Grain Markets Fade Late as Traders Brace for Another Headline-Driven Weekend

Early rallies gave away to late losses as higher energy prices in the overnight helped a higher morning trade before crude reversed pulling the other raw material markets lower with it. China made no direct or indirect movement to confirm the expanded trade deal, which is making the demand bulls nervous as any Chinese pushback will have a dramatic impact on prices. With every participant in the trade watching closely for Iran and China news, the other daily news was largely ignored despite a much-improved week of export sales with corn leading the way. If the recent trend of quiet Friday’s and news filled weekends continues over the 3-day break, early next week promises to be another volatile trade.

News and Notes:

- A wet weekend plus ahead from Texas the New England with excessive rain continuing for the Ohio Valley where a swath from MO to OH needs to dry out and see some warm sunshine. The excessive rain will continue to stress the Plains winter wheat crop. Next Tuesday’s wheat crop ratings should see additional losses in G/E.

- The cattle markets were hit hard today ahead of Friday’s Cattle on Feed report as technical selling pushed feeder cattle to a massive limit loss of $9.25 with an early failure to push above the 20-DMA setting up an easy fall through the 50-DMA (green line) and close below the 100-DMA (blue line) for the first time since December. There are not more cattle, and the Mexican border is not rumored to be opening soon, so it looks like exhaustion on a chart rolling over despite the supportive fundamentals.

- World energy traders have been quick to react to any Iran news and today’s higher start and lower close shows that if you balance all the factors of a reopening verse a continued closure, the traders appear to be more worried about the potential of a quick $15-$20 drop on a peace agreement, rather than controlled grind higher we have seen on days of no progress. With corn and beans so intertwined with the bio-fuel industry and gas prices, what happens to energy prices will have a bigger day to day impact than what China does regarding the alleged trade deal.

The trade may seem slow and choppy, but the traders I speak with are sitting on pins and needles ahead of the weekend and the probable sharp moves that will happen on Monday nights reopen. The stakes have not really changed as an end to the war will be short-term bearish as the energy markets extract war premium, while news from China could more than offset that bearishness or possibly add to the losses. Everyone from the producer to the end user to the speculative community is tired of the unknowns in price discovery, but it has supported prices, and bearish outcomes to all the variables will leave everyone wishing the recent opportunities of $5 new crop corn and $12 new crop bean futures would return. Plan for the worst seems to be the only strategy for the last several years in ag. If the news flow remains slow on Friday, expect more choppy trade heading into another critical weekend.