Inflation Trade Ignites Grains as $5 Corn Gains Momentum

Sharp gains in the corn and bean markets were part of an across-the-board rally in the raw material markets as crude oil was again higher as speculative traders believe inflation is an investable trend. Inflation is becoming a larger theme as the war drags on while the cease fire was violated today as several drones were shot at assets in the UAE  Another strong area of support was President Trump confirming over the weekend that his trade summit with China is still planned for mid-May which sparked the bean market into thoughts of good will bean purchases by China before the meeting. No purchases or totals have been circulated by China, which makes today’s rally very tentative if the meeting is cancelled or China buys no beans. The crosscurrents got even stronger today, making any marketing decision even more difficult, heading into the second half of planting.

News and Notes:

- After some record cold temperatures across the Midwest over the weekend, a warmup to more seasonal temperatures is forecast this week. A drier trend is also expected to help the wettest areas dry out and catch up on planting.

- The December corn chart is on Page 2 and shows the slow steady grind to the highest front year new crop close in nearly 2-years as speculators continue to show interest in corn based on the inflation trade and the probability of a less than maximum fertilized US corn crop that would drop yields below trend. With the close over the psychological barrier at $5, there is momentum and enough bullish public sentiment to keep support under this market. There is no obvious upside target, but if Dec closes over $5 this week, the significant support will be formed at $5.

- While the US continues to adhere to the ceasefire signed several weeks ago and since extended, the Iranian National Guard has still fired on any ship going through the Straits and even fired on neighboring United Arab Emirates (UAE) today. While all the drones were shot down or landed in the seas, there will not be a resumption of normal traffic through the Straits until safe passage can be guaranteed. With crude easily holding over $100 and no pullback in fertilizer prices, the southern hemisphere planting season with a fertilizer shortage must be addressed.

- The standing Sales Target for both 2026 and 2027 beans were hit in today’s strong rally to add to Friday’s finishing sale for 2025 corn. Both bean Sales Targets are now On Hold as the unexpected explosion in bean prices needs to be closely watched for signs of cracks, but markets in unexpected rallies or breaks often go much further than logic would dictate. Bean oil will be closely tied to crude oil and subsequently beans. One note on 2026 bean sales is that we apparently made an error on total % sold to date. We are checking on all past sales to find the accurate total and average sales price.

- Another round of Farmer Bridge payments went through the rumor mill today as high prices and the war will be around longer than expected. Very few details of the possible totals were mentioned. No doubt, these programs will be announced and confirmed before the mid-term elections in November.

With all the conversation about the corn and bean rallies being so closely tied with higher energy and inflation being a large part of the corn and bean rallies and today’s new 29-month spot corn high. For comparison, I went back and looks at December 2023 for other prices for comparison. Crude oil was at $73-$75 a barrel; beans were near $13 while interest rates were closer to 4.25% when todays are 4.5% in the 10-year Treasury. Using those numbers as context, it is clear that just one reason or market are not solely responsible for $5+ corn, but what we saw from 2022 to 2025, the Federal Reserve will not sit on their hands if inflation begins to be a problem like it was after Covid. In short, there is no easy answer to how high or how long this rally may go or last, but steady application of selling rallies should continue to be applied. This is not the time to get greedy or scared, it is a time to take advantage of the opportunity at hand.