New trading month with overnight action mostly firm due to crude oil.
Grain Overview
Grain markets started the new month on a firm tone, which later turned mixed overnight, as soybeans an d wheat moved higher while corn traded slightly lower. Most of the attention was focused on growing tensions in the Middle East. Pres. Trump sent a list of changes in the current cease-fire agreement, while there are reports of renewed fighting involving the U.S. and Iran, along with additional attacks across the region, which injected fresh uncertainty into global markets. While the White House continues to signal that a ceasefire remains in effect and that hostilities are easing, traders appear unconvinced. The market’s reaction tells a different story, with investors adding risk premiums back into several commodities.
Crude oil led the move higher, gaining more than $3.00 per barrel overnight. The strength in energy markets is providing support across the commodity space, including agriculture. Soybeans are benefiting the most from external influences, with soy oil dealing with RINS and record large margins of over $4.00/Bu being reported. This is helping to drive the advance in soybeans.
Weather remains an important piece of the grain market outlook. Growing conditions remain generally favorable, but reports of increasing moisture stress are emerging in some production areas. As a result, traders continue to closely monitor forecast updates for signs of broader dryness concerns.
This afternoon’s release of the first national corn and soybean crop condition ratings of the season will provide fresh data for the market to digest. While early-season ratings rarely offer a reliable indication of final yield potential, they can still influence short-term market sentiment.
Being the first trading session of a new month may also be contributing to today’s tone. Positioning adjustments and fund activity often play a larger role at month-end and month-beginning transitions, meaning market direction could be driven as much by money flow and trader psychology as by traditional supply-and-demand fundamentals.
Cattle Overview
Cattle futures ended lower again late last week, with selling prevalent, resulting in negative weekly closes. This occurred with the cash feeder index gaining $5.20 on the week at $were 373.40. The negotiated fed cattle trade was lower in all regions, with steers in the north at $256-257, while the southern trade was also at the same price, but only $3-4 lower on the week. Choice cutout and gained $1.20 on the week, while select was off $1.82.
August live cattle has a ledge of support at 236.50-237.00 that needs to hold to avoid further cascading selling. August feeder cattle have initial support at 343.75-344.00; if that fails, then a challenge of the 238-239 range starts to come into focus. In the news, New World screwworm cases are getting closer to the US, with the case reported within 31 miles. Cattle futures need to break their 30+ day chart action of lower lows and lower highs. 244.20 is significant resistance for August live cattle, with 366.00 a major hurdle despite extreme discounts to cash.