Grains catch a bid overnight after multiple days of liquidation.
Grain Overview
Grain futures appeared to complete their latest round of liquidation Tuesday evening, opening lower despite strength in crude oil. Energy markets continued to firm overnight and into the early morning hours following reports that Iran had launched attacks against neighboring countries. The renewed geopolitical tension helped support commodity markets and provided a stronger tone to the grain complex ahead of the opening.
Soybeans are drawing support from both the rebound in energy markets and continued strength in the cash market. Crush margins remain near record highs, encouraging strong processor demand. Year-to-date soybean crush is running 8% above last year’s pace and 1% ahead of expectations. While that may not seem like a significant divergence, additional demand is supportive, given the relatively tight soybean stocks. Soybean oil is pressing near 80.00 this morning, which would be new contract highs.
Weather remains an important market factor. Some areas of the Corn Belt continue to report a need for rainfall, and current forecasts do not indicate excessive moisture. At the same time, domestic demand is undergoing the typical transition from old-crop to new-crop sales, while traders continue to wait for signs that China may reduce tariffs on U.S. agricultural products.. Ahead of the May 15 summit, many market participants expected Chinese buying to emerge, creating a classic “buy the rumor, sell the fact” setup. Instead, China has remained on the sidelines, allowing grain markets to retreat with large open interest getting liquidated into their normal seasonal weakness. The resulting price decline has created attractive buying opportunities for importers. Reports indicate China is evaluating offers for U.S. corn and potentially sorghum, with wheat also remaining a possibility. There are been reports from USDA Undersecretary Vaden that China has begun placing orders for US beans as part of its 2026 25 MMT purchase commitment.
Even though there is a conversation about how Russian and Ukrainian wheat crops are looking good, yields are slashed for Australia, with production down in Brazil, and now China knows its wheat quality is being impacted by heavy rains again in the Hunan area. It’s expected that China will eventually buy US SRW wheat, with the recent price break advantageous for them.
Cattle Overview
It was a lower close for live and feeder cattle futures after a sharply lower early run, with buying interest surfacing to cut losses in half. The feeder index was down another $2.88 at $346.26, which spooked the feeder index of how the cash trade is drifting. Drought areas in the Plains are still seeing cattle herds liquidated. A report yesterday puts the New World screwworm infection rate in Mexico within 25 miles of the Texas border.
Box beef values yesterday had choice picking up $1.24 to $394.07, while select was higher by $1.72 to $394.81. 400 remains elusive, keeping cash trade on the defensive, with packers looking to recapture margins as herd numbers slowly increase seasonally.
Both August live and feeder cattle futures sliced through their Friday lows early yesterday morning, creating a massive break that eventually found bottom-picking against the May lows, anticipating that those levels would provide enough of a discount for the cash trade. On the chart, August feeders have extreme resistance at 356.50 with support at 343.75-344. August live cattle have resistance at 342.50-343.50, with support on a triple bottom in the 236.80-237.20 range.