Rally Pauses as Profit-Taking Hits Grains and Crude Pulls Back

After Monday’s new round of new highs for the move in corn and beans, prices took a breather today as farmer hedging was active, and crude oil fell over $3 on a lack of drama in the Straits. Crude continues to be the leader for most raw material markets’ daily action and on slow news days, the bulls pull back on their buying as the headline driven order flow becomes more obvious. With no surprises in US planting progress and largely favorable US weather into mid-May, the biggest news in the week ahead will be details about the upcoming China/US trade meeting and next week’s USDA monthly report. Beans have fully priced in China buying a large number of bushels at the meeting in a goodwill gesture, which sets the market up for a potential ugly shock if China does not follow through. To this point, Chinese trade sources have not been reported to be looking for offers from any US connected sellers.

News and Notes:

- The US weather is turning warmer with an open enough dry window for an acceleration of planting in many states this week. Rain will continue to fall in normal increments and amounts in most areas for the next 7-10 days. There are no major forecast models that are sounding the alarm on the dryness in Brazil, but it needs to be closely watched as pollination draws near.

- The November bean chart is on Page 2 and shows today’s minor setback in the 6-week bullish trend. Just barely punching through $12 in Monday’s trade is more psychologically important, but it was obvious that heavy volume farmer and elevator hedging was seen at the big round number of $12, as it was at $5 December corn. The funds are long just under 1.1 billion bushels, which sets up a slippery slope for the speculative community if the Straits re-open and crude price plunge, or a last second cancellation of the US/China trade meeting is announced. Every market that has rallied on inflation fears is susceptible to any sharp break in the energy markets.

- Monday’s crop condition report held no big surprises but did show the corn crop was 38% planted (38% expected), beans 33% (35%) while winter wheat conditions improved 1% to 31%. The planting paces remain ahead of the 5YA and with a dry but cool week ahead, both crops will be more than 50% planted in next week’s report. Early emergence remains a little inconsistent as the heavy rains and cold temperatures in many states are slowing early development.

- The standing Sales Target for another 10% of ‘26 December corn at $5.05 was hit in the overnight trade to put the first new crop sale over $5 on the board in a long time. With the crop going in the ground well and crude oil one tweet away from dropping 10-15%, being able to make this sale is a great opportunity. Dec ’27 corn did not quite get to that Sales Target but is within easy striking distance.

- At the request of many of you, I have put together several option strategies using both calls (ownership) and puts (setting a floor) that give you several different timing windows for all the events that may occur this growing season. The lawyers do not allow us to put out specific trades for multiple reasons, but if you have any interest in an explanation of what we found, please email, text or call either Brady or me when you have a minute.

For a little while on Monday, the markets gave everyone the short-lived opportunity to see new crop corn futures over $5 while new crop bean futures were over $12. Rather than wade into a bunch of research, it is accurate to say it has been a long few years since that opportunity was offered to the world’s farmers this late in the year. Unfortunately, the last time it was offered, the dynamics of the world political and world fertilizer landscape were much different than it is today. Using rough figuring on an average fall delivery basis, even if you sold 100% of both crops at this week’s highs, your yield would still need to be over 225 BPA for corn and 65 BPA for beans if you use the average costs throughout the Corn Belt, just to be close to break-even. I know that every operation's costs vary wildly, but this math just highlights how hard farming has been for the last several years. If you got all your inputs purchased during pre-pay and avoided the fertilizer price spike, please put together your break-even costs as you will probably need to be more aggressive during these rallies than you historically have been in the past.