Grain and lean hog futures ended mostly lower Monday, with cattle higher.
Grains See Risk Off Selling and Profit Taking
Grains markets initially opened higher but quickly faded with risk off selling spilling over from the financial markets and the sharply higher dollar. Chuck Shelby with Risk Management Commodities says the uncertainty in the markets caused some position squaring by traders but futures ended off session lows. “You saw a lot of price movement in grains, gold, silver, currencies with a major event going on in the world. But at the end of the day, as things settle down, I guess the fundamentals will come back into play and the market handled it pretty well. So unless something crazy happens overnight, markets will reflect a more calm nature moving forward”
Concerns China Will Pull Out of April Summit
Soybeans set back with fear that with China backing Iran they may decide to pull out of the April summit between President Trump and President Xi. So is that a fear the market needs to have?
Shelby says, “I mean the Chinese were partners with the Iranians and, you know, the crude oil situation, they get some of their crude over there. The Strait of Hormuz being shut down potentially is always a concern. I think at the end of the day, though, the Chinese think there’s more benefit to cooperating and working with the United States and working with Trump. So far, no real signals out of China that they want to cancel that meeting.”
Profit Taking in Grains
The grain markets also saw some profit taking after ending with higher weekly and monthly closes on Friday. “Yeah, it’s a new month. You know, the funds have added to long positions in soybeans. You know, you just have to wonder how much more they want to pile on here. But certainly a market that, you know offered some opportunities for producers to sell some old crop. Some of the new crop prices got up there near $11 cash. So we’ve had a pretty big run. I think there was probably some producers selling maybe at orders in the market. So yes, it’s a combination of things today.”
Technical Damage?
The soybean market did take out the November highs before turning lower. So is that reversal and indication of technical damage? Shelby says he’s not concerned, “I don’t think so at the moment.”
Inflationary Buying in the Grain Markets?
Funds have covered a massive part of their short position in both corn and wheat as well. So will they push long in the market and is this an inflationary play with crude oil moving higher that could bring more buying into the grain complex? Shelby says, “Well, the funds have been impressive. This is the second time they’ve entered the bean market. They like the long side of it. They’ve moved a little bit out of their shorts in the corn market, so they certainly impact our market. They don’t make money if they’re just sitting there not you know participating.” However, he says they will need a catalyst to keep the momentum going.
Wheat Removing Weather Premium
Shelby says the wheat markets were not only reacting to the higher dollar but removing weather premium. “Well, there’s supposed to be some significant moisture come into the center of the country to the Eastern Corn Belt, which is much needed because a lot of that area is in really dry conditions. So if the moisture comes in, that’s really helpful and needed. You know, we’re going to have to see how much really develops because in the past we’ve been showing opportunities for rain and it really, you know, hasn’t panned out. So pretty critical here, but probably some pullback was due to potential for some significant moisture.”
Planting has already started in Texas but is a few weeks away in other areas of the Corn Belt. Shelby says there is some significant dryness in key areas. “Actually if you look at a drought monitor map compared to beginning of 2012 we’re much drier in the U.S. than we’re in 2012. So i know a lot of producers are really concerned in dry areas but again that can change in the next few weeks if the moisture pans out like it’s predicted.”
Acreage Mix
How much of a shift in acres will the market see from corn into soybeans? USDA predicted 94 million acres of corn a nearly 4.8 million acre decrease from last year and 85 million acres of soybeans, so up 3.8 million from 2024. However, Shelby says the jury is still out. “Farmers will cut back on corn acres the question becomes you know how many guys want to plant corn on corn? When you look at the price of nitrogen it’s higher than last year about $35 an acre in general above last year’s cost if you use the same amount I think the rally in the bean market during the month when we calculated crop insurance also helped bring a few acres over so I don’t know I’d be in the camp around 94 or 95 on corn and soybeans around 85.”
He says it’s going to be interesting and after USDA’s big miss on acreage last year, will farmers participate in the surveys. “After last year, I mean, USDA’s massive switch in acres. Will the market believe what they say at that point in time or will it react to it if the acres are out of balance? Pretty big report at the end of the month. And it’s going to be really interesting to see what the what USDA comes up with.”
Higher Fertilizer Prices
One thing that might have an impact is fertilizer prices. They have shot up with the rally in crude oil in response to the Iran conflict and shipping delays out of the Strait of Hormuz. “Yeah, I think a lot of guys that already purchased their nitrogen, but what I’ve heard today was prices jumped up. It’s obviously shut down shipping. So bringing in fertilizer, urea, I think it’s another negative to the corn market when you look at.”
And it’s not just the high cost. If the Strait is shut for a few weeks it could mean some fertilizer products won’t get to farmers in time for planting. “I mean, it makes it challenging for those that supply fertilizer. It makes it challenging for farmers. I know farmers in the far south of Texas are starting to plant already. So, yeah, we’ve got a lot of, you know, concerns of getting it out there. And again, it could be another factor when you look at the price of corn and beans and what the mixture is going to be for 2026.”
Cattle Rebound
Cattle futures started lower in tandem with the risk off selling in the stock market tied to the Iran conflict. However, the financial markets rebounded later in the day and so did cattle but the futures also bounced off of key support. For live cattle the 100-day moving average on the April contract was defended. “But at the end of the day, we came back around in positive territory. I’m a pretty big fundamentalist. So going forward, when we get to the grilling season, I think you’re going to see that demand for beef to be there. So I think probably stabilize the market here for now, as long as the stock market can hold together and this conflict doesn’t escalate into something worse than what it is right now.”
The market was still digesting the lower cash from last week which on Friday was at only $240 in the North and mostly $244 in the South, down $5. However, even with lower cash the futures are at a discount. “And again, we’ve seen this market time and time again in the fats. We see the futures gyrate and move around and jump around and have some big disparities. But at the end of the day, the cash is still king.”
Hogs See Profit Taking
Lean hog futures started higher but then ran into resistance and saw some profit taking. Shelby also says some of the correction came from hedge selling. “You look at those deferreds out there from June on out you know they’re $109 , $110. You probably had the Easter ham demand coming into the market and i think the market’s kind of fair value where it is right now. Again as we go forward out there some premium in the market that might be a place for producers to look to take some advantage of it.”
