The grain trade bucks overnight outside influence, except for strength in energies.
Grain markets opened the day on firmer footing, with corn, soybeans, and wheat drawing support from strength in the broader energy sector. That outside influence continues to play a key role in setting the tone, particularly as volatility in fuel markets feeds into input costs and demand expectations across the ag space.
In contrast, the metal complex is under heavy pressure. Gold has dropped sharply, off roughly $300 in early trade, while silver is seeing steep losses as well, of $9.00. The selloff follows the latest messaging from the Federal Reserve, which held interest rates steady while maintaining a firm policy stance. Rates remain in the 3.5% to 3.75% range, a decision that aligned with expectations. Officials pointed to heightened uncertainty tied to the U.S.–Iran conflict as a key reason for avoiding any move lower. While softer labor signals might have justified easing, those concerns were tempered by a more cautious outlook on employment overall, and then there’s yesterday’s hot inflation reading.
Geopolitical tensions are adding another layer of instability. The conflict involving the U.S. and Iran has now expanded to include strikes on energy infrastructure beyond Iran’s borders, raising fresh concerns about supply disruptions and the broader economic fallout. Some analysts believe the timeline for resolution could stretch well beyond initial projections from Washington, prolonging uncertainty across global markets.
Word has it that the annual Brazilian port strike is expected to take place next week, which is supporting soybean meal prices. Argentina has also been slow to become an aggressive soymeal exporter, as heavy rains are slowing the corn harvest and raising concerns about a repeat of 2016, when the soybean harvest was also held up. Overnight, another Brazilian soybean cargo was rejected by China for pests. China is looking for a way to slow soybean imports, possibly buying soybeans from the US in April to appease a potential Emperor Trump arriving in late April if he has succeeded in taking the Iranian Mullahs out of power and replacing them with the leader of the people.
Within commodities, investor positioning is also shifting. Managed money appears to be leaning more heavily into the sector as a relatively safe haven, helping underpin prices. At the same time, strong processing economics are reinforcing demand. Soybean crush margins have climbed to their best levels in roughly two and a half years, while ethanol returns have pushed above last summer’s highs, supported by the rally in gasoline. Additional policy support is emerging as well, with the White House reportedly easing summer gasoline blending requirements, another factor boosting the outlook for renewable fuels. Taken together, these dynamics are helping keep cash markets resilient, even during periods when futures prices pull back.
After a mostly lower session yesterday, cattle futures mitigated losses towards the close, but those gains appear to be erased again this morning. A lower start is anticipated, given the weakness in the outside markets, and again, recession fears are building. The cash feeder index added only a penny yesterday and is now at $358.32. A pretty poor performance after 15 days of losses, and Tuesday saw just a gain of over a dollar. The bias for negotiated cash trade this week is leaning toward steady money, but initial bids in the north are off $3.00 at $232, with addresses being offered down $4 at $368.
The March COF report is released on Friday after the close at 2:00 p.m. CDT. Currently, expectations are for Placements at 99.2% (keep in mind we are now past months that are accustomed to having Mexican feeder cattle in this country at roughly 100,000 a month), the On feed number at 99%, and marketings near 92.8%.
April live cattle closed in the resistance zone of 235, and look to be at risk of retargeting last week’s support near 229. Meanwhile, feeder cattle stalled against their 20-day MAs, with April feeder cattle needing to find quick support at the 350-351 area, the prior resistance-turned-short-term support, or else 340 will get retargeted again, given outside influences.