Corn and wheat were higher early Tuesday with the soybean complex lower. Cattle continued higher with hogs lower.
Wheat Leads Gains
Wheat futures were higher again on Tuesday morning with hard red winter wheat taking the lead on drought and not only U.S. but global production concerns.
Wheat was making new highs for the move but can the market get above the March highs?
Lane Akre, economist with Pro Farmer, says he thinks it is possible the market will test those levels.
Global Wheat Production Concerns
“And if you look at the wheat market for like a month the view we are really kind of breaking out. We have been in this recent and ongoing rally and I think a big part of that just has to do with what seedings are going to look like for winter crops in the Southern hemisphere as those decisions are being made right now and what the crop’s going to look like in 2027,” he explains.
World demand for wheat has been really robust according to Akre and while the U.S. has played a smaller role in the export market the global market is still expecting a significant production drop.
“Maybe not so much this year. In the U.S., we’re seeing a big drop in production this year, and that’s been somewhat fueling the recent rally
with the poor conditions. But we’re looking at 2027. And the drop in production, I mean, The Strait of Hormuz being closed and the urea supplies being cut off from the world, a third of the world’s urea, it’s going to have long lasting implications. And now we’ve got Ukraine attacking Russian fertilizer production infrastructure and Russian energy infrastructure. And Russia is the world’s biggest producer and exporter of wheat,” he adds.
So he thinks the market is looking ahead and anticipating stockpiling.
“China produces a lot of wheat, and they’ve been basically locking down their fertilizer exports, and they’ve been trying to get as much as they can right now. But they typically don’t import a ton of wheat, but next year, you know, they might have to if they can’t get their production up,” he says.
HRW Wheat Sees Conditions Decline
While the crop rating was unchanged Monday showing 30% of the winter wheat in good to excellent condition the poor to very poor rating went up 2% to 35%.
There is rain in the forecast but until it materializes the market marches higher.
“We’re supposed to be getting some rain here soon, but those recent forecasts for rain haven’t really panned out. And the conditions are very poor. It’s going to be really hard for that crop to rebound. They say that wheat has nine lives. We’re testing that this year. It’s going to be hard to
see those conditions bounce,” hea adds.
Corn Makes For the Move Highs
Corn futures are making one month and new highs for the move on spillover from the wheat market but also acreage and fertilizer concerns according to Akre.
“Yeah, it’s a combination of it all. I think there’s a bullish case standalone for corn, similar to wheat with the production concerns. There’s more of a production concern in the U.S. this year. We are going to see a drop in acres, and we’re probably going to see a further drop than what USDA anticipated in their March prospective plantings report. Where that final number ends up, it’s really hard to say. There’s been some surveys out, and some guys are actually increasing acres, a lot of those guys being Midwest guys that are able to secure supplies, while other areas, they’re seeing a pretty substantial drop in acres as they’re either not wanting to pay up for supplies or supplies are kind of unavailable.”
He says last week a ship coming to New Orleans carrying urea was diverted to India as they put out a tender for 2.5 million metric tons of urea. Right now, these fertilizer distributors are going to be shipping to the highest bidder.
He says fortunately for the U.S., a lot of those supplies are already in place. “The prices here aren’t as bad as they are on the world market, but if it makes sense for these distributors to put that area back on a ship and ship it across the ocean, they’re going to do that. So it’s a matter of locking up as much of those supplies as we can.”
So he sees decreased rates of application and lower yields.
“I think we’re going to be closer to 180 than 186.5 bu per acre. But, you know, time will tell in that regard and weather is going to play a huge role in that. But if we’re not putting a lot of nitrogen on this crop, it’s just really hard to imagine we push up above 180 very much at all. And then a couple of that with the drop in acres, we’ll see a big drop in production,” he states.
Dec Corn Clear $5?
Can December corn get above the March high and clear $5?
Akre thinks so. “This war has shown no signs of slowing down, and the bullish case for corn is still there. Domestic use has been really strong. E15 has been getting a lot more attention. Exports have not really slowed down at all, and they’re looking good for the next crop year as well. And before long, we’re going to be getting into trading a summer market.”
He also thinks the funds are buying in anticipation of the drop in production and when priced dip the export demand picks up.
“That’s a positive sign and it shows that importers are just looking for chances to buy more so this the probability of all that slowing down isn’t very high,” he says.
Brazil is starting to ship more of their corn to other sources and Iran is historically their top corn buyer.
“Where that corn is going to go well they’ve found alternative destinations for the crop they’re also bumping up their ethanol use their crush use for corn, and that’s helping offset some of that increase in production that they’re seeing this year as well.”
Soybeans See Profit Taking or Fast Planting Pace?
Soybeans are correcting with soy products and seeing profit taking after yesterday’s rally.
“We’re up into the top end of the trading range that has lasted a month and a half. I think a lot of today’s selling can be chalked up to some technical selling pressure,” he says.
He says a close above $12 in July soybeans would confirm a bottom but if it closes below $11.75 a retest of $11.70 or lower is possible and would be a bearish technical signal.
However, while the corn market ignored the fast planting pace at 25% compared to the 19% average, soybeans are digesting a record planting pace of 23% versus 12% normally.
“Yes, we’ve been seeing record planting paces the past few years, and it’s shown that the earlier we can get beans in, the better the yields are going to be, and producers have really taken that in stride. They’ve been really hammering the bean planting early in the year and I think we’re going to be seeing that year after year the soybeans are able to also just sit in the ground longer,” he says.
Meal Eases After EU Rejects Argentine Meal
Soybean meal is also lower on Tuesday seeing a correction after the rally Monday tied to the EU rejecting three cargoes of soybean meal from Argentina as an unapproved GMO variety was detected.
Akre says if the U.S. was able to export more meal to the EU or into China that could be a good opportunity and help offset some of the bigger U.S. supplies.
Crush Continues Record
Akre says crush has been running at record rates and meal supplies had been building but the good news is export demand is strong and supporting the meal and bean oil market.
Bean oil stocks had also been building for several months but the most recent crush report also shows that has slowed.
“We saw a build up in stocks month over month for six, seven months in a row. And since then, we’ve been actually bringing stocks down. And that’s been a really positive sign. It helps keep those crushers motivated to continue crushing soybeans. And margins continue to be very good for the crush side of things. So I don’t think they’ll be slowing down anytime soon as production has increased, use has increased as well, both domestically and we’ve been exporting more as well.”
Crush Makes Up for China
With crush margins running over $3 a bushel that is supporting strong demand for soybeans and Akre says it is coming at a great time.
Crush is making up for some of the lost export business to China for 2025-26.
Akre doesn’t think China will buy 25 MMT of new crop soybeans and is doubtful about the extra 8 MMT of old crop business.
“China’s been slow to do some additional purchases. And even if we look at all the purchases by unknown destinations, you add that on top of the current China total. It doesn’t stack up. And we’ve been waiting for this meeting between Trump and Xi as he’s going there in May. And
frankly, there’s just not all that much time in the marketing year for sales to happen,” he says.
Akre says soybean exports saw a similar pace in 2018 to China.
“Which I would call a positive sign. It shows that there could be some room for growth on the export side. And we’ve seen how fast China can come into the market and just buy a bunch of cargos and really kind of shift things around. But as time goes on, I’ve just grown a little bit more pessimistic on that side,” he adds.
Cattle Recovering
Cattle futures continued to recover on Tuesday off the reversal scored last Thursday. So will the market retest the highs?
Akre is hopeful, “Yeah, I think we’ll at least retest those in the June contract highs at $252. I think it’s going to be really hard to push above that
mark until we get some participation from the cash market. So last couple of weeks, cash market has just been following futures and that broke last week.”
Last week cash averaged aroudn $246 but he thinks the big jump in futures prices will support a higher cash market.
“If we’re able to get cash trade about $250, I would think that vwe’d be able to push to some fresh contract highs in fats. But I think that $252 mark’s going to be really stiff overhead resistance until we get some cash trade pushing up near $250.”
Border Reopening
The cattle market has also seen recovery as the fears about the border reopening to Mexican cattle has subsided.
However, Akre thinks the market is becoming more immune to headlines from war to New World Screwworm and the like.
“It’s really narrowed down to maybe a session or 2 based on some of these. I think it’s become more of a show me market and maybe once the border reopens, we will see. Price reflect it, but we’ve been talking for months. We thought that the border is gonna be open reopened in January and here we are, we’re nearing May and it’s still just talk,” he adds.
