Farmfutures

Prices updated as of 6:55 a.m. CDT.

What we’re watching

About 86% of U.S. farms are small, family operations, Ag Secretary Brooke Rollins noted this week as she toured the Midwest touting a “Farmers First” policy initiative she said would help improve access to credit, land, markets and business planning tools. To ensure small farms can be passed along generations, “we have to change the way we think and the way we do business,” she said.

Plus, is that the smell of barbeque in the air? It’s almost summer grilling season, and based on Rabobank’s “BBQ Index,” consumers can expect to fork over more this year for most of the fixings: beef, tomatoes, even beer (and you can’t blame tariffs).

Corn technicals continue strengthening

July corn rose 1.25 cents to $4.5575 per bushel late in overnight trading after earlier touching $4.5675, the contract’s highest intraday price since May 12. December corn rose 2.5 cents to $4.51 after reaching $4.5125, the contract’s highest intraday price since $4.5350 on May 2.

Corn futures extended this week’s strength overnight and technicals continued to firm following the market’s sharp rebound from five-month lows. Speculators appear to be backpedaling from a pile of bearish bets accumulated earlier this month, and further short covering could buoy prices the rest of the week, though trade may start to thin out ahead of the three-day holiday weekend.

It’s possible July futures have established a near-term bottom at the 6 ½-month intraday low of $5.3650 posted May 13, but a sustained rally would likely require a push above some near-term resistance levels, including the 20- and 200-day simple moving averages at $4.6025 and $4.6150, respectively. December futures also flashed some bullish signals with Tuesday’s close above the 200-day SMA around $4.48, which may have bulls targeting the May intraday high at $4.5350 and the 100-day SMA at $4.5425.

Barchart’s front-month national average cash corn price rose about 7.25 cents Tuesday to $4.27, its highest level in over three weeks.

The corn market’s recent strength may reflect efforts to restore some weather premium in new-crop prices. While planting remains ahead of schedule, eastern Corn Belt states such as Ohio continue to lag amid persistent rains and some western states such as Nebraska are too dry. Signs of improvement in new-crop export bookings, as well as a short-covering rally in wheat, have also encouraged buyers.

However, though funds have been paring back a recently-formed net short in corn futures, rally efforts could be limited by expectations for historically high acres and a potentially record harvest.

The U.S. corn crop was 78% planted as of Sunday, up from 62% a week earlier and above the 73% average for that date the previous five years, the USDA reported late Monday. In Iowa, the crop was 91% planted, ahead of the 85% five-year average, but Ohio was only 34% planted, behind the 48% five-year average. Still, with most of the crop seeded, this week’s expected rain should bring welcome moisture relief to many areas.

Analysts expect a rebound in weekly U.S. ethanol production after last week’s dip. During the week ended May 9, output fell 2.6% from the previous week to an average of 993,000 barrels per day, the lowest weekly rate since September, the Energy Information Administration reported. The EIA updates weekly petroleum figures later this morning.

Soybean futures build base of support

July soybeans jumped 7.5 cents to $10.6050 late in overnight trading and are poised for the contract’s third daily advance. November soybeans rose 8.25 cents to $10.4925 after earlier reaching $10.50, the contract’s highest intraday price since $10.5775 on May 15.

Soybean futures retain a neutral-bullish near-term technical posture, with July futures building a base of support in the $10.45 to $10.46 area, marking the past week’s lows and coinciding the with the 200-day SMA. Overnight, July futures pushed above the 10-day SMA at $10.5825 to hit a high for the week at $10.6125, which may have bulls aiming for the three-month high at $10.82 hit in mid-May.

November futures also forged above the 10-day SMA ($10.43) overnight and face further resistance around the $10.50 and $10.60 levels, as well as last week’s three-month high at $10.6550. But with a three-day weekend approaching, bulls and bears may avoid taking large positions.

Barchart’s national front-month cash soybean price rose about 2.25 cents Tuesday to $10.0350.

July soybean meal rose $1.20 to $293.80 per ton after gaining 0.5% Tuesday in a modest rebound from a drop to a six-week low at the start of the week. July soybean oil rose 45 points to 49.95 cents per pound after hitting a high for the week at 50.17 cents.

The soy complex retains support from signs of improvement in new-crop export commitments and hopes for higher federal biofuels blending requirements. Soybean planting remains ahead of schedule, but parts of the Midwest are still too dry or too wet, keeping spring weather in market focus.

“Planting delays are confined to southern and eastern portions of the Midwest where forecasters believe there will be windows of opportunity to get the planting done,” StoneX analyst Arlan Suderman said in a note Tuesday. “Even so, these areas will need to be watched over the next couple of weeks for the possibility of lost corn acres. The amount of acres involved probably won’t matter, though, unless we see a weather threat develop in the Midwest this summer.”

Weather problems in South America have also provided support. Earlier this week, the Buenos Aires grain exchange warned that Argentina’s 2024-25 soybean crop could suffer “significant losses” in northwestern growing areas after recent heavy storms and suggested it may trim its production outlook.

Wheat extends rally after conditions slip

July Chicago SRW wheat rose 4.5 cents to $5.5050 overnight after earlier reaching $5.51, the contract’s highest intraday price since April 23. Prices soared 17 cents Tuesday for the contract’s fifth advance in the past six sessions and its highest close since $5.5025 on April 22.

Wheat futures have pulled out of heavily oversold conditions over the past week as speculators scaled back historically large bearish bets on the market. July Chicago futures have rebounded about 43 cents, or 8.5%, from a contract low hit May 13 at $5.0625 and on Tuesday closed strongly above 10- and 20-day SMAs ($5.2750 and $5.3175).

Calling a bottom in wheat is done at one’s own peril, but the unexpected deterioration in USDA condition ratings combined with signs of improved exports and recent weakness in the U.S. dollar, could keep sellers at bay for a few weeks and allow prices to work even higher. The 100-day SMA at $5.65 looms as longer-term resistance.

July Kansas City wheat rose 3.75 cents to $5.40 after surging 13.5 cents Tuesday to $5.3625, a two-week closing high as the market extended a recovery from a drop to four-year lows at $5.0025 on May 13. July Minneapolis wheat rose 4 cents to $6.0175 after jumping 12.25 cents Tuesday.

Wheat futures extended a rally over the past week following an unexpected downturn in USDA ratings for the winter wheat crop. Additional fundamental support stemmed from reports Russia’s crop is struggling with cold conditions. Crops in southern Russia have been hit by frost, according to Commerzbank, with some areas in Ukraine's south also being afflicted.

How much this affects the global wheat supply balance remains uncertain. Russian export prices remain low and are pressuring European wheat prices, Commerzbank said.

Early this week, USDA rated 52% of the winter wheat crop “good” or “excellent” as of Sunday, down from 54% a week earlier but above the 49% combined figure a year ago. About 18% of the crop was rated “poor” or “very poor,” unchanged from a week earlier.

“The bottom line is that the crop's rating surprised the trade by dropping this past week, but it still remains well above average, with a big crop expected,” Suderman of StoneX wrote. “However, speculative fund managers became nervous about this new trend of declining ratings, since they hold historically large net short positions.”

Wet week for Midwest continues

More widespread rain is heading for the Midwest and Plains today through Saturday and also late in the weekend, with 1.25 inches to as much as 3 inches possible for southeast Kansas and southwest Missouri, based on the latest 72-hour cumulative precipitation map from NOAA. Eastern Ohio could also receive 0.5 inch to 2 inches, while trace amounts to 0.5 inch are possible for the Northern Plains and western Corn Belt.

The last week of May and first few days of June will bring cooler than normal conditions for much of the Midwest, though conditions will start to turn drier or feature normal precipitation levels, for the norther half of the region, according to the National Weather Service’s 8-to-14-day outlook, which covers May 28-June 3.

Stocks under pressure as yields climb

U.S. stock index futures fell overnight as the market extended Wednesday’s declines amid investor uncertainty over the U.S. budget and rising Treasury yields. The benchmark 10-year Treasury yield climbed above 4.54% Wednesday to hit its highest levels in three months.

Futures based on the S&P 500 and Nasdaq-100 indexes each fell about 0.5% late in overnight trading. The U.S. dollar index eroded another 0.6% to hit a two-week low and was tracking for a third straight daily decline. July WTI crude oil futures gained 49 cents to $62.52 per barrel.

What else I’m reading at www.FarmFutures.com this morning: