Markets Searching for a Spark as China Stays Quiet and Weather Turns Friendly

Friday’s celebration of a possible end to the war with Iran and a re-opening of the Stratis of Hormuz did not spill over into the grain and soy markets as sharply lower crude oil prices and sharply higher world equity markets had little effect on the row crop markets that have been punished so far in June. With only modest changes and a smaller but continued weekly price slide, the trade has seen the funds abandon their once record long positions in pursuit of other opportunities. Non-threatening US and world weather conditions and forecasts and a conspicuous absence of China entering the US export market since the trade summit, have killed all enthusiasm of what was a promising landscape just a month ago. If the peace deal is signed and the Straits return to a normal flow of oil and fertilizer, the fall South American planting intentions will go from supportive to bearish in an already troubled market.

News and Notes:

- The majority of the Corn Belt is well watered with the drought index shrinking in most Midwest states. As the US corn crop looks ahead to the start of pollination in a few weeks, there is little concern and the complete lack of weather premium in new crop prices show that.

- The daily new crop corn, bean, and wheat charts look terrible after Thursday’s post report collapse and have very little technically going for them beside being extremely oversold. The funds have gone from record long heading into the growing season to flat to short, which largely precipitated the price collapse. The funds need a reason to re-enter our markets, which is currently lacking.

- Fertilizer prices have been in seasonal retreat since planting ended, and the Straits re-opening should continue that trend. The drop in both diesel and fertilizer prices isgiving everyone an opportunity to begin to talk to suppliers about pricing upcoming needs to top off your fuel tanks and secure your summer and fall fertilizer needs. If your retail prices have not fallen as much as the futures, patience should give you better opportunities in the coming weeks.

- Despite the enormous intra-day volatility and concern/fear about the spread of the flies that cause screwworm during the summer, prices have largely been range bound (albeit it big ranges) for the last few months. Feeders have been mostly stuck between $340 and $365 with front month live cattle futures and cash trade between $240-$260. It is hard to see one factor that would break the cattle markets other than consistent herd expansion that has been absent for over 5 years. Put option strategies are a reliable way to set a hard floor for your new feeders if you want some peace of mind at these historic levels. Please call with any questions or for an explanation of potential strategies.

- Weekly Changes: Corn – 4 3/4 (July ‘26), - 5 3/4 (Dec ‘26), Beans – 8 (July ‘26), - 5 1/2 (Nov ‘26), Wheat + 4 1/2 (July ’26), Crude - 719, Diesel - 2235, Dow + 291, US Dollar - 306, Cattle - 90, Feeder Cattle + 353, Hogs - 178, Cotton - 106, Milk - 14 (15.99).

Once the funds decided to unwind the inflation trade and prepare for a re-opened Straits of Hormuz, the general raw material price landscape suffered substantially. Combine that very significant event and plenty (too much in many areas) of rain on the US corn crop in early June and we got smacked by the perfect bearish storm. Predicting the unpredictable sometimes seems easier than it should be and sometimes feels impossible and that any move you make is just wrong. There are many commentators that have pieced together a rather elaborate plan on how the US’s control over the world oil market (the US is the world’s largest exporter, the US is in charge of rebuilding and exporting Venezuelan oil and however the US is involved in controlling the Straits moving forward) will begin to place a choke hold on China’s oil supply and force China to follow through on all trade purchase pledges from the trade summit. For all of us, I hope they are 100% correct. There will be too many twists and turns ahead for the rest of the growing season, but June has been a brutal reminder that selling rallies is the easiest and most reliable plan as there are just too many unknowns in any crop year. Opening calls are slightly lower as the Iran peace deal is expected to be signed with an immediate reopening of the Straits but Israeli bombing on Sunday morning may put that in jeopardy. Have a great Sunday.