Grain Markets Fight Back as End Users Step In After Historic Selloff

After a mostly lower overnight session spurred largely by additional sharp losses in crude oil, the lower overnight trade quickly turned into a rapid opening rally as heavy end user buying and potentially some world pricing developed after US corn, bean and wheat prices fell to parity with our international competition. It will be interesting if any daily flash sales are announced the rest of the week after today’s 7, 20 and 15 cent rallies in the first ten minutes of trade. Other news was lacking but the official signing ceremony of the peace memorandum is still on the schedule for Friday in Switzerland while President Trump is overseas at the G7 economic summit.

News and Notes:

• US and world weather forecasts remain largely unchanged from Monday’s runs as the US will be cooler than normal into late June with normal rain changes for everywhere except the southern plains. The corn and bean crops are well watered, but the spring wheat crop is showing signs of disease pressure from too much rain.
• The daily August diesel chart is on Page 2, and it shows the wild ride the market has been on since the war started 100+ days ago. Today’s drop to and bounce from the 100-DMA (blue line) is likely a good point to slow down the rapid reopening descent. Futures prices have now fallen 77-cents off the mid-May contract highs but still 90 cents-$1 a gallon higher than the pre-war trade. The market (like corn and beans) is very oversold (the most in 7-months), which should also provide some modest support, or at least slow down the decline. Continue to talk to your suppliers and top off your tanks when the retail price starts to catch up with the futures decline.
• There was so much to talk about in the weekend comment, we ran out of room to put in our latest podcast with Helena. Please take a few minutes to listen.
• There were no surprises in Monday’s crop progress report with corn ratings improving 1% to 68% G/E while beans were also up 1% to 66%. The corn rating is 4% behind last year while the bean rating is the same. Notable state changes were Indiana’s corn crop improving 5% to 62% with beans up 7% to 62%. Iowa and Illinois’ ratings dropped with Iowa ratings down 4% in corn and 3% in beans. Nebraska crop stress is starting to show up with corn down 3% to 55% while beans fell 8% to 55%. While the early June ratings are not great indicators, with each week that passes going into the pollination, the correlation becomes more important. This crop has 180+ potential, but if fertilizer prices do not begin to reset in conjunction with a rally back to the $4.75-$4.80 range for December corn, the late season fertilization program could decide if this crop is above or below 180 BPA final yield.
• With end user strong end user margins for bean crush and cattle feeders, the demand pace at these lower price levels will stay strong. Daily export reports will soon tell the story if China has been bottom fishing during the early June collapse.
• Feeder cattle continued their impressive post screwworm rebound adding another $3 today to finish within $11 of the all-time closing high from April. Fresh screwworm news has been absent this week but remains an issue for all cattle.

Today’s trade continues to help build momentum at a time when sizable rallies in June with good US weather are hard to ignite. Any end user who does not have coverage for the grains or particular soy complex parts, should be looking at locking in your remaining 2026 needs as the break could provide a great base for a late summer rally on any good news from China. Do not get cute and try to pick the bottom when placing your purchase orders, as missing a discounted price by 5-10-cents is the opposite end of the greed trade that cost everyone so much money trying to pick the tops in 2023. Strong upcoming export reports will be critical to recapturing the early June losses as we head toward the critical June 30^th acreage update. Also, stay vigilant on talking to your fertilizer and fuel providers for opportunities as the energy markets have lost 15-20% in the last week on the peace deal. There are always opportunities at the extremes of large price moves.