Grains ended lower on Tuesday with cattle higher and lean hog futures mixed.
Grains See Risk-Off Selling
Grains futures consolidated on Tuesday with risk-off selling tied to outside market concerns regarding possible EU tariffs and retaliation according to Oliver Sloup with Blue Line Futures. Over the weekend President Trump threatened to impose 10% tariffs on goods from eight EU countries starting Feb. 1 if Europe does not sell Greenland to the U.S. That tariff rate would go up to 25% on June 1. The EU fired back with talk of retaliatory measures. Sloup says the rising trade tensions caused a lower day in the equity markets which spilled over to the grain futures. The weaker dollar and higher crude oil futures were not able to help stem the tide.
Corn Stops at Resistance Despite Strong Export Inspections
Grain futures ended higher on Friday before the holiday weekend but were also unable to extend gains despite strong export inspections of 58.4 million bu. Corn futures ran up into chart resistance with March corn struggling at the $4.25 mark says Sloup.
“Right now, what we’re looking at for resistance $4.25 to $4.27. That’s going to be the big hurdle for the bulls to get out above, maybe spur some technical momentum. Above that, you’re looking at tacking on potentially a dime or so in a relatively short amount of time. That was old support and the breakdown point from last week’s WASDE report. So that would be the level to keep a very close eye on. On the flip side, if the bulls can’t get out above that, $4.17 1/4, $4.19 1/2, that was last Tuesdays lows. So we’re just kind of sandwiched there.”
After the WASDE report the corn market has established a new lower trading range and to break out of that it will take a big catalyst. He says that could come from technicals, South American weather or a shift out of corn acreage in 2026.
Low Volatility in the Grain Markets
Sloup says the grain markets saw relatively quiet day overall with low volume and low volatility which is also allowing the market to drift without any bullish news.
Soybeans Also Establish New Trading Range
Soybeans also consolidated after closing higher for three straight sessions and just like corn ran up into chart resistance at the top end of the markets new trading ranges established after the WASDE. Sloup explains, “Today’s high right near $10.68. That was basically unchanged from where we were trading before last week’s WASDE report. So at a pretty big inflection point for the market.” Technicians have also been watching the double bottom at around $10.38 on the March which also coincides with the January lows and was not take out on report day. At the lower price levels soybeans did see strong weekly export inspections at 49.1 million bu. but accumulated shipments are now 40% behind a year ago.
Soybeans Watching South American Weather and China
Currently the soybean market is in a holding pattern waiting for the South American crop to come to the market. Early harvest has started in Brazil but Sloup isn’t expecting significant hedge pressure for a couple of weeks yet. Meanwhile, Bloomberg reports China has bought all 12 MMT of the soybeans they committed to purchase from the U.S. and the next question will be whether or not those sales completely shut off now and shift to Brazil.
Wheat Sells Off
Despite cold weather threats in the U.S. Southern Plains and Black Sea regions and a weaker dollar, that failed to excite the wheat market. Instead Sloup says big global supplies and risk-off selling pushed all three exchanges lower on Tuesday.
Funds Short in Corn and Wheat, Exiting Longs in Soybeans
Sloup says the managed money funds are combined short in the three wheat classes over 120,000 contracts. That’s a position they’ve held for over two years. Meanwhile in the corn market funds have pushed short over 90,000 contracts and are continuing to add to that position. Funds are still slightly long in the soybean market by around 20,000 contracts but have been slowly liquidating since prices peaked in mid-November. The question now is whether or not they will go flat or push the short side of that market as well.
Cattle Futures Try to Recover
After a $4 selloff in live cattle Friday and over $8.00 on March feeder cattle futures the market tried to recover on Tuesday. The selling pressure was tied to rumors that New World Screwworm (NWS) had been detected in New Mexico. However, there was no confirmation of the parasite in the U.S. and so that allowed the market to bounce. Sloup says the recovery might have been greater except for the spillover from the bearish day in the financial markets.
Can Cattle Continue to Rebound With Higher Cash?
Can the futures markets continue to recover if the cash market leads the way? The case could be made for feeder cattle which have seen hot cash performance at auctions with no slow down in sight. However, after steady cash last week the fed market will need to be able to advance this week to help the futures further heal according to Sloup.
Lean Hogs End Mixed With Summer Months Making Contract Highs
The lean hog futures ended mixed with Feb and April lower, while the deferred contracts ground out more new contract highs. Sloup says disease issues in the U.S. but also African Swine Fever in Spain has fueled some of the rally in the summer months. He says they are cautious about the summer months moving much past the $110 mark and are suggesting these are good hedging opportunities.
