Ag markets were mostly lower on Tuesday except for cotton and hogs.
Grains See More Fund Selling
Grain markets were all lower on Tuesday with more risk off selling and fund long liquidation.
Randy Martinson with Martinson Ag Risk Management says open interest has increased as the market has gone done.
“That tells us that, there’s liquidation going on, but there’s new shorts coming into the marketplace and it’s likely the funds selling or getting out of their positions.”
Why Are Funds Exiting?
So the funds bought grain futures due to higher crude oil, adding war premium and even inflationary concerns but now they have pivoted.
Martinson says weather is the driving factor. “Seasonally, this is what happens this time of year. You know, our weather is starting to show up to
be pretty benign. You know, nothing threatening as far as the next 15 days out for pretty much most of the Plains and the Corn Belt.”
So the market is comfortable with the size of this year’s crop and that is causing profit taking by speculators.
The first crop ratings of the season were at 67% good to excellent on corn and 66% on soybeans, which was below expectations, yet the market disregarded it.
“They didn’t pay much attention to that report at all. And they’re looking at, sure, we saw a little bit lower than expected conditions, but this week’s weather is going to influence it. It’s going to be better. And we’ll see conditions pop back next week,” he adds.
So the market mentality is also that the early start means trendline yields he says. “I mean, you know, the earlier the crop can get off and get started and do well, the better potential you have for yield later. And that certainly is what the funds are and the market is looking at at this point.”
New Lows for Move in All the Grains
With new lows in all of the grain markets how much more fund liquidation is anticipated?
He says funds often liquidate in three day waves. “And so that would mean one more day yet to go and I would expect to see that here probably going into tomorrow, especially with as poor as our close was, we’ll start to see even some margin call selling take place with other weaker longs getting out of the market as well. So I do think that we probably have another 10 to 15 cents down in the markets.”
Funds are also getting out as the wheat harvest is beginning and the crop becomes available he says.
Technical Damage in the Grain Markets
So how much technical damage has been done in the grain markets, especially corn?
Martinson says in old crop corn support was broken a couple of days ago and selling has continued, while in December new crop the market took out the 200-day moving average it is still holding the uptrend line area.
“Most definitely, yeah, looking at the trends, looking at where support is, and it does look like right now, we could possibly get down to that $4.50 area, and that hopefully will be enough to slow it down,” he says.
Soybeans are holding up better. “If you look at new crop November, they’ve seen higher monthly closes for all five months so far. So they’re holding up.”
Soybean Market Holding on Crush and China Hopes
Martinson says soybeans have been holding up on hopes for China business as they are supposed to buy 25 MMT or 920 million bu. of U.S. soybeans.
“I think there’s just a little more concern that with the China business, the funds don’t want to take that market down too far and then see a surprise and have to dig their way back up again.”
However, he thinks the market is getting tired of waiting for China to buy. “I mean, you know, we were supposed to see that not long
after the summit took place, that each side was going to lift their 10% tariffs. And we were supposed to start seeing a little bit more news on the $17 billion of other ag goods that China might be interested in buying. So far, we’ve heard nothing on that.”
Martinson says the market is also getting tired of the conflicting reports on the end of the Iran war or the ceasefire.
China Ag Ministry Says China to Lower Soybean Imports
China’s Ag Minister also provided negative news Tuesday saying they would be lowering imports of soybeans. “They’re saying their hog herd is shrinking a little more than anticipated and that they’re going to be looking at importing less soybeans in 2026 than what they did in 2025.”
And on top of that, China’s buying Argentina corn too. You know, it’s a little cheaper and they’ve got a big crop. They’ve got to move some. So they basically have a fire sale on their corn. “So we thought that part of that $17 billion would be corn going into China. But it’s not coming from the U.S. It’s coming from Argentina.”
How Long Until China Buys?
So how long do you think it will take before China will step in to buy?
Martinson says prices are getting down to levels that are very attractive for China.
“But I really don’t expect them to show up until after the July time frame, maybe into August, just as we’re kind of finalizing or looking at where our crop is going to be situated. I would expect that’s when they’ll start showing up to do some purchasing.”
Record Crush Supports Soybeans
Soybeans have not seen the big correction that the corn and wheat have in part due to strong crush demand and continued four year highs in bean oil.
USDA’s crush report showed a record 218.5 million bu. were crushed in April, plus crush margins are at a record $4.07 per bushel.
Martinson says with the 60% higher RVO levels for 2026 and 2027 on bio-mass based diesel that is driving the crush pace.
Wheat Corrects Over $1 From Highs
The wheat market was the first to rally to new highs on May 13 and has lost over $1 from the highs in July hard red winter wheat.
How much more downside risk is left in the market?
Martinson says, “I look at that market and I figure that there’s probably about another 20, 25 cents. Which is kind of disheartening when you look at, you know, how poor the conditions are, how poor the harvest results are. Harvest is getting started and they’re pretty disappointed in Kansas.”
He says it is largely a function of ample stocks and slow demand.
Spring Wheat Acres Down, Ratings Down
Martinson says spring wheat acres could also be down in the June 30 report because of the cold wet spring in the Northern Plains.
The first spring wheat rating was at only 47% which surprised him, yet the market didn’t react.
“It was 13% less than what the average trade was expecting it to come in. And, in the wheat it started off pretty good. But once we got into
warmer, drier weather we started to see that wheat deteriorate. I think the market is just looking at the fact that we got plentiful wheat supplies, and it’s not going to make that much of a dent in how big our spring wheat crop is,” he explains.
Wheat Beat Up Technically
The wheat market has also been beat up technically and has taken out uptrend lines.
“It was the first market to break its support,” he adds.
Cattle Fall on NWS Fears
Cattle futures were lower on Tuesday with continued fund selling and liquidation as there have been rumors of a New World Screwworm (NWS) case in the U.S. and one just 1 mile from the U.S. border.
USDA Secretary Brooke Rollins told reporters in a news conference that the U.S. does not have a case.
She said the closest detection was on May 30 in a 5 year old goat just 25 miles from the border.
The market was not able to recover on fear that it will eventually get into the country and hurt consumer demand. “At first it will be, you know, whenever you have, you know, whether or not it impacts the meat or not, you know, it’s always construed as being negative to the marketplace. So yeah, we’ll see some pressure come into play for the first couple of sessions after it gets detected.”
Martinson says the technicals also look wobbly and there was some early cash at $255 in Texas but the other fundamentals are still solid including decent beef clearance over the holidays.
Hog Market Stages Key Reversal
Lean hog futures made new six month lows in the July and August contracts early in the session and then bounced, scoring key reversals.
The market saw short covering as futures were oversold but also with an over $2.50 jump in the pork cutout values as bellies finally caught fire.
Martinson there may have also been ideas that pork demand could benefit from an NWS case in the cattle market during the grilling season.
