Corn and wheat ended slightly higher Monday with soybeans and livestock lower.
Corn Finally Bounces Monday
Corn was finally higher on Monday seeing a slight bounce after losing nearly 30 cents last week and hitting new contract lows.
Dave Chatterton with Strategic Farm Marketing says funds have sold and liquidated hard the last three weeks in the corn market and while they took their foot off the gas on Monday he doesn’t think the selling is done.
“We’re going to need some help from either the USDA report on Thursday and or the weather in terms of dryness or drought that threatens the U.S. crop. This is a time of year during this June and July time period where funds are, you know, without a weather issue. Historically noted sellers, you know, in our database, go back and look, you’re probably talking around 200,000 contracts each of corn and soybeans during the months of June and July historically. So not saying that will follow that precedent exactly, but certainly it leaves the door open here,” he says.
Weather a Headwind
So far weather has been improving, especially with rain in the Western Corn Belt which has improved the outlook for the crops.
Chatterton says, “I think ideas on the crops are going up. We’re certainly, you know, had some beneficial rains in our part of the country in central Illinois here over the weekend and even going through Monday. So, ideas on the crop, I don’t think are going down by any means.”
Markets Disconnect From Crude Oil
The grains and even soybean oil also look like they have disconnected from the crude oil market, at least in the short term.
“It’s a situation where we need a new catalyst here. I think, you know, the disconnect that we’ve had from the oil complex and what’s
happened there. We’ve detached at least here, in the short term. I think there is still a longer term story there, but we can put that on the back burner while we’re watching weather and talking about supply here in the near term,” he adds.
WASDE Positioning
He says the market is also gearing up for Thursday’s WASDE report and funds may have backed off of their selling as well ahead of that, even though it is typically not a big market mover.
The one caveat could be an adjustment in wheat production but overall the market is not expecting much.
“We looked at the average trade guesses, which came out this morning from the wire services, looking at what I’ll call statistically just, you know, indifferent changes or, you know, just non-consequential here. I think the eyes and the focus really going to be more at the end of the month when we get the acreage number,” he says.
He says there is still come thought that acreage could be down on corn and shifted to soybeans.
“I know in our own internal balance sheets here, we’re down around 1.8 million acres from the USDA number for corn acres in March,” he explains.
Soybeans Fall as Funds Still Long
Soybeans did see additional fund selling in soybeans and meal on Monday.
The funds are still long a combined 433,000 contracts of soybeans, meal and bean oil.
Chatterton says that leaves the soybean market more vulnerable to additional selling.
“Yeah, I mean, domestic demand and crush demand have been very impressive here, but it has a limit. In other words, we can’t go out and build new crush plants overnight and create additional capacity. I think the idea that China will buy additional U.S. soybeans is certainly being floated by the administration, but we’ve got this Board of Trade structure that’s supposedly to be in place before those purchases take place,” he adds.
Chatterton explains the public debate in the U.S. is going to take to at least the end of July, which pushes back Chinese purchases until at least August, if not later. The Chinese soybean market has been much weaker here of late. They had the same fund length in their marketplace that we did. And those funds have been liquidating in a similar way. So I think if you look for the weaker leg of the complex right now, you know, bean oil can hold us up to a degree, but it has its limits. And I think that soybean long is vulnerable here in the near term.”
How Low Do Corn and Soybeans Fall Before China Buys?
If China waits until August to buy soybeans and other products, prices will keep falling.
Chatterton says that is by design as China wants prices to fall to the match Brazil’s lower price levels.
“I have to give them credit on that at the moment. But I think right now the logical areas that we’re talking about, probably for new crop December corn or probably in that $4.25 area, I think is where we would look at maybe, you know, buying back or covering some hedges or, you know, maybe considering it anyway. I think you have to look at probably a $10.50 number in the beans in November.”
Wheat Sees Short Covering
Wheat futures were slightly higher on Monday likely on short covering.
Chatterton says last week’s COT report showed funds had sold nearly 38,000 contracts in soft red winter wheat, which is a record for any week.
“I think it’s just positioning and kind of squaring up here after what was a pretty aggressive or wild week last week or pretty volatile week. And we’ve got, you know, we’ve got the funds short in Chicago, still long a little bit in KC. There’s a lot of spread trade going back and forth between the wheat classes as well as the other grains and the complex. You know, we look at what happened on Monday in a three cent move, you know, in a low volume environment and a slow news day. I don’t think I want to make too much of that in terms of where we’re at.”
He says the weather story may be over in wheat for the rest of 2026 with the exception of some quality issues. So production losses may be more of a 2027 concern.
Cattle Reverse
Cattle futures opened higher with spillover buying from the higher weekly closes after the “sell the rumor, buy the fact” reaction to New World Screwworm (NWS) finally hitting the U.S.
However, the market seemed to hit chart resistance at the 50% retracement levels which triggered fund selling and profit taking.
Plus, Chatterton says the realization is growing that there will be more and more cases.
“It’s a matter of can we contain this in a regional basis and do a good job of managing it. And, you know, I think the odds of that are fairly high. In the meantime, you know, we’ve got a lot of fund length running around in this cattle complex, the Friday CFTC data. We had the funds along around 115,000 contracts, and with the beef market struggling, we’ve seen this cutout kind of really struggle to put in any summer strength at all during a seasonal time period where it should be gaining,” he adds.
Plus, cash markets are called weaker for this week as the peak of the summer grilling demand is closing in as July 4 approaches.
Cattle on Feed Bearish
Markets are already looking ahead at the Cattle on Feed Report for next Thursday with ideas of bigger placements and lower marketings which show producers are not as current in the front end of the market.
Drought has also meant the market has pulled cattle ahead and so the on-feed expectation is around 102%.
Hogs Fall to Fresh Lows
The hog market also fell near six month lows despite the funds being short nearly 20,000 contracts.
How much farther does the market push here before finding some support?
“Yeah, really interesting situation with funds short here. They’re in the lower 10th percentile of terms of, you know, they don’t typically run short hogs or do so for very long. We’ve had a very extended sell off here and some oversold. The market is still definitely in a downward channel. We did nothing today to alter that situation,” he adds.
So the market is still hoping for a bottom.
