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:
News: 0:00min
Seasonal Corn Data: 1:35min
Corn: 3:30min
Soybeans: 5:40min
Wheat: 10:30min

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Overview & News

Grains mixed as corn & soybeans were both caught in between some geopolitical headlines and soybeans run into some profit taking after hitting their highest levels since February.

Japan is looking like they are going to be one of the first to ink a trade deal.

We had news out that Japan is debating importing more US corn as part of their trade deal.

This would be a very friendly factor for corn as Japan was our #2 buyer last year behind Mexico. Accounting for 20% of our exports (Only behind Mexico's 40%).

Trade deals are going to be more friendly for new crop rather than old crop. As these will affect future demand.

Reports also said that Japan is considering purchasing more US soybeans are part of the trade deal as well.

Japan currently only accounts for 4% of soybean exports. So not huge, but friendly of they become a bigger buyer.

The recent strength in soybeans has been driven by a few things.

One has been rumors circulating about that the government is going to come out with a strong biofuel guidance policy.

This has helped push soybean oil to 2 year highs.

Soybeans were higher again overnight, but then we saw some selling as China announced they were not talking to the US about a trade deal. Despite Trump claiming yesterday they were.

China told the US to stop confusing people.

China announced they were going to be exempting some US imports from the 125% tariffs. However, the initial rumor list does not include soybeans that I know of.

How often does corn NOT take out the April highs?

I've went through when new crop corn has posted it's highs before.

But with the recent rally, I wanted to know how often we've not taken out the April highs. So I did some digging.

Here is a chart showing the April highs and our post April highs since 2010.

Only one year did we not take out the April highs at some point. That was 2014.

In 2014 we posted our yearly highs on April 9th.

More Seasonal Data

New crop corn has actually been following this 20 year seasonal pretty close thus far.

History says we start to rally the first week or two in May.

Then top on June 16th before falling off a cliff.

But happened if every year you were to enter a trade and go long corn today on April 25th, and sell on June 16th?

Here is the data since 2005 (20 Years).

Go long April 25th, sell on June 16th.

7 losing years.

13 winning years.

A 65% win rate.

However, there should be some additional context to this data.

As some years we topped out in May, or we fell after April before rocketing higher in July or August rather than perfectly topping out in June.

2024: Topped in May
2018: Topped in May
2015: Topped in July
2014: Topped in April
2012: Topped in August
2011: Topped in August
2006: Topped in May

The point is, more often than not we take out the April highs at some point in the year.

Today's Main Takeaways

Corn

Fundamentals:

The funds have recently got their foot back into the corn market.

If you are the funds, and you see this weather forecast for summer.. would you really want to get short the corn market ahead of growing season?

Especially given that the world situation is the tightest in years?

You wouldn’t think so.

June/July/August Precip Forecasts

Weather is going to be a key factor short term just like it will long term.

We are still scheduled to get rain the next week, so this could add some support for a few days.

However, as it dries out in the early part of May this should lead to some accelerated planting. Fast planting usually pressures the market.

So I wouldn’t be surprised to see corn struggle slightly short term until we get into that real weather market.

After that, I do believe dry concerns will be a catalyst.

Keep in mind, our old crop situation is now below a 10% stocks to use ratio. World corn minus China is the tightest ever. This amplifies the need for a good crop.

Technicals:

Especially if planting is fast, I still would not be surprised to see us make one final leg lower into the blue box before resuming higher, but we do not have to.

A drop to the blue box gives back 50-61.8% of the recent rally. That is a standard correction, so no need to panic if it happens.

Regardless, since we hit the $4.86-$4.94 target, our next target is going to be $5.23-$5.26

For Dec corn, bulls want to hold this red box to keep the upward momentum in place.

It is simply 50-61.8% of the recent rally (aka the golden zone).

Next big upside target is $4.84 to $4.89

Soybeans

Fundamentals:

Soybeans are actually starting to put together a compelling bull case for the first time in a long time. Especially for new crop beans.

I've already went over in the past how tight the new crop balance sheet could get if we even see just the slightest hiccup in yield.

As our carryout is already down -25% vs last year if we magically raise a record 52.5 bpa yield.

We still have to battle an entire growing season. New crop beans can not afford any weather issues without carryout getting substantially tighter.

If trade deals are made, it would be extremely friendly as they could add future demand. If we cannot put together an agreement with China, it does not become an overly bearish item until harvest time. So we still have some time to get one done before it creates a massive anchor on bean prices. So right now it appears that tariffs have more potential upside than downside impact short term. Long term is a completely different story if we can’t cut a deal with China.

Then we have the renewable volume obligation rumor. This "could" add immense demand for soybeans as well. Again, this is not confirmed but there is a lot of chatter about it.

Soybeans finally have some momentum behind them. The funds just bought a heavy amount of soybeans with plenty of more room to buy.

The funds are simply trend followers, and the trend in soybeans looks like it could be shifting higher (which I'll touch on in the technicals).

Technicals:

Soybeans finally broke above the 200-day MA for the first time since 2023.

The 200-day MA often signals what type of market you are in. An upward trending one, or a downward trending one. Breaking above, indicates a shift in trend.

Not only that, but the 200-day MA has been an enormous lid.

It marked the highs in May 2024.

It marked the recent Feb highs.

I would like to think a break above such significant resistance should spark more upside.

Since it was big resistance, it is now seen as our key support we want to hold.

Next target is $11.04

Why? 3 Reasons:

$11.04 claws back 50% of the May highs.

$11.04 was also the recent Feb highs.

$11.04 is the golden fib extension from this recent rally (161.8% of the rally).

If you are confused, here is how the math works for this fib extension:

We had a 74 cent rally
74 cents X 161.8% = $1.20
$9.84 lows + $1.20 = $11.04

Here is July beans inverted.

This simply helps give you a new perspective on the chart and helps you see things you might not have before.

It also helps remove bias if you are someone who is always bearish/bullish.

The path of least resistance looks lower.

We bounced at $11.00 in Oct & Feb. Makes sense that would be our next stop.

Also have a clear bearish head & shoulders pattern.

Lastly, I wanted to show you monthly July soybeans.

We are currently on the verge of posting a key monthly reversal.

(Occurs when you take out the previous months low, then close above the previous months highs).

Still have a few days left. Need to close above $10.47 for confirmation. This is an indication of a bullish reversal. Even more impactful since it's on a monthly scale.

Unlike Jully beans, Nov beans have not yet closed above the 200-day MA.

As we rejected off of it once again for the 7th day in a row. This shows how important of a resistance it is.

However, since it's such an important level, if we can break above it should spark a move higher.

At the same time, we still need to hold the 100-day MA as well. If we break below that, it likely causes a leg lower.

First target is still $10.78 to $10.82

Wheat

Fundamentals:

I'm not going to spend much time on wheat today.

The wheat market is simply the short leg the funds refuse to let go of. As they continue to hold heavy shorts. Eventually, the shorts will unwind even if it takes longer than we'd like.

The major growing US wheat regions are still pretty dry despite the recent rains adding some pressure to the market.

The extended forecasts all call for the central plains to continue to be dry after this next batch of rain.

Seasonally, wheat starts to gain some attention here.

There is just zero appeal to market any wheat down here. So I am remaining patient for the next opportunity.

We are some key support on the charts (scroll to view).

Technicals:

KC wheat has tagged this downward trendline for the 3rd time in nearly a year.

The past 2 times marked significant bottoms that eventually led to a rally to the top of the range.

I like wheat's odds at moving higher here.

As a spec, this is where I'd personally be placing my long bets.

As has been the case for weeks, really nothing new on Chicago wheat.

Trapped in the downward channel.

Want to see us work our way closer to the top end of the channel before making many sales.