Crude Surge Fuels Breakout in Corn and Beans as Markets Brace for Sudden Reversal

Positioning for first notice day for May futures, surging crude oil prices, new 2026 closing highs for December corn and November beans were just a few things moving today’s markets. Corn and beans were able to hold to most for their daily gains by the close, but wheat saw massive farmer hedging as Chicago July futures topped $6.70 and eventually finished well off the early highs. Crude continued rally was driven by an early morning tweet from President Trump highlighting another non-starter peace plan offer from Iran and to expect the Straits to remain closed for longer. Spot W Texas crude oil futures prices have easily moved back over $106 and spot diesel over $4.10 as the world waits on any breakthrough between the US and Iran and try to posture for a massive correction if a plan is approved while also finding protection against high energy prices for the next several months.

News and Notes:

- With most of the dry areas in IN and IL having caught up on rain (although too quickly) the last week, there is little drought concern for the majority of he Midwest. On the other hand, a line from roughly Kansas City to Indianapolis is drying out from a 3–5-inch soaker this week. There will be replant but a wet and warmer forecast may be able to keep the most impacted ground from crusting as corn emerges. Rain remains in the forecast for the S and W Plains to help the struggling wheat crop and already planted corn and beans.

- From the day after the ultra-bearish January 12th USDA report lows of $4.17 ¼ to today’s breakout high of $4.79, there have been more variables to consider than any year in recent history. The Dec corn daily chart is on Page 2 and shows the steady climb from January 13th until today’s high. The market is impressively overbought but that is not a reason for a massive trend-changing correction, just daily volatility where any lower trade will find strong support . The funds are still holding a massive, long position considering how well the corn crop is going in the ground, but crude oil is the team leader until a peace deal is signed. The next technical upside target is the December 2023 gap from $5 to $5.05. Today’s close was $4.97 ¾ after an early attempt to punch through $5 was turned away at $4.99 ½.

- Cattle’s sharp rally to new all-time highs on Tuesday was driven by the shocking weekly cash trade jumping by $10 or more in some areas. Cash trade at $256 is stunning but will not create a problem until the consumer pushes back against high beef prices because of the extra money they are spending on gas. There are no rumors or news on re-opening the Mexican border for cattle imports.

- The Federal Reserve left interest rates unchanged at the completion of this week’s meeting, but the bond markets are rallying (higher lending rates) on inflation worries from higher gas prices and general raw material price inflation. Since the war started, nearly every raw material market has rallied anywhere from 10 to 100%.

- Demand news has been slow this week as the weekly ethanol grind was below last week and last year while stocks were higher. There have been no flash sales of note so far this week and Thursday’s weekly export report is expected to be decent for corn, but pretty routine for the bean complex and wheat. With the CBOT rallies and mostly flat US basis, US prices for corn, beans, and wheat are all well above other world offers. If this continues for several more weeks, the US will have to make some negative demand adjustments in the June 30th planted acreage and quarterly stocks report.

Today’s mental exercise was putting together a list of the bullish factors (crude oil is #1 by a longshot) and bearish factors (slowing demand among others) to help develop a hedging plan for the rest of the year. It is hard to ignore the highest new crop prices in years until you fold in the complication of high fertilizer prices and probable yield stress from under fertilization. One tweet that a peace deal is signed, and we will wonder why we did not sell more even extending out to 2027 where $5 new crop corn, $7 wheat, and $11.35 beans look great IF fertilizer prices normalize. The cross-currents are as intense as they can get without a summer weather problem, but history tells us that selling during the uncertainty proves rewarding more often than not.