delta and especially in the southern US Plains, where dryness abounds.
China and India are experiencing a mostly good summer crop production year. China has had a few bouts of dryness and excessive rain with flooding, but the incidents have not likely had a big impact on the bottom line for production.
India’s monsoon got off to a very poor start and shook up many farmers in the nation, leading to speculation about a failing rainy season and production cuts. Along came July, and rainfall improved in both timeliness and in volume. It has been proven many times in the past that June rainfall in India has much less to say about production for the summer crops than July and August rainfall.
Sufficient soil moisture has been in place for the bulk of India’s summer grain and oilseed production areas. Some significant moisture deficits exist, but yields are not determined by percent of normal rainfall — rather by the timeliness of rain and temperatures. India may still have a dry finish to the growing season, and if that evolves, there could be a little more futures market speculation to deal with.
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India is still quite dry in southern parts, impacting rice, sugar cane, coffee, and some minor grain and oilseed production areas. Certainly, if rainfall does not increase over the next few months, there may be some greater losses to deal with later in the year. The bulk of grain and oilseed production comes from central India, which has experienced some of the best rainfall in recent weeks.
There is some potential that India will have a sufficient summer crop to contribute to world supply in a positive manner, and with the United States looking at an average crop and China a big crop, that makes the impact of small production losses rather low.
Without any doubt, France, the United Kingdom, Belgium and parts of Germany will come up with horrific yields this summer because of too much heat and dryness. Eastern Europe was experiencing some very good weather, along with the former Soviet Union, until recently. Rain has diminished greatly in the past few weeks, and there has been a rise in daily temperatures leading to rapid drying in the topsoil across southeastern Europe. Areas from western Slovakia to northern Serbia and northwestern Romania have been the driest for the longest period of time, and yields will be low like parts of western Europe. The Balkan countries, Ukraine and Russia’s Southern Region have only recently dried down, and if the warm and dry conditions prevail for much longer, there may be a reduction in yield for these areas as well.
Still, there is no “crisis” in summer crop production around the world, and the impact on the futures trade is not likely to be significant.
That leaves us with El Niño and South America weather to induce a market frenzy, and neither will have much impact for a while. El Niño is evolving aggressively, but the only areas that have been seriously harmed by the event have been Indonesia, perhaps southern and west-central Thailand, and north-central into interior western Myanmar. Most of these crop areas produce rice and sugar cane more than contributing to traditional coarse grain or oilseed production. Palm oil production can have an influence on vegetable oil supply and futures prices, but another several weeks of hot, dry weather is needed to impact production.
Canola in Australia, South Africa, Argentina and Canada is rated favorably, but for most of the Southern Hemisphere crops, there is still plenty of time for trouble to develop. South Africa and Australia winter crops have established quite favorably this year on frequent rain. El Niño can flip South Africa and Australia winter production on its back in a short period of time. But given where these crops are grown, it is far more likely that summer crop production will be more impacted than winter crops, and canola production may be better than expected.
Canada’s canola crop has not seen ideal conditions. The spring was wet and cold, with flooding in parts of east-central Saskatchewan, west-central Manitoba and north-central Alberta. Some production cuts are likely because of flooded fields.
Other areas in Canada’s Prairies experienced a good mix of weather after the cool and wet spring. Some warm and dry conditions evolved in July, stressing crops that may have had short root systems because of too much wet and cool weather in the spring. However, subsoil moisture was still rated well enough to carry crops into the first week of August without much production cut, and mid-August rain should prove to be timely enough to place a cap in production cuts this summer.
Overall, weather in 2026 has not been ideal, and many production areas may not have the best year. But with ending stocks where they are and production expected to be good enough to limit a shortfall on supply, there is not much reason to anticipate a huge run on grain or oilseed commodity futures.
El Niño provides some hope for speculators. Rice, sugar cane, coffee, cocoa, oil palm, coconut and rubber production areas still face the potential wrath of El Niño, but as noted earlier this year, the El Niño event may have been overhyped, certainly from a grain and oilseed production perspective.
