Markets Begin to Break Away From Crude Oil as Traders Search for the Next Story

The grains were lower today with wheat posting double digit losses with corn down 1/3 of that while the bean complex was flat to higher on strength in bean oil. The soy leader was higher bean oil on unconfirmed rumors China would be lowering import tariffs. All markets had been moving in lock step with crude oil, but despite today’s positive announcements on a peace deal and crude oil falling over $4 a barrel, the markets showed some independence. Equity markets ended mixed after surging to another round of new all-time highs in early trade, but all markets are showing signs of exhaustion after 3-months of trading the closure of the Straits. With only two trading sessions left in May, the rest of the week will be headline sensitive trade trying to position for month end and another weekend of announcements and developments from Iran.

News and Notes:

- Heat is heading toward the WCB and Dakotas in the next week with normal ECB temperatures and rainfall while the Delta will begin to dry out. There are no immediate weather issues in the US , but the WCB and Dakotas will be closely watched as they have been the swing states for the recent run of record or near record national yields. SA weather remains unconcerning, but Europe is in the middle of the hottest and driest late spring in years.

- The daily December corn chart is on Page 2 and shows the follow the leader trade as corn has fallen sharply over the last 5-days following crude’s $15+ a barrel loss during that time. Ethanol will always be tied to big moves in energy prices. Funds have trimmed roughly 250 MBU from their net long in the last 2-weeks and taken the overbought/oversold indicators to the lowest since the 30-cent drop in early April. With the 100-DMA just 2 ½-cents below today’s low and strong support at $4.68 (200-DMA) and trend line support at $4.69 (orange dotted line), there is still 10-15-cents of technical downside, but the chart does show a more neutral outlook is probable in the short-term. Any rally in crude will push Dec corn back to $4.87-$4.93. Today’s close was $4.77.

- I want to use this note to get on my soapbox. Several analysts I follow are beginning to cite the “prediction” firm Kalshi in their research. Kalshi is a legalized gambling site where anyone can make a wager on anything from when the Straits will reopen to who will win the best picture Academy Award. The odds are set by Sweaty Joe from your local bar who threw in $5 and some other “genius” who has a feeling. I am not anti-gambling by any means, but it discourages me to see such a joke of a platform start to bleed into our industry as a reliable source of information. Please take anything sourced from Kalshi with a big grain of salt.

- Cattle have been very volatile over the last three trading sessions, with both live and feeder futures up sharply today to recover almost all of last Friday’s limit down losses. Although the Cattle on Feed showed a bearish increase in placements, the market is trading differently from the news, which should always get your attention.

While all of the fundamentals we usually talk about in late May of planting pace, early development of the crop and Brazil’s safrinha crop rain outlook, they are all getting attention but are not going to move the markets like an end or escalation of the war and its impact will have on both short and long term. All markets have taken the attitude that the war is closer to over than extending, which will continue to be short-term bearish until crude settles back into a normal price range. With China news limited, an end to war would be welcome to allow our markets to trade to potentially bullish news that could develop with a US weather issue or sizable acreage shift from corn to beans in the June 30th update. Unless something wilder than normal happens on Thursday, there will be no comment tomorrow.