Corn and soybeans ended slightly higher, with wheat lower. Cattle and hogs both soared.
Row Crops See Slight Gains
Corn and soybeans were slightly higher on Wednesday with fund buying tied to inflation concerns and some optimism heading into the China summit.
Sam Hudson with Cornbelt Marketing says corn got help from limit up moves in the wheat market after the WASDE but Wednesday traded its own fundamentals.
“USDA data paints a picture where we don’t have a lot of downside, you’re looking at a trend yield, you’re looking at pretty solid acres here. And with that, we still see stocks to usage go backwards about 1% year over year. And there’s just not a lot of breathing room for any errors. I think the fertilizer aspect of it also paints, you know, the idea that you could actually lose a few more acres at the end of June. So with all that going on, it’s just it’s hard. to get tied to a short position, especially when you continue to make new highs. And it was nice to see us press through the $5 mark, but not fade it off real hard. We’re going to probably find some support here now at that level until we can learn about what some of these geopolitics do into the weekend.
December Corn Makes New Highs
December or new crop corn made new highs on Wednesday and posted new high closes. So how much higher could the market rally?
Hudson says, “Well, the $5.08 to $5.13 zone is kind of one I’ve been watching and waiting for here for quite a while. I would say this is a successful more or less test of that. If you can exceed those levels, though, Michelle, and continue to keep a bid in that wheat market and optimism on soybeans and energy markets in general, then I think it’s possible you could track up to that $5.45 to $5.65 zone.”
However, he thinks it will be more of a grind to get to that level with plenty of old crop corn available.
“Demand is big, but we’ve got enough supply to service it. I think where you really get concerned is if you have to pull back. that supply number, whether it’s in acres or yield here down the road,” he says.
E15 Optimism
Some lightly buying could have been tied to hopes the House would pass a year-round E15 bill in the House on Tuesday afternoon.
“There’s certainly plenty of opinions to be had on that but it’s a lot of hype. I don’t know if it matters a ton for demand. I’ve probably been in that camp for quite a while. The adoption process, the pace of that is all filtered back into that. And my issue with it is, you know, whenever we get legislated demand, I’m always wondering about what’s coming along with that in the fine print. You know, thus far, over the last two or
three years, I think the biggest growth and benefit I think that we’ve seen without that is the fact that other countries around the world have adopted it at a much faster pace and that really helps facilitate our exports, especially in an energy pinch like this.
When Does Weather Become a Factor in the Corn Market?
So when will the corn market stop chasing headlines and start trading weather? Hudson says seasonally the market is getting into that window but so far there is no threat.
“It’s really hard to hurt the corn crop between now and, you know, July 1st at this point. It seems like we’re putting that cold weather in the rear view. You might have a few places that are still struggling to get stuff replanted and kind of filtered in here. But on the whole, you know, it’s only the 13th, 14th of May here. We typically plant our best corn, at least in central Illinois, during that time frame anyways. And so I don’t think there’s a lot of concern unless you go cold again or if we’re still looking at persistent rains for the next two weeks,” he says.
The Western Corn Belt is seeing some dry conditions but he says states like Nebraska have irrigation to get the crop up and going.
Soybean Market Awaits China Summit
The soybean market has been trading optimism of a China deal out of the summit this week for some time now. So what are the bulls looking for in the deal and what is already programmed into soybean prices at this point?
Hudson downplayed the meeting. “You know, I don’t know if it’s going to be a big deal as what we want to make it out to be. And the reason I
think that is I don’t I think you could have a lot of frameworks for some of those deals, especially when it’s pertaining to soybeans and some of these ag commodities like that. But we need to see details to see a lot of follow through buying. You probably need to see details,”
He says with the gains in the soybean market going into the meeting there is 30 to 50 cents of risk on the knee jerk reaction if the meeting doesn’t go well.
“But in the same breath, if that meeting doesn’t go well, it probably means you don’t have any more progress in the Middle East. And that’s going to keep our energy markets supported and that inflationary aspect still well alive.”
Soybean Meal Rally Supports Soybeans
Soybean meal was up more than $10 on Wednesday with some unwinding of meal/oil spreads which Hudson says is affecting soy processing margins and company stock.
“ADM would be a perfect example. Some of these biofuel companies, keep in mind the hedges they have to hold during all this. A lot of these margins were locked in initially when we shut the oil flow off from Venezuela, those margins improved. And ever since then, they’re just using their profits to feed their margin calls. I think those profits are going to be even wider here as you get into the fall months and they have new supplies to capture that on,” he explains.
Crush margins had been running at record levels at soy processing plants across the Midwest but especially in Illinois.
November Soybeans to New Highs, July Eyes March Highs
The November soybean contract made new highs on Wednesday and posted a new high close, while July soybeans are still trying to reach the March high of just over $12.50.
Hudson says there have been no soybean shortages yet requiring a push in prices.
“There’s plenty of supply to meet the demand. Those crushers can’t get it in and crush it fast enough. In the meantime, you know, if China wants to buy beans, I still think if it happens it’s going to end up on the new crop balance sheet. I don’t see them knee jerking to buy any old crop beans. And let’s face it, they haven’t really committed to a lot of new crop. So even if we get a positive announcement here, again, you have to look at the details and the volumes of it. And I just don’t know if we’re going to have all that this early in the game.”
Wheat Eases After Limit Up Moves
Winter wheat futures made more new highs early Wednesday still trading the 54 year low in production printed in the WASDE.
However, the market ended lower on a combination of profit taking and some farmer selling.
“We probably all knew this was coming anyways but I don’t think anyone knew the USDA was going to make early adjustment like this
and this instantly has me thinking and probably a lot of other people that you’re going to continue to see additional supply cuts and the first question I have is if the abandonment is going to be that high where do those acres go,” he says.
Options include milo or soybeans and that could impact the acreage numbers at the end of June.
Markets Watch Kansas Wheat Tour Results
The market also faded day one results from the Kansas wheat tour which came in at 38.3 bu. per acre compared to 50.5 bu. for the Day 1 estimate in 2025.
While the tour reinforced USDA’s estimate and there were plenty of visuals to go with it.
“Some of those pictures are just horrendous and just, you know, underscores how bad things are.”
Wheat Pausing Before Next Leg Higher
So was the wheat market just pausing to get more bullish information before taking the next let higher?
Hudson thinks it is possible for wheat to move higher but it is likely to happen in the deferred contracts.
“Because think about acres for next year. You know, not only, you know, we raise wheat all around the globe simultaneously. That’s one of the first markets you could lose acreage somewhere in like a third world country if they can’t get fertilizer or the cost structure gets too high.”
Cotton Hits New Contract Highs
Cotton futures were back higher on Wednesday and nearing the 90 cent mark but will the market get there?
Hudson says, “At this point, why not? You know, we’re looking at two year highs now at this point. I think you’re, you know, this is two prong.
I think you’re looking for more acres, but also the energy pinch that we’re seeing, you know, makes cotton a lot cheaper compared to a lot of this polyester we’re wearing anymore. All those leggings out there.”
Cattle Correct
Cattle futures were higher on corrective buying and with help from higher cash and easing fear about the administration lowering the TRQs on beef imports to increase supplies.
Hudson says, “These headlines took some of the length and took the edge off, but the cash markets are putting it right back in.”
Still he thinks it will be difficult to keep the funds in the market as they will lack confidence in being long with if the administration starts talking
about lowering beef prices again. Funds were still long over 138,000 contracts as of last Tuesday.
He points out that the fundamentals have not changed.
Cash at Record Levels
Cash trade had already developed early in the week at $260 in the South and bids were renewed at higher levels while the futures were trading.
After the board closed the North saw cash trade ranging from $263 to $265 late and dressed prices as high as $410.
Hogs See Short Covering
The lean hog futures were also higher seeing short covering after hitting new lows for the move on Tuesday.
Hudson says the market got oversold. “Things got a little cheaper than I would have expected. Maybe I had a bit of a bias there but with the capitulation you saw on the chart today, maybe that’s enough to put a bottom in this market, at least for a little while until we see how some of this geopolitics play out that we talked about.”
The back months also continue to price in disease concerns and are chasing the higher priced beef market.
