Corn and wheat ended lower on Monday, with soybeans higher. Cattle ended strong with hogs lower.
Corn and Wheat Fall with Crude Oil
Corn and wheat futures fell on Monday in tandem with a correction in crude oil and a de-escalation of the war in Iran.
Brian Grete with CommStock Investments says early in the morning President Trump posted that the U.S. had postponed strikes on Iran’s power and energy infrastructure for five days which tanked the energy market and turned the stock market higher.
“What we saw is that when the crude oil market faded, those two markets went along with it and probably going to be the case near term, at least. I think that there’s so much geopolitical stuff going on right now and so much that could really move markets from that perspective that we are going to see crude oil be the leader and at least on a price directional standpoint,” he says.
Funds Keep Adding to Long in Corn
The funds have continued to add to their long position in the corn market and are over 220,000 contracts long as of last Tuesday.
However, Grete says whether or not they add to that length is totally dependent on the direction of crude oil. “Well, in all likelihood, no, just because you’ll see money flow out of the long side of the corn market. But, you know, if crude oil does reverse and is at or above $100 that is something that they are willing to trade, then corn, I think, does have more room to the upside.”
USDA Reports
The corn market is also gearing up for key USDA reports on March 31 and the new RFS blending mandates.
Early private acreage estimates on corn are down from 4.5 to 5 million acres.
Grete says he’s in the camp of around 95 million but points out those are farmer’s intentions as of March 1 and that could change substantially into the June 30 report.
“So, you know, we had such huge corn acres last year that we are going to be down. It’s just a matter of how much, but market factors right now tell farmers to plant corn over soybeans. The one uncertainty is on the fertilizer side because of the situation
in Iran and the Middle East. And can they get supply? What’s the price? We know that the prices have been elevated because of that. And so there’s a lot of uncertainty. So you got those two things tugging against each other. And we’ll see where it lands,” he says.
USDA Quarterly Stocks
Quarterly stocks will also be interesting considering the massive amount of farmer selling, especially of corn, recently and it’s always a wild card according to Grete.
“That one’s the one that the market has missed, especially on the corn side of things, in a big way. Multiple hundreds of millions of bushels on a consistent basis over several years. And so I would watch the corn stocks number. That one will give direction.”
However, he thinks it may be overshadowed by the geopolitical headlines.
Soybeans Bounce
Soybeans were able to divorce from lower crude oil and grain market to close higher Monday.
Grete says some of it was corrective buying after last week’s steep sell off and in preparation for the final RFS biofuels blending mandates to be announced.
“Some of it was corrective because the soybean market just got hammered a week ago on soybeans not being the centerpiece of U.S.
and Chinese talks. And so that’ll be a focal point as we move forward, too. Soybean market is consolidating. There’s a big bear flag on
the daily. front month futures chart. And so that’s something we need to watch from a technical perspective.”
He thinks the RVO announcement could be potentially bullish for soybeans and soy oil in particular, but we shall see because it’s been a fool’s game to try to outguess any administration on biofuels policy.
Robust RVOs Priced Into Soybean Oil?
So how much of the robust RVO levels are already priced into the soybean oil market?
Grete says, “Well, if you think back to EPA’s proposal last June, it was 5.61 billion gallons for biodiesel. I think we’re probably going to get to that level with a combination of the RVO and then reallocations from 2023 to 2025. I don’t think we’ll get above that level. But like I said, it’s a fool’s game to guess too much ahead of time. So I think some of that is and most of it probably is already baked into the marketplace.”
Old Crop Soybeans Highs In
With the bearish flag formation is the high in the old crop soybean market, unless the U.S. sees the additional 8 MMT of old crop purchases?
Grete says yes. “And like I said, I don’t think that soybeans are going to be the focal point. I think it’s expanding to feed grains. And my personal belief is that that’s positive for U.S. agriculture and for the U.S. farmer. We don’t want to put all our eggs into the soybean
basket. And I don’t think China does either. And so by expanding it to potentially include corn, wheat, sorghum, maybe ethanol and DDGs, I think is a positive thing.”
New Crop Highs In?
Are the highs also in the new crop soybean futures?
While China is expected to buy another 25 MMT of new crop soybeans the market also has to digest more soybean acres.
“So we had the really low number last year. Soybean acres will go up. Do farmers listen to the market factors? How much does the fertilizer
situation play in on corn and all that? And I’ll go back to what I said on corn. Remember, this is a benchmark from which to start adding or subtracting acres, whatever USDA says as of March 31st,” he adds.
Wheat Damage?
Wheat futures were also lower with corn and crude oil and saw technical selling pressure again Monday.
Extended forecasts still look dry near term but have put rain in the 6-10 day forecast which was also negative for the market but there are reports of damage in winter wheat areas according to Grete.
“You know, we saw condition ratings on a state-by-state basis, and not all states updated throughout the winter months, but we did see that Kansas declined through the winter. We know that they’re going to need some timely rains as we move through the spring and the crop greens up here, and it’s not dire yet, but I think we’re getting closer to that with each passing week without meaningful rainfall across the Plains.”
Cattle Higher Fading Cattle on Feed
Cattle futures ended higher Monday following the rally in equity markets and with steady to slightly higher cash.
As a result, Grete says the market was able to fade the slightly bearish placements number in the Cattle on Feed Report which came in above expectations at 104%.
However, he says the placement number was being compared to very low placements a year ago, due to the border being closed to Mexican feeder cattle and a weather event.
” I was really encouraged the fact that we faded that placements number. I think that you know we were comparing to a really low number in February 2025 and so that kind of skewed it. The headline number appeared to be more bearish than what the actual reality was,” he explains.
Higher Cash Cattle This Week?
After steady to even a bit firmer cash trade last week at mostly $235 and $372 dressed but with the five area weighted average at $235.08, up $.25. So can the market build on it this week and can producers regain leverage?
Grete is optimistic, “We aren’t going to see big periods of price pressure I don’t think because of the fact that the numbers just aren’t there. Now we have the whole JBS Greeley, CO plant situation and everything and that diverts some of those cattle to other plants and so that throws a little bit of a wrench into it. But I think overall, we’re still fairly well supported.”
He thinks feedlots in the next couple of weeks will get a little bit more leverage back.
Hogs End Lower
Lean hog futures ended lower on technical selling and fund liquidation.
Grete says that could continue as cash is softening a bit and with nervousness going into the Hogs and Pigs Report on Thursday.
“Revisions to pass data will be critical. And then we get the farrowing intentions as we move forward through spring and summer, in addition to the winter pig crop. And so those all be key numbers along with the market hog inventory, which should tell us what the slaughter rate will be over the next three to six months or so. So a critical report.”
The hogs are also sensitive to the geopolitics that are in play and the uncertainty in the market.
