Crude Oil Collapse Puts Grain Bulls on Edge Heading Into Shortened Holiday Week

Happy Memorial Day and thanks to all of our veterans and the families of those who paid the ultimate sacrifice in service for our country. Rather than recap last week's trade, the massive developments of the long weekend have been increased confidence that President Trump's negotiation teams are in the final stages of negotiating both an end to the war against Iran and a reopening of the Straits of Hormuz. While the last five weekends have been active with head fakes and failures of promises, the market's that traded on Monday are taking the stance that this agreement may have teeth with crude oil down over $6 a barrel while the US equity indexes all sharply higher and posting new all-time highs. The opening calls for the grains and beans are 4-6 lower on the renewable energy relationship, which has been the pattern with corn and beans almost exclusively following the energy markets on days with big moves. With a shortened week ahead confirmation or denial from Iran will direct each day's trading direction. 

News and Notes:

- Other than an excessively wet Delta, the weather patterns and planting progress in the Midwest remain non-threatening with normal temperatures and rain forecast for the next 7-10-days. US planting progress is estimated at roughly 85% for beans and 75%+ for corn. The US has no obvious weather problem into early June, but the excessively wet areas from MO to OH will be closely watched to see if prevent plant acres cut into the USDA's planted corn number from March 30th.

- The new crop corn, bean and wheat charts are the first three on Page 2 and show the deteriorating technical conditions of the charts with all three now leaning more bearish than bullish. The funds continue to hold large, long (bullish) positions in corn (1.45 BBU) and beans (1.04 BBU) in an inflation trade, but they will quickly sour on the idea of being long if the Straits have a reliable reopening. Crude oil is the 4^th chart on Page 2, and it is after the Sunday and Monday trade where world markets were open and shows the current trade that has fallen beneath the 50-DMA (red line) for the first time in 4 months. If Tuesday's close and then the weekly close are below the 50-DMA, the initial downside target will be another $10-$15 to the $75 to $80 a barrel area. Unfortunately, do not expect to see any immediate relief at the pump as gas prices always go down much slower than they go up.

- Friday's Cattle on Feed report is being viewed as slightly bearish, but after late last week's sharp losses, the trade may take a more neutral approach in Tuesday's trade. Seasonally, the cattle markets typically trade softer after Memorial Day and with a $20 gap between late summer futures and last week's cash trade, there is a premium priced in the markets.

- Weekly Changes: Corn + 7 1/2 (July ‘26), + 5 1/2 (Dec ‘26), Beans + 19 1/2 (July ‘26), + 18 (Nov ‘26), Wheat + 10 1/2 (July ’26), Crude - 402, Diesel - 1492, Dow + 1045, US Dollar - 22, Cattle - 415, Feeder Cattle - 1160, Hogs - 300, Cotton - 258, Milk - 4 (16.92).

The markets are back to a go up sharply or go down sharply attitude as the volatility in crude oil will direct price trends this week. Understandably, everyone is skeptical that a quick and lasting reopening of the Straits will occur the chance that it happens is high enough that a giant exhale of selling would be seen as the trade becomes more confident in an agreement. Opening calls are lower. Have a great Sunday night.