Grain and livestock futures ended higher on Monday.
Risk on Buying
The grain and livestock futures saw commodity wide speculative buying to start the week according to DuWayne Bosse with Bolt Marketing.
The markets had a risk on tone due to the lack of resolution to the Iran war and reopening the Strait of Hormuz but weather also drove the market.
“And when you really don’t hear bullish stories to drive the market, it probably is more just fund direction. And the funds have been buying everything recently, right? You know, a little bit of wheat even. They finally bought corn back again after getting out of a lot of their longs earlier. I think the weak longs are out. They’re back in buying. Even soybeans today, really good buying, which was surprising seeing how long they already are in that soybean complex.”
Funds Length in Soybean Complex a Concern?
When you add up the fund long position in the soybean complex it is already pushing over 470,000 contracts.
So do the funds keep pushing the long side of the soybean complex?
Bosse says, “I guess today the answer to that is yes, they will. That’s surprising though to me because that’s like the fifth largest combined they’ve ever been. We combine all of them, but you look today, all of them were up. Soybean meal was up, soybean oil was up. Usually you see those contradict each other a little bit, right, and spreads too. We’re entering kind of a different era in soybeans where crush and soybean oil is the strongest demand. It used to be meal was the biggest demand. Now meal is kind of the byproduct we kind of have to get rid of. And that’ll probably be through our export market.”
He says he’s not as bearish soybeans as he once was.
“I still think export demand is going to have to get trimmed down a little bit by USDA, but not the 100 to 150 million bushels I was threatening before,” Bosse adds.
Frost in Argentina
On Monday meal was the leader on short covering but also due to possible frost or freeze damage to the soybean crop in Argentina as temperatures dipped Monday morning.
Bosse says, “Remember, Argentina is still the lead exporter in soybean meal throughout the world, so if you did hurt that crop at all, it’s soybean meal that should react first here. Now, I really question how much damage, but it’s one of those, we’re the futures market, we’re going to put the premium first, and then they’ll ask those questions about how much production was really damaged. The reason I’m saying that is they’re harvesting some, and most U.S. producers know, well, if you’re harvesting frost, isn’t going to really hurt the beans. But of course, those are big countries in South America, North to South. So there’s probably some late maturing soybeans that it could have been dinged for sure,” he explains.
New Crop Soybean Upside Potential?
With an additional 3.5 million more acres of soybeans expected to be planted in the U.S. in 2026 if the U.S. does not get China in buying the 25 million metric tons of new crop soybean promised the ending stocks figure could quickly balloon.
Bosse thinks there will be more acres added to USDA’s estimate in the Prospective Plantings Report and China is still less than certain.
“I really question the whole China buying, even the 25 MMT for new crop. It’s just world stocks are record high and prices are cheaper than U.S. I think Argentina is like $1.20 cheaper than us. Brazil’s like 60 cents cheaper than us. So, it just it doesn’t really make a lot of economic sense for them to come and buy from us. I mean I get there’s the whole lot of political reasons but that can only go so far,” he adds.
So, he is looking at put options to hedge new crop soybeans.
Corn Makes New Highs for the Move
July corn futures made new highs for the move on Monday following wheat and soybeans but Bosse thinks the market has its own story.
“You know, the war in Iran, even though I am really tired of reporting about it in the Trump posts back and forth, it’s still ongoing. The Strait is
still closed for the most part. That means higher fertilizer, higher fuel prices for the world. To me, that’s a big story that corn should have rallied. quite a bit more than this for the last month and we just haven’t you know not to mention the whole you know will we get all the acres planted,” he says.
States like North Dakota look cold and wet in the 8-14 day forecast and they aren’t alone.
“I wouldn’t say we’re late or delayed planting. I don’t think we have to rally on that just yet but it’s starting to raise my eyebrows a little bit they’re like oh we could have an issue here. So, I think corn has its own story and should continue to rally higher,” he says.
New Crop Corn Adding Input Premium?
New crop or December corn is closing in on the March high of $4.98 1/2 and it could be putting in some input premium according to Bosse.
“I mean, that’s where the supply could change a lot in new crop, right? World stocks are actually like at a seven or eight year low. Our export demand is phenomenal. So if we decrease acres a little bit or we don’t use as much fertilizer as we should, a new crop situation could be quite tight, maybe like a 1.6 to 1.7 for an ending stock. Well, that’s fairly bullish and this market should rally,” he explains.
However, he says some times the market just sees bull spreading. “Because people just want to buy the old crop bushels instead of even worrying about the new crop supply. But you’re right, it’s the new crop that should put a premium in, but I doubt we’ll see it.”
Lack of Farmer Selling
Meanwhile, July corn did see a chart breakout and that could be due to the lack of farmer selling because of farmers focusing on planting.
“Absolutely, 100%. Nobody wants to go fire up a truck and haul any grain in right now. Everyone’s trying to get the crop planted. June is more the month where, okay, let’s empty bins out and that. So no, farmer selling has dried up. Sadly, I can see nationwide the base is improving. It really isn’t up here for us in the Northern Plains. We’re still at wide basis up here. But like you said, that’s kind of part of having that big old crop and a lot of farmer supply is still sitting out there,” he says.
Wheat Makes Fresh Highs
The wheat market also made more new highs for the move adding weather premium, especially with the drought in the Southern Plains.
How much more weather premium does the market need to add?
Bosse says, “I could actually see it going up quite a bit more. I could see KC wheat obviously getting to $7.00 and I could see it really on a chart a continuous chart banner going to $7.50 but that’s if it doesn’t rain.”
If it does rain he thinks the market will start trying to price in a lower yield number.
“And if you start talking to national wheat yield below 42 bushels an acre, well, it gets pretty tight in the U.S. Now, sadly, Michelle, I think we could just ration export demand and just bring it all back later. But it’s helping to push like Minneapolis wheat higher, which is the wheat that’s grown in my area up here. And I like that. I’m looking at it as an opportunity to start getting hedges in place,” he says.
Spring Wheat Planting Delays
The spring wheat market is concerned about getting all of the acres planted and already started with historically low acres to begin with.
“Right, we don’t have a lot of wiggle room there. We didn’t start up with high acres and we can trim some off. It sounds like from the west of me, like closer to the river, we’ve gotten a lot of the spring wheat in. Some of it even coming up, looking nice. But North Dakota, from the clients I talked to up there, not a lot of activity yet. It’s just been very damp soils. They just haven’t gotten going. But I think we’ll see that in the crop progress report this afternoon. And so, you know, the premium’s probably justified for now,” he states.
Cattle Up a Third Day
Cattle futures were up for a third day and are still recovering off the lows scored last Thursday.
Bosse says part of the reason is the market is not as concerned about the border reopening to Mexican cattle imports after USDA Secretary Brooke Rollins canceled her trip to Arizona.
“And, you know, some guys are trying to link it back to more screw worm cases being found in Mexico. You know, maybe they’re just not going to open the border now for a while. I had always heard things that the border wasn’t going to be open even until July anyway. And at that point, it was going to be just small stages from west to east. So to me, it shouldn’t affect things like June fat cattle or nearby feeders but you know the market takes that news and runs with it,” he explains.
With that meeting not happening speculation continues to run high on when the border will reopen but for now the market looks stronger.
“This week cash could be higher, boxes are higher, we got some big holidays coming up for beef demand. I’m excited about the market for this week at least,” he says.
Market Bounces Technically
Plus the market also held technically where it needed to.
“We were getting to some little retracement levels that I was watching fairly close. And when this market sells off, I ask myself over time, is this it? Are we done? Are we going to crash back now? But for the umpteenth time in a row now, we were bouncing off support. We corrected the overbought position. Now the question is, can we go back and test the contract highs or even make new contract highs? I guess we’ll have to see here,” he states.
He is also concerned about what happens if screw worm gets to the U.S.
“I’m still worried about it, especially as the temps get warm. It’s going to come across in something, a deer, a raccoon, something it’s going to come across on,” he says.
Hogs Bottoming?
Lean hogs were mostly higher on Monday after higher weekly closes. So is the market trying to bottom?
Bosse thinks technically the market is trying to hold plus the seasonal low usually hit around this time.
“Demand should be stronger here this next month. And, you know, there’s still always these questions about the U.S. production. Sounds like there’s been a lot of disease pressure. It’s really hard to get confirmation on that now anymore, but I’ve heard some of that. Now, don’t
look for China to come and buy any of our pork, though. As far as global supplies, it’s very large and we’re higher priced than the rest of the world,” he adds.
