Grains Prices Rally Amid Speculation of Chinese Purchases, Trading Remains Volatile

US-Iran Conflict and Drought Weigh on Grain Markets

Market players are closely monitoring the escalating conflict between the US and Iran, as well as the ongoing drought in the US Plains, with these factors influencing grain futures prices. On Friday, Chicago soybean futures rose as traders anticipated that China may make a soybean purchase ahead of a meeting between US President Donald Trump and Chinese President Xi Jinping next week.

Chicago Board of Trade most-active wheat rose by 6.75 cents to settle at $6.19 per bushel, while soybeans gained 15.75 cents to $12.08 per bushel. Corn settled 3.75 cents higher to $4.71.25 per bushel. Analysts believe that China will make a small purchase of soybeans, often referred to as a goodwill purchase, ahead of the May 14-15 visit.

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The US-Iran conflict has led to uncertainty in the market, with futures taking a pause. "Futures are taking a bit of a pause today, and it's a wait-and-see moment," said Terry Linn, analyst at Linn and Associates, referencing the uncertainty surrounding the US-Iran war.

Additionally, dealers are monitoring the weather in drought-hit US wheat belts, where this week's rainfall missed some critically dry areas and may have arrived too late or in insufficient amounts to prevent crop damage. Some rain is forecast next week, but volumes are expected to be moderate, while a swing toward warmer weather could also heap stress onto the crop.

"There's a realization that the crop has been hurt," said Terry Linn, analyst at Linn and Associates. "This hard red winter crop has been through a lot. Wheat has nine lives, they say, but we've probably used up about eight of them."