The global commodities market saw mixed performance during yesterday's trading session (July 8th). At closing, the MXV-Index reversed course, weakening slightly by 0.1% to 2,637 points after three previous positive sessions.
MXV-Index
Corn futures prices continued their strong recovery as the risk of severe weather directly threatened crop yield prospects in both hemispheres. At the close of trading, corn prices on the CBOT rose 1.25% to close at $174.7 per ton, the highest level in over a month. The market is currently reflecting a consensus between concerns about tight supply and positive technical signals on the exchange.
At the Vietnam Commodity Exchange (MXV), market liquidity remains stable thanks to a steady inflow of capital. Agricultural commodities continue to see stable trading demand, notably soybeans and corn.
Forecasts of high temperatures impacting the US Midwest are a key factor triggering buying anxiety. The latest meteorological models confirm a massive, hot, dry high-pressure system is enveloping the area and is likely to last longer than previously anticipated.
Concerns about extreme weather are driving up global corn prices. (Illustrative image)
Severe drought conditions and high temperatures are expected to intensify significantly between July 13th and 21st, accelerating water evaporation and rapidly reducing soil moisture. Notably, this natural disaster coincides with the pollination period – the most sensitive growth stage that directly determines the actual yield of corn.
According to Peak Trading Research, weather patterns in July will be a key factor determining the medium-term trajectory of corn prices, as speculators are aggressively adding a substantial weather risk premium to futures prices.
Weather forecast in the US. Source: MXV
Pressure to tighten global supply is increasing as a record-breaking heatwave in Western Europe is severely damaging crops on a large scale. Preliminary estimates from the French Ministry of Agriculture indicate that this natural disaster risks damaging nearly one-third of France's total corn production – the largest corn producer in the European Union (EU). This has driven up corn futures prices on the Paris exchange, indirectly supporting the surge in US corn prices on the Chicago exchange in terms of intermarket capital flows.
Despite ongoing harvesting pressures from South America, a solid support level for corn prices has been officially established following the US Department of Agriculture's (USDA) second-quarter grain inventory report. The USDA confirmed that US corn inventories as of June 1st were only approximately 134.49 million tons, significantly lower than analysts' expectations of 137.42 million tons. This demonstrates that US domestic demand for both ethanol production and animal feed remains at historically high levels, completely eliminating short-term downward price pressures.
The confluence of fundamental factors helped corn prices break above the 100-day moving average. This breakout above the 100-day moving average triggered technical buying, as many investment funds simultaneously closed short positions and cut losses, thereby contributing to the accelerated upward trend in corn prices.
Buyer optimism was further bolstered as the price spread between spot corn on the Dalian exchange and US Gulf Coast free-on-board (FOB) corn widened above $150 per ton. This widening spread, the largest in two years, is fueling strong speculation that China will soon ramp up its purchases of US corn.
Annual US corn exports. Source: MXV
According to MXV, these developments continue to attract capital into the grain sector as investors increase trading activity to anticipate supply risks. Market liquidity remains stable, with agricultural products recording consistent trading demand, notably corn and soybeans.
Soybean processors in China typically begin placing large orders for the new U.S. soybean crop in August, meaning any further progress in negotiations could further support demand for U.S. soybeans.
In addition, the widening price difference between spot corn on the Dalian exchange and FOB US Gulf corn prices to over $150/ton has also increased expectations that China will soon boost US corn imports.
MXV believes the current upward trend in corn prices reflects a strong return of the weather risk premium ahead of the crucial USDA Supply and Demand Report (WASDE) release on July 10th. With corn futures prices having recovered from their lows, animal feed manufacturers in Vietnam should closely monitor US weather developments next week.
At the same time, it is necessary to take advantage of technical fluctuations leading up to the report to diversify cash flow, gradually locking in import prices for long-term contracts in Q3 and Q4/2026 in order to protect the safety of production profit margins.
With both fundamental factors and speculative capital flows leaning towards an upward trend, MXV believes that the recovery in corn prices will likely be significantly impacted by the upcoming WASDE report.
Following the upward trend in world corn prices, some domestic purchasing businesses have adjusted their domestic corn offer prices upwards by 100-150 VND/kg compared to the end of last week, with spot corn prices fluctuating between 6,850 and 6,950 VND/kg.