Soybean Shock and Rising Tensions Ignite Broad Commodity Rally

Another bullish start to a new week which was partly driven by the cancellation of weekend peace negotiations with Iran, but also on the report that the Netherlands turned away several bean meal cargoes from Argentina as a non-approved gene was discovered in the shipments. The markets quickly reacted with the entire soybean complex rallying, helped by the export news and crude oil rallying over $2. The markets have at least five major cross-currents to figure into daily price discovery which will further complicate market movement as trying to decide which moving part is the most important factor for each day.

News and Notes:

- Weekend forecasts kept seasonally cooler than normal weather for the Midwest for the next week. There has been too much rain for many parts of the Corn Belt over the last few weeks, but the N and S Plains wheat crop remains too dry. This afternoons planting progress numbers should show strong corn and bean seeding rates, but lower wheat crop conditions are again expected.

- With today’s sharp rally in both old and new crop beans, I included the November bean daily chart which shows today’s rally that was built on two-week’s of stable trade just above the 20-DMA (green line). After the January crop report finalizing 2025 US crop yields and potentially record SA bean crops that were off to a good start, there was no one who thought prices would be $1.10 per bushel higher unless Brazil’s bean crop had experienced significant yield loss. This is another classic example that when everyone is drinking the same Kool-Aid, they are often wrong.

- Breaking down today’s surprise bean demand news is pretty simple. The HB4 soybean gene has not been approved to import into Europe although it has been approved in China and the US. With the Netherlands rejecting the shipment on a positive test of HB4 in several bean meal cargoes last week, the market is trying to judge if more Argentinian bean meal exports into Europe will be at risk. Europe imports roughly 400-450 MBU of Argentine bean meal annually. World bean crush totals have been record large on massive bean oil demand and even if the EU rejects all other cargoes, the US or China will buy the meal with potentially the US being able to sell approved meal to Europe. Like many things in the import/export marketplace this creates a game of musical chairs rather than the loss of that many bushels or that demand.

- In response to skyrocketing fertilizer costs, multiple major production countries are announcing increased government subsidies to lower fertilizer prices. The latest is India with an announcement that they will increase their fertilizer subsidy bill by an additional 20% this year. US farmers continue to play on an uneven playing field as even this year’s Farmer Bridge Program barely solves last year’s problems, and any program this year will not come until later this year.

- Both live and feeder cattle futures were sharply higher to start the week and have regained over 75% of the recent losses. Both are within easy striking distance of new all-time highs. The drought in the cattle pasture areas of the Plains is beginning to work its way into the market outlook.

Just when you think you understand all the variables moving the markets, the world always seems to have another curveball to throw at the traders. The unpredictability of negotiations with Iran and the probable closure of the Straits for the near future, the bullish momentum in bean oil and now the bullish surprise in bean meal, have added more layers to a bean market that was left for dead early this year. Corn has a cold wet US planting issue to deal with while wheat has its own dry and cold issues affecting yield. Even if you took out the issues in Iran, there are other legs of support for each market as April ends to factor in to decide on sales targets and fair value. This afternoon’s crop conditions will figure into Tuesday’s trade.