Grains end mostly higher on Tuesday, with livestock sharply lower.
Soybeans Continue to Rally
Mike Minor of Professional Ag Marketing says soybeans extended gains despite soybean oil finally taking a break after two limit up days.
Soybeans saw some technical buying as the chart picture is starting to improve and with help from a slightly higher soybean meal market, but what will it take to sustain the rally?
Minor says, “We got back above the crop insurance price from February on November soybean. So back into this $10.60s area. We had an old high about $10.65. We took that one out. So some really nice resistance levels that we’ve kind of taken out here, but we are getting to that spot from that $10.75 high that’s going to become concerning here around this level. To get further support, we’re going to probably need some more positive news like China buying some beans.”
Soybean oil consolidated on Tuesday after trying to price in EPA’s higher than anticipated biomass based diesel blending levels in the Renewable Fuels Standard.
Minor says for soybean oil to continue to rally it will also need help from the crude oil market as they are tied together.
“If crude oil it goes $80 to $100, for example, it’s going to give soybean oil more room to run like it did back in 2022 up towards $80 or $90,” he explains.
With the geopolitical risk premium being added to the crude oil market he thinks that’s possible.
Old Crop Corn Still a Dog
Corn was mostly higher except for the July contract which once again tested lows on liquidation ahead of option expiration on Friday but Minor also believes there is just more corn in the country than is on USDA’s balance sheets.
“It just takes me back to that January report where we had cut out a huge chunk of yield. It makes us wonder, was this crop bigger than anticipated? Are we going to get a surprise at the end of this month in the quarterly stocks report or not?”
Minor says at this point, the futures market and spreads are not acting like the corn crop is a half a billion bushels smaller than the projections for 2025-26.
“As I try to source corn I am not having a problem finding it and the cash market and basis levels reflect that,” he explains.
New crop corn saw a slight pop after holding and bouncing off key support and triggering some fund short covering but it was also up in tandem with the wheat market.
Wheat Sees Short Covering?
Funds were also covering short positions in the wheat market but Minor says the market was also responding to the 2% drop in crop ratings and the slow harvest pace at only 10%.
Wheat may have also been adding a small amount of war or risk premium, although the Iran/Israel conflict has not stopped the flow of grain.
Cattle Futures Tank
Cattle futures tanked late in the session and Minor attributes it to risk off selling by the funds tied to geopolitical concerns and spillover from the lower equity markets.
Minor says both cattle and hogs are also concerned about the impact the recent ICE raids and immigration deportation is having on the chain speeds at beef and pork packing plants.
“A lot of the money that you saw leaving the cattle market was in the front months. So for one, yes, that probably does say that the managed money funds are shedding some of their long positions. Now, the other aspect of this would be this building worry about our packing plant industry. A week or so ago, we saw the Omaha plant get raided. They were running at 30% of capacity with half their workers detained. The fear that the packing plant down the road road from it is gonna be next is definitely a problem.,” he says.
President Trump has flip flopped on the immigration issue saying on Monday he would exempt farms and meat processing facilities, then walking that back on Tuesday.
Lean Hogs Hit New Highs Then Reverse
Lean hog futures hit some new contract highs before reversing lower with cattle, but the fundamentals suggest the hog market is fundamentally sound.
“We do have some health problems, which is getting talked about in that industry as well. Cash isoweans are nearing $60, so that market is very expensive,” he says.
Plus, cutouts are around $119, which suggests strong demand and so he thinks there’s more upside in the hogs market.
