MARKET UPDATE

You can scroll to read the usual update as well. As the written version is the exact same as the video.

Timestamps for video:
Overview: 0:00min
Corn: 5:15min
Beans: 11:10min
Wheat: 13:05min
Cattle: 15:05min

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Overview

Grains mixed today, with soybeans on the strong side while the corn and wheat market followed crude oil lower.

Today we had a USDA report.

This report was a complete non-event, they provided pretty much no changes at all anywhere.

The US side of the balance sheet was left completely unchanged across the board for corn, soybeans, and wheat.

Here is the balance sheets.

Unchanged for corn.

Unchanged for wheat.

Technically, for soybeans, crush was bumped a very small +5 million bushels.

But it was offset by an increase of +5 million on the imports.

As a result a complete wash.

The only changes made were some slight revisions to the South America crops, but nothing crazy at all.

Brazil soybeans were left unchanged at that record 180.

Argy soybeans dropped from 48.5 down to 48.

Brazil corn was bumped slightly from 131 up to 132.

Argy corn dropped slightly from 53 down to 52.

Overall a complete nothing burger of a report. Which was expected. As the March report tends to be the on the quiet side.

The markets did not even flinch after the numbers were released.

Chart from Karen Braun

Crude & War

Obviously crude and the war is what's been driving this market.

So what's the latest update?

Well over the weekend, things escalated.

Sunday night, crude was trading at nearly $120 a barrel. Up almost $30 a barrel.

Grains followed suit and gapped open higher Sunday night.

Then yesterday, things de-escalated.. fast.

Crude oil saw the largest single day rally, and largest single day collapse in history yesterday. On the same day.

We went from being up $30 and trading at $120, to collapsing over -$35 and trading back down to nearly $80. All in one day.

No one has ever seen a move quite like this. This was a historic day.

We had a near $40 trading range in crude yesterday. That is almost a 50% swing up and down.

The largest daily price swing in history.

For reference, that would be like corn having a $2.30 cent trading range or soybeans having a $6.00 trading range. An utterly massive move.

Trump gave a speech yesterday about the whole war situation.

He said that the war is ahead of schedule and "pretty much complete".

He said that the war will end very soon, but not this week.

So it sounds like the war is nearing an end and de-escalating according to Trump.

The crude oil market is sure trading like it is.

But then you receive random headlines like this:

Trump says "We will not rest until Iran is totally defeated".

So things could always ramp back up out of nowhere.

It is war afterall, one of the hardest market factors to predict. That completely lies in the hands of Trump.

For example, today we saw some another set of random headlines.

The US Energy Secretary posted saying that a US ship went through the Strait of Hurmoz.

As a result, oil tanked immediately.

He then removed the post.

Karoline Levitt then confirmed this was not true.

A US ship did NOT go through the Strait.

Oil then pumped $10 off the lows.

There was then headlines about mines in the Strait.

Trump said Iran needed to remove them ASAP or Iran will face consequences never seen before.

Trump then posted and said that the US hit and destoryed 10 mines.

So clearly the situation is still all over the board, and you can’t rule out further escalation.

Clearly, things can change fast. Things could escalate again.

But yesterday’s action in crude is exactly why we wanted to defend this rally with that sell signal and hedge alert on Friday. Especially in corn and wheat.

At the end of the day, it's not "if" the war rally will be faded. It is "when".

Every war rally aside from the Russia and Ukraine war was faded eventually. (That war was a different animal).

The war in Iran doesn’t fundamentally change anything for grains.

The balance sheets haven’t changed.

So defending the highest prices we've seen in a year makes sense.

Here is an overlay of the crude chart and KC wheat chart.

If crude falls apart, wheat probably follows suit.

If crude turns back around and goes on another run, wheat probably follows.

Crude is going to be the biggest indicator to watch here.

It's going to tell us if this war situation is over or not.

The rally started in the $60's.

If we start to fall down into the $70's, the crude market is probably trying to tell us that it's over.

As a result, the grains more than likely give back some of that war premium we've built in.

Crude is trading around $85 right now.

Like I stated, last week. It is in Trumps best interest to keep oil low. A sustained move beyond $100 would create a ton of problems he can’t have.

Today's Main Takeaways

Corn

There are 3 months the corn market has never posted it's highest price for the year.

September, October, and.... March.

May to July is the usual window of opportunity because we have an entire growing season filled with uncertainty ahead of us.

So on the surface, history suggests we'll see an opportunity at some point this year.

But the recent war premium has to make you think twice.

The biggest argument against another early non-seasonal top would be the funds and how they are positioned.

Last year, they were mega long in the corn market. Long over 300k contracts in February before puking that entire position until July.

In the commitment of traders last Friday, they were long about 50k contracts. But that number is probably closer to 100k since the last data was from March 3rd.

If it wasn’t for this war, you could easily argue that corn didn’t have a chance at trading this high without a weather scare this summer.

Because we can’t forget that the balance sheet isn’t super bullish or anything as of today.

The current balance sheet would suggest a lid in that $5 or so range when you compare the current stocks to use and price highs of other years.

Typically to surpass much beyond $5.00 it takes a tighter situation and a stocks to use ratio closer to 10%.

So this is why we wanted to defend this rally that was driven by something that didn’t materially change anything.

Could things escalate out of nowhere and corn goes on another big rally towards $5.00?

Absolutely possible. You can’t outguess war.

That is why our advice since Friday was to simply lock in a floor using short dated puts.

This gives you a worst case scenario, while keeping your upside completely open.

Having some cheap puts eliminates the fear of not selling and prices fall apart, it also eliminates the fear of selling too early in the event of us going higher.

It just makes sense.

Taking some risk off the table doesn’t mean we think the sky falling and it's time to flip all bearish. It's simply smart to defend the highest prices we've seen in a year when there are endless unknowns.

Here is some way too early drought talk.

The drought monitor is pretty colorful.

Here is a year by year breakdown of corn areas in drought for March 3rd.

We are sitting at over 50% today.

One of the driest years we've ever been in March, along with last year and 2013.

Does this matter today?

No. Not at all.

Take 2013 and 2025 for example. Neither featured a summer rally or drought scare at all. The drought story was way too soon.

Drought won’t matter to the market until we get into June and July.

Take 2023 and 2012 for example.

Drought mattered during those years because it happened in June and July.

But this is definitely something to keep on your radar this summer. We haven’t had a summer weather scare since 2023.

New crop still has a "potential" story this year.

Based on the Feb outlook, the USDA suggested that we are going to need to see a 183 yield to get a 1.8 billion bushel carryout.

Which is already -300 million bushels smaller than last year.

Without touching demand numbers, here is how yield impacts the carryout and stocks to use ratio.

So you can imagine the impact one sub par corn yield would make this year if it happened.

Before changing demand, a 179 yield brings that stocks to use below 10% and into bullish territory.

So the potential is always there heading into growing season.

Then you of course have the whole fertilizer situation and acre debate.

Did enough people not have enough fertilizer booked before the spike to cause a drastic shift in corn acres?

I mean corn acres can’t fall too far, or we will need yet another large yield to meet the current monster demand behind the corn market.

Bottom line, if crude starts to fall and if this war situation is truly de-escalating it's reasonable to think that we give back some of this war premium short term. So it makes sense to defend a war driven rally that offers no fundamental changes.

But looking forward, new crop corn still has some potential, and at some point we do have a chance to rally without war being the driving factor.

July Corn:

July corn hit both of those targets we talked about last week.

$4.70-72 was 61.8% of the Feb 2025 highs.

$4.85 was 61.8% of the May 2024 highs.

May Corn:

The big level to watch moving forward is $4.45

That gives back 61.8% of the entire rally.

That same level is the previous range support.

So ideally, bulls want to hold that level.

If we break below, we could held back to the lower range.

We had a nice bounce off that level today, which was encouraging to see.

Dec Corn:

We hit both the targets we talked about Friday, where we wanted to de-risk at.

The first was 61.8% of the contract highs at $4.84

The second was $4.97 as that was where we had an open gap on the weekly chart.

Soybeans

Unlike corn and wheat, the entire rally in soybeans hasn’t been completely driven by the war.

I mean crude oil was down -10% today, wheat was down double digits, and yet soybeans traded slightly higher.

Unlike corn and wheat, soybeans were already at their highest price of the year before the war. They didn’t need war to go hit new highs like corn and wheat did.

After this war dies down, it would be reasonable to expect the grains as a whole to lose that war premuim. But soybeans are going to go back to being all about China.

That meeting between China and Trump is still scheduled at the end of the month.

The million dolllar question is how many soybeans will China buy?

Because if they buy what Trump claims they will, there is a still potential path for the soybean situation to get tight.

Given that he's claiming China agreed to buy an extra 300 million bushels of soybeans. Which is the size of the entire carryout.

But with all of the uncertainties, we feel like it makes sense to defend these levels in some manner.

Front month soybeans are at $12.00 for the first time since May 2024. Which was 650 days ago.

We had a sell signal and hedge alert yesterday. Not because we are bearish, but because we feel like it makes sense to protect this size of rally.

Our preferred way to go about this is simply grabbing some short-dated puts.

Like we've been talking about, that is by far the best way to tackle this thing.

We fall out of bed? Your put protects you and offsets the losses on the board.

We rally? You're just out of the cost of the put, with the ability to make a cash sale higher.

That is how you navigate uncertainty.

May Beans

We cleared those November highs.

Maybe we can try to turn that old resistance into some new support.

So ideally I'd like to see us hold that $11.70 level.

Front Month Beans:

Next big target is still $12.50

The highs from 2024 and lows from 2023.

Wheat

We had that sell signal and hedge alert on Friday.

Wheat is the market we liked rewarding the most on this war driven rally, given how closely it follows the geopolitical headlines.

If war escalates, wheat has the most upside.

But if things cool off, wheat has the most downside.

Hence why wheat has followed crude lower the last two days.

Short term that is really all it is going to come down to.

If we look at the front month KC contract, we traded to our highest levels since February 2025.

It just makes sense to defend the highest prices we've seen in over a year.

Because like corn, the war doesn’t fundamentally change anything.

If it wasn’t for the war, you could very well make the case that wheat didn’t have a very high chance to get this high this year.

I still feel like the wheat market has put in some long term lows.

The monthly chart still paints a longer term friendly story.

But that doesn’t mean we don’t have headline risk here and haven’t built in a bunch of war premium that we can’t give back.

We can’t forget just how fast the wheat market can give back rallies.

Wheat often likes to take the elevator back down.

Long term I think the trend has shifted in wheat, but short term there is a reason to be cautious.

Weekly July KC:

We clawed back 61.8% of the May 2024 highs, which was the methodology behind Friday's alert.

Who knows how the war headlines will shake out over the next few weeks.

For all we know, things could heat up again and the wheat market runs another $1.00

But if things cool down and the wheat market does heads lower, it wouldn’t be a surprise at all to see us come down into that $5.80 to $5.90 range. That would be the golden zone of the entire rally.

If we came down, that would be a reasonable spot to carve out a bottom.

But headlines are what is driving this market, and things can change in the blink of an eye.

Cattle

No big news in cattle today.

JBS workers have been working under an extension since back in July when their contract originally expired.

Over the weekend, the workers gave offical notice to terminate their extension and go on strike next Monday.

So JBS said fine we're shutting down immediately and we'll pay your contract until Sunday.

It doesn’t sound like there is any negotiations in sight, and they are technically already on strike.

Cattle slaughter is sitting at some historically low levels due to historic packer losses.

Basically some of the slowest slaughter in history. Even lower than 2015.

Throw on the JBS shutdown and it could get even slower.

So this has been building front end supplies.

Another reason to have some caution in this market.