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: 1:30min
Beans: 6:00min
Wheat: 10:20min

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Overview

Wheat continues to find some life while the soybean market got hammered today as soybean oil was limit down on some RVO rumors.

Why did soybeans & soy oil sell off so hard?

Lee Zeldin, the EPA's leader, said that new rules for mixing bio fuels into fuel (known as RVOs) would be set in "the next few months".

2 Reasons for the Sell Off:

1) Traders had been expecting these rules sooner
2) Traders were hoping for higher biofuel amounts

But now we have a delay to go along with rumors of lower targets. So this sparked an immediate sell off in the market.

As rumors popped up that the 2026 D4 mandate could come in at 4.65 billion gallons, while most in the industry were expecting a number closer to 5.5-6 billion. Again, just a rumor.

Soybeans and soybean oil had been seeing some support from optimism surrounding policies. Hence why we had seen the soybean oil market recently rally to it's highest levels since 2023.

In simple terms, soybean oil dropped because it is used to make biofuel. Less biofuel demand = less need for soybean oil. Soybeans fell because they are used to make soybean oil.

This news led to soybean oil being locked limit down today, down nearly -6%.

Todays Main Takeaways

Corn

Fundamentals

We have the tightest starting carryout for new crop corn in 3 years.

On one hand, this gives us an easier path lower in comparison.

Often times we will see our highest carryout print of the year in the initial estimates as it of course usually uses a large trendline yield.

On the other hand, to get this carryout the USDA gave us a big demand number (Exports estimated at 2,675 million bu vs 2,600 for old crop).

So once they realize yield probably isn’t 181 bpa, they likely start to cut back on these export estimates.

But, the good news is that to ration demand lower, usually prices go higher first on a supply rally.

The bad news is that a supply rally doesn’t last long like a demand driven one does.

So a bit of a double edged sword. But starting the marketing year at a 1.8 billion bu carryout is a lot more bullish than starting off with a 2.2 billion one.

Short term there isn’t a ton to get excited about in the corn market.

As the market will need some weather premium to move substantially higher. As of right now, there is no risk short term.

Below is the next 8-14 days of rain.

We already have the vast majority of this crop in the ground, now we are going to be seeing decent rains across most of the corn belt. So this is bearish.

From Empire Weather

From Crop Prophet

Does this mean we still can’t have a "weather scare"?

No of course not. It's the middle of May and we still have a long ways to go before this crop is made.

The extended forecasts for summer still suggest drier than normal.

Here is the Government outlooks.

Jun-Jul-Aug

Jul-Aug-Sep

Here is BAM Weather's outlook.

This market has zero weather premium built into it.

The USDA report changed a lot.

We are now looking at a potentially much tighter new crop corn situation than everyone originally thought.

Which does make a weather scare all that more impactful if we get one.

Here is an example of this I showed on Monday.

To get a stocks to use ratio below 10%, we would now only need to see a yield of 178.

Before this report, everyone thought we would see a new crop carryout of +2 billion bu. Because back in the February outlook, that is what the numbers said.

Based on the projections in February, we would’ve had to see yield drop all the way down to 173 to get a stocks to use ratio below 10%.

That is a massive difference and will make any sort of weather premium rally more amplified. As it now takes less of a yield loss to create a tighter balance sheet.

This is all simply due to the USDA raising their expectations for new crop exports.

(The balance sheet scenarios do not take into account for changes to demand).

Current 178 Scenario

173 Scenario Based on Feb Outlook

We do not "have" to get a weather scare.

But more often than not, we at the very least see some weather premium built into this market.

If we do run into a weather scare, the tighter balance sheets open the door for an even bigger opportunity at a rally.

Technicals:

I need to see July corn above $4.60 to be confident we found a bottom.

Until then, bulls need to hold $4.37 as that is the last support level until contract lows.

Not much to update on Dec corn either.

Need to hold this blue box, otherwise the next support is contract lows.

Will have our upside target once I'm confident we put in a low.

Soybeans

Fundamentals

I'm not a biofuel expert by any stretch of the imagination.

I don’t know what the government is going to do about these policies.

What I do know is that the US situation for soybeans is shifting more and more friendly than it had been recently.

Here is a tidbit from the May USDA report. Where carryout was on that day and the price of soybeans.

May 12th 2025

New Crop Carryout: 295 million bu
Price of Nov Beans: $10.58

May 10th, 2024

New Crop Carryout: 445 million bu
Price of Nov Beans: $12.06

New crop carryout for the May USDA report was -35% lower than it was last year. Yet, prices are -$1.50 cheaper.

This could suggest soybeans are undervalued here in comparison.

Not to mention.. this lower carryout includes a record 52.5 bpa yield.

Could a record yield happen? Of course.

But soybeans have the most weather risk simply due to having less acres. Meaning that any swing in yield can create a massive impact on the supply and demand outlook.

For reference:

Here is a chart showing soybeans stocks to use ratio since 2010.

The green line is using a 52.5 bpa yield.

The white line is using just a 51 bpa yield.

Right now we are projected to have the tightest stocks to use in 3 years.

But if yield even falls to just 51 bpa, that number drastically falls to it's tightest levels in over a decade.

Here is the same chart but showing soybean carryout instead.

Again, carryout is tighter than in recent years.

But a yield of 51 could massively eat into this carryout.

This is possible due to far less acres this year.

There is just simply not a ton of room for error in the US crop.

We don’t have to rally short term.

As a good portion of this recent rally was led by soybean oil on hopes that biodiesel blending requirements would be addressed soon.

With reports saying that this will now be discussed in the coming months instead, the market is naturally giving back some of that premium it had built in.

We still have an entire weather market ahead and I think it should lead to an opportunity.

Technicals:

July beans came right down to the 200-day MA today before bouncing.

It makes sense we would find support here.

The 200-day was massive resistance for 2 years.

We finally broke above it. Old resistance usually acts as new support.

So a bounce here makes sense. If we do not bounce here, we likely drop into the blue box. Which is the 50-61.8% retracements of the entire rally since the trade war sell off.

Next target is still $11.04.

Nov beans also closed right at the 200-day MA.

Once again, this was major resistance as it marked our highs in May 2024 and back in February.

So a bounce here and turning the 200-day into support would make sense.

This blue box is also past resistance from March to April.

Old resistance usually creates new support.

Failure to hold here could drop us into the green box.

Next target is still $10.78-82

Here is a more simplistic view of Nov beans and the 200-day MA.

Again, it has kept a lid on us for years.

If we can build a base of support, it would be a very positive sign.

Wheat

Fundamentals:

The wheat market is finally finding some life.

Sometimes the wheat market makes zero sense.

Day 1 of the Kansas winter wheat crop tours scouts found an average yield of 50.5 bpa vs their 5-year average of 45.1 bpa. This was the highest yield estimate for day 1 since 2021.

Day 2 of the crop tour scouts since an average yield of 53.3 bpa, which was up 42.4 bpa compared to last year and well above the 5-year average of 42.3 bpa.

Yet.. the wheat market is finally trading higher.

This can often be one of those signs that we've put in a top or a bottom in a market.

In this case, we at the bottom of the range and we get bearish news yet prices go higher.

In other cases, we are at the top end of the range and we get bullish news yet prices go lower.

It's hard to think we will see a face melting rally going into winter wheat harvest, as seasonally this is about the time of year we would typically be posting our highs.

But on the bright side, perhaps these low prices are finally attracting some buyers on the export market. As export sales were surprisingly strong today.

Wheat doesn’t have to rally tomorrow, but maybe the heavy blood shed is over for now.

Regardless, I don’t see the logic into selling into 5-year lows here after a -$1.40 sell off.

As a spec, does it really make sense to get overly short at $5 wheat? I'd say probably not.

Technicals:

July Chicago has now clawed itself back into the downward channel.

We could’ve just seen a classic bear trap below as the past 3 days of price action looks solid.

Regardless, not looking to de-risk until closer to the top of the channel.

Continuous wheat catching a bid exactly where it needed to.

As a beneath that blue support we have zero support.

Here is weekly KC wheat.

We bounced right at that old resistance from 2019-20 like I mentioned I would like to see on Monday.

Could’ve very well found our lows here.

Very nice weekly candle as well.