Corn ends higher on Tuesday with soybeans and wheat lower. Cattle ended mixed, with hogs higher.
Soybeans Sink on Trade Woes
Soybeans ended lower with risk off in the broader marketplace and fund selling in reaction to bearish trade developments.
Mike Zuzolo, Global Commodity Analytics, says China, India, Brazil and Russia met in Singapore over the weekend to put together a shared response to U.S. tariffs, which signals to him there will be no deal between the U.S. and China any time soon and no movement on peace talks with Russia.
“I think this really goes back to the New East trade alliance. Meaning there are three big countries. Russia and China have invited India in right in the middle of us negotiating trade with China and India and negotiating peace in Ukraine with Russia. And all three of those countries look like it’s not going to go well when it comes to our negotiations with them,” he describes.
He says traders on Wall Street and LaSalle Street have both realized no progress is going to be made with any of these countries on trade.
Weather Also a Factor for Soybeans
Zuzolo says the weather also turned a bit more conducive for soybeans through mid-September so traders removed some risk premium.
“It looks like based upon the models we have a wetter forecast for the soybeans through mid-September,” he says.
The good news is technically, September soybeans held and bounced off of support at last week’s lows on the charts around $10.19 1/2.
Grains Ignore Federal Appeals Court Ruling on Tariffs
Zuzolo says the grain markets did not react to last Friday’s U.S. appeals court ruling that said most U.S. tariffs are illegal.
The judges ruled 7-4 that sweeping U.S. global tariffs exceeded the authority granted under the 1977 International Emergency Economic Powers Act (IEEPA). The appeals judges let the levies stay in place while the case proceeds.
The news did send global stock markets lower, while bond yields rose, gold made new record highs and the dollar strengthened.
Corn Rallies to Fresh Highs
Corn ended higher on Tuesday making new highs for the move and erasing early losses.
Zuzolo says the spreads indicate strong underlying demand for corn.
Weekly export inspections were at 55.4 million bu. with the cumulative total for the 2024-25 marketing year now 29% above a year ago.
However, he thinks the market is also realizing that the corn crop is getting smaller.
“Yields are being trimmed by flash drought in portions of the Eastern and Southern Corn Belt plus disease pressure is causing the crop to die prematurely,” he adds.
How High Can Corn Rally?
Zuzolo says fund buying was triggered on Friday as the December contract closed above the 50-day moving average on end of month short covering.
That technical buying continued Tuesday pushing December to 9-week highs, but how high can the market run?
“I think another 10 to 15 cents higher in September, another seven to 10 cents higher in Dec. So, $4.25, $4.35,” he says.
After that corn gets into long term chart resistance and that’s when he would recommend starting to make some sales.
Wheat Falls on Trade and Higher Dollar
Wheat futures were unable to follow corn and instead saw technical selling and spillover from the lower soybean market and a higher dollar.
The funds are still short in the wheat market a combined 153,000 contracts.
“The fund traders feel very comfortable with a bigger Black Sea crop. They feel very comfortable with the fact that the French, Russian and U.S. prices are all about $230 a ton right now. I think what we’re gonna have to see is them get spooked out of the wheat. We saw a lot of corn wheat spreading action again on Tuesday and that got close to $1.07 premium to soft red weed and lead month futures. That gets you closer and closer to wheat being a feed grain.”
Cattle End Mixed Eyeing the S&P
Live and feeder cattle futures opened higher Tuesday and some contracts did break to new highs before seeing some consolidation.
Zuzolo thinks the break in the S&P 500 in response to trade uncertainty played a big role.
However, he says a 15% to 20% correction in the major indices would be needed to spur a larger correction in the cattle futures.
Zuzolo thinks the cash market and boxed beef values will also have to break to see a major correction in the cattle.
Cash trade was steady last week in the North at $245 and up $2 in the South at $242. Choice boxed beef was lower by $2 but is still hovering just above $413.
Deferred Lean Hogs Make Contract Highs
Lean hog futures hit new contract highs in the December and more deferred months on continued fund buying.
Zuzolo says the lean hogs have benefited from the higher cattle market and will be the key to whether or not that market can continue to push higher.
However, he says these are good price levels to hedge for hog producers, especially with the low prices for corn and soybean meal.
