Corn and soybeans are higher early Wednesday with wheat lower. Cattle and hogs started lower then turned mixed.
Soybeans Back Higher on China Hopes
Soybeans are seeing a bounce on Wednesday morning. The market corrected the last two sessions on fear that the Iran war developments would jeopardize the mid-May meeting with China.
Brian Grete with CommStock Investments says, “President Trump was out on Truth Social this morning saying that China was happy with everything, the opening of the Strait of Hormuz, and that they wouldn’t be sending weapons to Iran. And so I think everything’s kind of trending in the direction from a market perspective attitude, at least that maybe a peace deal is on the near term horizon. So we shall see. But as some of those geopolitical issues start to ease a little bit, we get more of a fundamental focus.”
He thinks the NOPA crush report Wednesday morning will be key with the market expecting a record crush figure.
“And so you know, that would be a positive on the demand side. We’ll see how it shakes up compared to the pre-report expectations. But a little bit more of a fundamental focus, I think, moving forward.”
China Premium in the Soybean Market
The soybean market has held together due to the idea China will be making soybean purchases as part of the mid-May meeting says Grete.
“China does carry a lot of weight, obviously, in the soybean market and everybody’s anxious to see if President Trump can negotiate a deal for China to buy more soybeans, whether it be more for 2025-26 or additional promises and pledges for 2026-27. But I think that one of the things that if this meeting happens in mid-May is that we aren’t going to see just soybeans be the center point we will see other feed grains like corn, wheat, sorghum maybe ethanol and biofuels and things like that be part of that deal,” he adds.
How Much of the 8 MMT Does China Buy?
The big question is how much of the 8 MMT of old crop soybean business the President has talked about are part of the deal and what is already priced into the market?
Grete says, “Yeah, I don’t think a lot is built in, to be honest with you. While you can argue that soybean prices are probably over inflated at
current values, I don’t think that’s really tied to that extra 8 million tons. And what’s the possibility out of that? Well, maybe half of that total. I don’t know. I’m just throwing numbers out there, to be honest. No one really knows.”
Soybeans Rangebound
From a chart perspective soybeans are still sideways says Grete.
“They’ve gone nowhere, to be honest with you, for about a month now. So just chop around in a relatively tight range, too. We saw way more volatility ahead of that. And the volatility has decreased and the price range has turned choppy.”
Corn Extends Gains
Corn futures are higher early Wednesday getting some help from soybeans and strong demand according to Grete.
He says record exports and flash sales to unknown and Mexico on Tuesday are supportive.
“And that just continues. We’re seeing no slowdown there. So that is a real story. Ethanol use has been OK. It hasn’t been spectacular. And so there’s some talk that maybe USDA will have to cut the corn for ethanol usage number a little bit. But I’m not real concerned on that front.”
The market is also concerned about lower acreage.
“Were the March Prospective Plantings numbers the highest that we’ll see for the season? In all likelihood, that is the case but we’ll see how
much we drift down from there. That will be a focal point as we move through the remainder of April and then into the May time frame,” he adds.
Corn Acres Falling
So how much are corn acres falling due to the whole fertilizer supply crunch and higher prices since the Iran war?
Grete thinks acres will be a little bit below where USDA was with the March perspective plantings.
“Regionally, I think there is some potential for some big shifts, to be honest with you. In the central Corn Belt, probably not a whole lot of movement.”
The American Farm Bureau Federation came out with its survey, and it said that the pre-booked fertilizer was the highest within the central Corn Belt area.
“So you’re probably not going to see a whole lot of movement there. You get down into the South and there was less than 20% pre-book coverage. And so those crops that are most at risk are peanuts, cotton, some of those that are specific to the South are probably the crops most at risk. We’ll see what happens with corn and soybean acres in those areas. I think that if you’re going to see any kind of big movement from the March intentions for corn and soybeans, it’s probably going to come from the fringe area. So I will include that up into the Plains, the Northern Plains, down through the south and southeast is the areas where we could see the biggest shift.”
Too Early To Trade Planting Delays
He says it is too early to be trading planting delays due to the heavy rains that have fallen in some areas of the Corn Belt.
“It’s mid-April, let’s be honest. If it was a month from now, then the concern would be much greater.”
He says the concern is coming from farmers that got off to such a fast start last year.
“So they feel like they’re behind and they are behind that but from a national perspective we’re right about where we need to be on corn and we’re well ahead on soybeans,” he remarks.
Corn Divorced From Crude Oil
The corn market has also divorced from the crude oil market and geopolitical headlines and is trading its own fundamentals.
“Right now, we’ve removed all the war premium from corn. We’re back to those pre-war levels.”
Corn Bottoming?
Corn had a 30 cent plus correction off the war highs on March 9 but held support on Tuesday so Grete thinks the market is trying to bottom.
“No doubt about that. You know, we saw the spike low last Friday. We’ve had some basing action since that point in time. And I really like the price action. Now, I don’t think that corn is going to go on a big move to the upside. But, you know from a downside risk perspective, I think the last Friday’s low is key near-term support that probably will be defended by bulls.”
Wheat Market Eases
After a big rally on Tuesday the wheat market was slightly lower on Wednesday.
Grete says the market has enough weather premium for the time being and needs some more bullish news to push that market higher.
“The global supply is plentiful at this point in time we’re oversupplied. The real story in wheat is that the SRW crop is doing well, the white winter wheat crop is doing well, the HRW crop is struggling. And are HRW concerns are they enough to pull higher when we have an oversupplied global market and the other two winter wheats are doing relatively well right now,” he explains.
As a result he doesn’t see a lot more upside to prices and technically the market has not taken out the March highs either.
Cattle Just Off Contract Highs
Cattle futures opened lower on Wednesday after new contract highs the prior session and even some all-time highs in live cattle.
Some light profit taking is understandable with the overbought condition of the market but are the fundamentals strong enough to support a sustained rally?
“I don’t know,” he says, “We’re in kind of rarefied air. We make new all-time highs on a near daily basis in live cattle futures. They’re trading at a premium to last week’s average cash. And so we need the cash market to come along. Boy, you get up in here and you got to have a new reason to be a buyer on a daily basis. And so far, we’ve seen that to a semi-limited degree. I don’t think that the traders will build too much premium into futures over the cash, but we do need the cash to keep performing.”
The wholesale beef prices had also seen select trading premium to choice and while that got corrected yesterday it is something to watch.
The market is also going into a Cattle on Feed Report and so there could be some consolidation going into that report even though the expectations are bullish.
“If the numbers aren’t as bullish as what the pre-report expectations are, you could see a little bit of additional profit taking. But really, it comes down to what’s the cash market doing? Because as long as the cash market continues to strengthen, then you’ll see some support in the futures, I believe.”
Hogs Bounce off New Lows
Lean hog futures opened lower for a sixth day and made new lows for the move before bouncing.
Grete says April hogs expire at noon and so the selloff may have been because the futures were too premium to the cash index.
“As May takes over lead month status, we’ve seen premium trimmed to under $4 to the cash index. Sometimes it’s nothing more than the expiration of the current front month contract that leads to a change in buyer interest. And so maybe we do see some buyers come back after that happens. We shall see on that front. But really, the cash index needs to start putting in some stronger gains, I think, to rebuild buyer
interest in the futures.”
