Grain and livestock markets are mostly lower early Thursday.
Grains See Profit Taking
Grain markets are taking a pause on Thursday after some new highs for the move overnight in July corn. Plus, 22 month highs Wednesday in both winter wheat classes and new contract highs in bean oil, December corn and hard red spring wheat.
Chip Nellinger with Blue Reef Agri-Marketing says it’s end of the month, so he chalks this up to some routine profit taking and farmer selling.
“You saw with the new highs in the corn market, a lot of new farmers selling, just cleaning up some old crop stuff, but probably a little bit bigger movement on the new crop as we just got fractionally close to $5 December futures. That’s the highest level we could have sold to date on the December contract,” he explains.
Markets Eye Crude Oil
The markets are also watching the movement in crude oil, which was sharply higher on Thursday and overnight with the Strait of Hormuz still blocked.
Crude oil backed off and pushed slightly lower early Thursday on end of month profit taking and Nellinger thinks that may have trimmed gains in the grain markets as well.
“We’ve had crude oil really screaming higher, got north of $110. It reversed overnight and is back a couple dollars lower. And so I think all of that is kind of a little bit of a headwind here, but it’s not like it’s aggressive selling yet. Just kind of a normal correction lower. I don’t think it’s anything out of the ordinary,” he says.
Wheat Rally Over?
The wheat market was overbought and do for a correction plus it is first notice day for May contracts and Nellinger says there were some deliveries in Kansas City wheat.
“There’s an old saying on the Chicago Board of Trade grain floor from way back when, buy first notice day. I don’t know if that’s going to hold true today. Kansas City wheat had some deliveries on that May contract. A little bit shocking. You know, sometimes when you get to first notice day, the commercials really kind of start playing a high-stakes poker game, trying to, you know, sift each other out and figure out who’s got the ace in their pocket. And so I think that commercial delivery in the Kansas City May contract this morning had a little bit of a negative tone to it. After a big run into the month, good reason to pull back a little bit.”
There are also rain chances for Texas and that may have also caused funds to take some profits.
However, Nellinger doesn’t think the lower production concerns are priced in yet.
“We’ve likely priced in a lot of the multi-week crop condition decline. But to your point, we don’t know what the ultimate yields are. There’s a lot of people saying, hey, rains don’t matter at this point. We’re too far gone on yields. We may even abandon these acres and not get harvested. So we know there’s damage, but sometimes you have to wait to get into harvest to figure out really what is there. But certainly rain in the forecast, even if it’s a small chance, you know, is not immediately bullish. But likely we’ve dialed in a lot of a lot of bullishness with yield pullbacks. But we won’t know till harvest the ultimate result there,” he says.
Frost Concerns
There are also forecasts for cold temperatures and some frost in some areas of the wheat belt as far South as Nebraska.
Some of the corn and soybeans that have been planted may also be suseptible.
“Yeah, I think on the eastern Corn Belt side, there certainly would be. Again, I don’t think it’s a tremendous amount of acres, but we’re far enough long on the production cycle there that a hard freeze now, once we’re about to turn the calendar here to May, certainly could nip a little bit of wheat. It’s not the perfect time for a frost. We’re far enough along in the development that it could hurt, but I think the frost line is going to be far enough north. probably going to be out of that main wheat growing area in the Eastern Corn Belt here,” he adds.
Does Corn Take Out $5?
December corn got just a tick from $5 on Thursday as it made new contract highs as it has been getting help from the wheat market and the run up in energy prices.
However, if the wheat market rally is over does corn have enough of it’s own story to take out $5?
Nellinger thinks so. “You know, we’re coming into the timeframe here. First part of May, we’re typically put in a spring high. I think everybody’s kind of watching that. And everyone’s asking that same question, Michelle. I think some of it depends on crude oil. You know, crude oil went very quickly from $90 a barrel to north of $110 a barrel. The world took notice of that. The Strait of Hormuz is still closed. So I think some of it depends on what happens the next 10 days, two weeks on crude oil prices,” he says.
The May crop report is also coming up and the market may need demand confirmation from USDA on corn and beans to keep going, but he’s not ruling it out.
“I wouldn’t put it past this to get north of $5 on Dec corn. I don’t know if it’s dramatically north of there as there’s going to be a lot of farmer selling on a push north of $5,” he adds.
Fertilizer Story for 2026 or 2027?
Still with high fertilizer prices and some farmers unable to get supplies there is talk of lower corn acreage for 2026 but is this more of a 2027 story?
He says, “I think it’s both. I’m getting a sense of that as well. And I think that’s maybe drawn some kind of outside equity money in or money off the sidelines kind of as an investment into grains. I get this sense that there’s a narrative across the world of potential food shortages, yield losses due to lack of availability or rationing of nitrogen due to high prices. I think it’s yet to be seen. It’s certainly not something that’s bearish.”
It will impact the Southern Hemisphere, Brazil and Argentina in particular according to Nellinger.
“We have some issues brewing here. So I think it is a story. It’s not going to go away anytime soon,” he says.
Basis Improvement on Corn
Even with the higher futures prices on corn the basis has also improved which is perplexing to Nellinger.
He says, “Yes, you can argue that producers were in the field doing field work, some early planning in the Southern portions. But that basis improvement started even before they got in the field. So surprisingly, over here in the Eastern Corn Belt, things look relatively tight. I don’t think there’s a lot of old crop corn left. Basis has improved. Demand’s good. But in the Northwest Corn Belt, I don’t think the basis has improved as much.”
Export demand may be part of the reason and weekly sales were strong at nearly 63 million bu. again on Thursday.
“Still running, what, 2%, 3% ahead of the pace that the USDA has, and that’s a massive number to begin with. So there has been no slowdown yet,” he says.
High crude oil prices have ethanol margins strong and even with a smaller cattle herd he says producers are feeding to much heavier weights.
Wednesday’s EIA report showed ethanol production was down 31,000 barrels per day, but it was because of routine maintenance.
E15 Possible?
The House passed the farm bill without the E15 amendment but is looking for an alternative to get it passed yet this week before Congress goes on recess until May 12.
How big of demand push will that be for corn?
Nellinger says it will help but it won’t shoot prices higher.
“Unless it’s a mandatory, you know, a mandated thing that we’re going to use X percent. If it’s voluntary, it will help, but probably not to the massive bullish extent that maybe people hope for,” was his opinion.
Soybeans Retrace But Still Sideways
Soybeans are easing as well on Thursday with the rest of the grain complex and seeing some end of month positioning.
However, the soybean oil rallying to new contract highs on Thursday has been supportive as well as hopes for a China deal.
He says, “There’s a lot of optimism that these mid-May China-U.S. trade talks are going to immediately produce large Chinese bean purchases. Not sure if I’m in that camp, but it’s going to hold the bean market fairly firm on breaks in here for a couple of weeks. And you mentioned bean oil. We’ve been hitting new contract highs there again following crude oil.”
Is Bean Oil Close to a Top?
So is bean oil getting overpriced or is it putting in a top?
Nellinger says the big key is when is the Strait of Hormuz going to open and when is oil going to start flowing.
“Crush margins are near record. And so crush demand domestically is just through the roof. And that’s helping bean demand,” he says.
Cattle Consolidate Off Record Highs
Live cattle futures hit record highs on Thursday following record cash trade.
However, Nellinger says they are due for a correction especially as it is end of the month.
“The speed that we went up, yeah, the cash market was massively strong, way better than expected. Probably due for a break in here. I’m not so sure that the packers didn’t get long and then goose the cash market. They’ve been known to do that, and then they take profits immediately after that. So no reason we’ve got to break $20 barring some sort of a Black Swan news event but we are probably overextended and need a little bit of a break here to correct the overbought condition,” he says.
FOMC Leaves Rates Unchanged For Now?
The Fed left interest rates unchanged at the conclusion of their April meeting but the surprise was there were four dissenting votes giving the indication that additional rate cuts are off the table for 2026.
In fact if energy prices stay high with the ongoing war and inflation continues to flair is it possible the Fed could have to raise rates this year?
Nellinger says its possible, “Yeah, I think you would have to, you know, and you may have to anyway. I think that the the $100 plus crude oil is going to take several months to sift through the world economy. So we haven’t even seen some of the effects of that on prices. Think about everything that moves with diesel trains, automobiles, planes, barges, you name it. it is a big deal so the longer we stay at or above $100 I think the more of an argument they have to raise rates to kind of stem inflation a little bit,” he adds.
