China Hopes and Energy Tensions Fuel Strong Finish for Grain Markets

The week ended with decent gains in the grain markets and stronger gains in the soy complex as early week losses gave way to optimism that China will be a buyer of beans heading into the trade meeting while crude bounced as the US and Iran traded drone attacks on ships trying to pass through the Straits of Hormuz. While the Trump team says an agreement to reopen the Straits is close, sources in Iran do not share that optimism. Although West Texas crude oil remains high ($94.68 per barrel), the deferred markets are looking past the war and lower prices. The ethanol and bio-diesel markets are benefiting from strong margins which is helping push demand to record levels just as the summer driving season starts. Peace progress will be the top market driver next week, with Tuesday’s USDA report and Friday’s trade meeting keeping the news flow active.

News and Notes:

- Warmer weather is ahead for the Corn Belt and Midwest in the weeks ahead with normal rainfall expected. Planting progress will be rapid with Monday’s report estimates that both corn and beans are nearly 50% planted while winter wheat conditions hold steady. Recent rains have improved the outlook for Brazil’s safrinha crop with early pollination starting in the few weeks. Currently, the US and world weather forecasts are neutral to bearish.

- All four charts on Page 2 show the strong influence of the technical traders as each market fell to and bounced from either the 20-DMA (red line) and/or the 50-DMA (green line). With the funds long over 1.6 BBU of corn, 1.05 BBU of beans, and 50 MBU of wheat, the speculative crowd is heavily invested in the raw material markets and continues to exercise considerable influence in day-to-day movement. As long as inflation concerns persist and crude oil prices remain elevated, expect the technicians to have as much influence as the fundamental traders.

- While the main stated purpose of the meeting between the US and China is about trade, China’s reliance on Iran’s oil and growing shortages in China, will be discussed. With the US involved in a fragile ceasefire with Iran, it is hoped (expected) that China can put enough pressure on Iran to have them agree to a lasting peace deal that reopens the Straits and ends Iran’s nuclear goals. China’s involvement will be critical to the Straits reopening soon.

- The rallies have presented several opportunities to advance sales. Please look on Page 3 at the recent sales and if your crop is going in the ground well and you have not made enough sales, please make some catch up sales. The best prices are almost always made when uncertainty and fear are at the highest, not when everyone knows all the outcomes.

- Weekly Changes: Corn - 9 (July ‘26), - 5 1/4 (Dec ‘26), Beans + 4 3/4 (July ‘26), + 7 3/4 (Nov ‘26), Wheat – 18 3/4 (July ’26), Crude - 652, Diesel - 473, Dow + 45, US Dollar - 221, Cattle - 410, Feeder Cattle - 402, Hogs - 195, Cotton + 90, Milk - 13 (16.95).

Happy Mother’s Day to all the farm Moms who keep everything running smoothly. Next week will continue to watch the war and if a peace plan can be agreed to, Tuesday’s May USDA update, and what happens in the days before the US/China trade meeting starting on Thursday. So far this weekend there has not been any major breakthrough on reopening the Straits or a workable plan to end the war which means the grain and soy markets should open with a firmer tone. Have a great Sunday.