Soybean futures rallied overnight as traders reacted to mounting crop stress in the U.S. and news of potential trade disruptions with China. The National Weather Service has warned that a dangerous heat wave stretching from Minnesota to the Gulf Coast could persist through the week, placing crops and livestock under intense environmental pressure.

Soybeans for November delivery rose 7¼¢ to $10.32¾ per bushel, while soymeal and soybean oil also posted modest gains. The climb follows a slight decline in crop condition ratings: 68% of soybeans are now rated good to excellent, down two points from last week, according to the USDA.

Triple-Digit Heat Threatens Corn and Soy Yields

Temperatures have surged across major growing regions. Heat indexes of 105°F to 110°F are forecast from central Iowa to southern Missouri, while parts of Michigan and Indiana may see record-breaking highs of up to 108°F. The combination of extreme heat and high humidity during key reproductive stages-pod setting in soybeans and silking in corn-could reduce pollination success and seed fill, lowering yield potential.

Corn ratings held steady at 74% good to excellent, but with much of the crop in the dough stage, further heat could impair grain development.

In the northern Plains, spring wheat continues to struggle. USDA data shows only 52% of the spring wheat crop is rated good to excellent, down from 54% the prior week and far below last year's 77%. North Dakota, the top-producing state, saw ratings fall to 67%, prompting Governor Kelly Armstrong to request a federal disaster declaration after severe storms damaged infrastructure and affected over 37,000 residents. Losses are estimated at $11.5 million.

China Set to Suspend Tariff Exemptions

Adding to the volatility, China is expected to suspend tariff exemptions on a wide range of U.S. agricultural goods as of August 1, with existing exemptions expiring by September 14, according to a report from the USDA's office in Beijing.

The suspension would impact nearly all key ag categories-grains, oilseeds, meat, pulses, tree nuts, and fruit-potentially disrupting export channels during a critical market window. These exemptions have been in place since 2020 and helped ease trade tensions following the U.S.-China tariff battles.

The move, though not officially confirmed by Beijing, raises alarm as farmers and exporters may face higher tariffs on goods just as harvest nears. Industry sources suggest the policy shift reflects political maneuvering and growing friction over bilateral trade terms.

EU Tariffs Add More Global Trade Headwinds

Meanwhile, the European Commission has finalized a list of retaliatory tariffs in response to U.S. "Liberation Day" duties. Although core U.S. staples like corn, soy, wheat, beef, and pork are not named directly, over 1,700 product codes worth $7.2 billion are included, covering animal products, seafood, fruits and vegetables, and machinery.

Market Outlook and Producer Response

Despite overnight gains, markets remain volatile. While soybeans benefit short-term from speculative buying, underlying fundamentals are shaky. The combination of crop stress and trade uncertainty could dampen overall profitability if yields drop and export markets shrink.

Producers are urged to:

Monitor crop development daily during this heat wave

Prepare for potential price fluctuations as global tariffs shift

Consider risk management tools, including crop insurance reviews and forward contracting

With critical weeks ahead, attention will remain fixed on weather maps, trade policies, and USDA updates to determine how much of the 2025 crop season can be salvaged-or lost.