Soybeans, wheat and cattle ended lower on Monday with corn and hogs slightly higher.
Ag Markets Caught up in Money Flow and Tariff Uncertainty
Grain and cattle futures ended mostly lower on Monday caught up in money flow and the selloff in the stock market tied to tariff concerns. Mike Minor with Professional Ag Marketing says, “So just uncertainty about what this is all going to do from a, from a broad perspective, with broad tariffs to 15 % now over the weekend. And what does that mean for ag commodities specifically.”
Are Tariffs Bearish or Bullish?
Minor says the markets were having a difficult time figuring out if the tariff news was bullish or bearish.SCOTUS struct down the IEEPA tariffs early Friday but later in the day President Trump used his authority under the Trade Act of 1974 to impose broad 10% tariffs and then over the weekend raised those levies to 15%.USTR Jamieson Greer tried to calm the waters by saying that USMCA goods would largely be unaffected.Plus, the trade deals with China, the European Union and South Korea would also stay in place.
Market analyst opinions varied on the impact of the events, but Minor thinks overall its bearish.“I think when you talk about trade activity, when you talk about what this means for us in China. One, I think it loses leverage if the United States government can’t quite figure out what to do, can’t really say that, you know, Trump, you shouldn’t be tariffing these countries. It takes a little leverage out of it. You know, it really puts China in a better situation, I think, to say if I need to walk away from U.S. soybeans, I can. And at this point, they’re heavily incentivized to. There’s no reason they should be buying U.S. soybeans today at our current price levels. We’re much more expensive than Brazil at this current point. So they have no real incentive to buy from us. So my mind went there with it.”
Greer also said that the meeting between President Trump and President Xi set for March 31 to April 2 was still on.
Minor adds that the managed money had added to their length in the soybeans to the tune of 163,000 contracts and he thinks they may be looking at exiting some positions with the risk.
Soybean Oil Makes New Contract Highs
Soybean oil made contract highs again on Monday as the market continues to price in biofuels policy hopes.EPA is expected to release its final Renewable Volume Obligations for 2026 and 2027 with more robust biomass based diesel blending levels.Minor says, “The oil’s really been running. That one’s been getting a lot of the spec buying activity. Probably can’t run too hard if crude oil is not going to follow suit as well.”He says if crude oil prices stay below $80, renewable diesel is not competitive. “So, we need some help from the United States government to really push people to blend that and mix it. Anything above $80, it starts to make a lot of sense for them to blend straight renewable diesel and put that in our tanks. We need more government direction. We continue to have production output raise here over the last few years. And it looks like we’re getting that end of that run now for expansion over the next two years or so, while we probably aren’t building many more renewable diesel plants and refinery. So, it’s going to be an interesting thing to watch over the next two years and how the United States government influences us to use renewable diesel.”
South American Weather
South American weather is also being watched as Argentina has received some rain recently which is at least stabilizing the crop.“After a really steep drop-off in crop conditions over the past few weeks, they are starting to see that rise finally in this last report. So a little bit of an uptake there, a little bit of a balance after a really hard sell -off from high levels, but they are starting to stabilize a little bit. And that’s normal from the time of the year as well. I got some nice rains over the weekend or so. But going back into January, it was just hot and dry. And they’re trying to make up for that a little bit here recently,” he adds.
The second crop safrinha corn planting is also running behind but Minor says it is too early for the market to get too concerned.
First Notice Day Selling
First notice day on the March contracts takes place on Friday and last year it was a blood bath in the corn market as farmers sold or rolled basis fixed contracts ahead of delivery.“At this point, looking forward, probably a lot of corn getting priced and or rolled. It’s not like they’ve had much of a rally to really build off of probably about 20 cents here in the last month, enough to help with some, but just not quite enough. So I think there’s a lot of corn producers still wanting more but they’ll probably roll out to the next futures month and we’ll see. But there’s still a ton of corn out there,” he explains.
Wheat Sees Profit Taking
Wheat futures set back on profit taking. Minor says the market may have also put in enough geopolitical and weather premium. “There’s been a heck of a large position short wise on these wheat contracts for quite some time that they can try to get out of and just finally punch their ticket take a little bit of risk premium out.”
He says most of the fund buying has been in hard red winter wheat and Chicago wheat, the spring wheat hasn’t participated much in this at all.And there are still lingering weather issues.“We’ll keep an eye on that dry Southern Plains and also the Black Sea and the French crop,” he adds.
Cattle See Profit Taking with Stock Market Sell Off
Cattle futures saw an early rally with the friendly Cattle on Feed report and higher cash trade at $247 to $249.Minor says the sell off in the stock market spilled over to stop the rally.“I think outside market weakness had to hurt today. The stock market was down pretty good,” he says.
There may also be some market impact from the wildfires in the Central and Southern Plains cattle areas.“So, they’ve burned up a lot of acres there.”
Still Watching for JBS Plant Strike
Plant workers at the JBS plant in Greeley, CO did not vote to strike on Friday, but the situation is not resolved and bears watching. “And packer margins are so tough. I mean, at this point, we’re just waiting if this lasts too long, there will be another packing plant closure. And it still looks like it might only take one big one to close and really have an impact on this market. It’s tough with running so far below capacity” he explains.
Lean Hogs Up a Fifth Day
Lean hog futures saw continued short covering for a 5th day.Minor says the hog market has been resilient. “Cutout has been holding here well after a nice little pop. Cash hogs were a little bit lower on Friday, but they still finished the week nearly $4 higher.” Fund liquidation was heavy the prior week but the market is working on a nice correction. “I think some of these deferred months are going to want to take out the old highs there. But these technical bears, They’re probably waiting for a test to some of these resistance levels.”
