For Now, It's All About The Crude

Corn:
Corn futures nearly recovered the entire selloff triggered by the January 12 crop report, with May corn rallying back toward the 4.56 area before stalling just under resistance. Technically, the market continues to hold key moving average support, reinforcing the idea that a larger wave three rally may be developing. Intraday wave structures suggest continued upward momentum, with a potential short term target around the 4.60 level. A small old crop sale may be made into that strength, while producers who sold physical corn earlier were advised to reown those bushels via May futures to participate in the rally.

Soybeans:
Soybeans moved higher largely because of strength in soybean oil, which has been closely tracking crude oil prices. The rally produced the highest soybean close in over a year as the market continues to grind upward with consistent higher daily lows. Technically the rally could still have additional upside before a larger correction occurs. New crop risk management began with short dated November $11 puts costing about 28 cents. This strategy protects prices through key acreage and planting reports while leaving upside open if the rally continues.

Wheat:
Wheat futures rallied sharply as global buyers, particularly in the Middle East, appear to be shifting away from hand to mouth purchasing toward rebuilding reserves. The change in buying behavior comes amid ongoing geopolitical tensions and global supply uncertainty. Despite improving moisture across parts of the eastern Plains and Midwest, the western Plains remain dry. Technical targets suggest additional upside potential before major resistance zones are reached where new sales may occur.

Crude Oil and Energy:
Crude oil surged above major resistance levels and briefly traded above $82 per barrel before retreating late in the session. Comments from government officials about potential actions to address energy pricing created uncertainty and may have contributed to the pullback. Diesel fuel prices reached a 62 percent Fibonacci retracement level from previous highs, suggesting the rally could be near a short term exhaustion point. Strong momentum indicators, however, indicate the market could still experience additional volatility before stabilizing.

USDA Report Outlook:
Attention now turns to next Tuesday’s USDA supply and demand report. Analysts expect minimal changes overall, with small adjustments to exports and production estimates. Corn carryout estimates differ only slightly from previous projections, suggesting little immediate market impact unless the government surprises with larger revisions. Soybeans remain dependent on whether China steps in to purchase the rumored volumes of U.S. beans. Wheat expectations are mostly unchanged, leaving room for potential surprises in global carryout figures.

Cattle:
Cattle markets held relatively firm despite a sharp decline in the stock market and rising energy prices. Live cattle are trading near major Fibonacci resistance while forming a possible head and shoulders topping structure. Packers have been reducing slaughter levels in an effort to support boxed beef prices, but the increases have been modest compared to previous years. With consumer costs rising for energy and food, demand strength may be limited if economic pressures continue to build.