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:
Tariffs & Stock Market: 0:00min
Why weren’t beans lower?: 1:15min
Corn: 3:10min
Soybeans: 7:05min
Wheat: 9:40min

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Overview

Grains higher across the board despite the outside fear in the rest of the markets and continued tariff headlines.

What is going on?

Initally, the outside markets were surging.

As Trump said: "China wants to make a deal badly, but they don’t know how to get it started. We are waiting for their call."

South Korea said they will not join China or Japan and will not retaliate with tariffs of their own.

Several countries have came forward to make deals with Trump.

The thought that deals were being made had the stock market soaring.

At one point it was up nearly +5% on pace for it's best day since 2020.

This came after posting it's largest 3-day loss since the 1980's last week.

HOWEVER, news then broke that the White House said 104% tariffs on China will go into effect at midnight because China did not remove their 34% retaliatory tariffs.

This led to the largest intraday bull trap in history..

As it the stock market crashed hard and ended the day lower.

Why are soybeans trading higher if we just tariffed China +100%?

China accounts for 20% of all US soybean demand.

(Crush is 55% - Exports are 42%) (China is 48% of our exports).

So why aren’t soybeans getting hammered today?

There are two main reasons:

Reason 1)

What real difference does a 54% tariff vs 104% tariff make?

Soybeans already crashed on news of the original tariff fear.

Increasing the tariff doesn’t add any more fear. The initial fear is what the market traded.

A 1,000% tariff on nothing equates to nothing no matter how large it is.

A larger tariff doesn’t impact the soybean market anymore than an already large tariff does.

Reason 2)

This is the seasonal time frame where China stops buying from the US anyways.

They will be looking to get their needs from Brazil.

Which means tariffs now aren’t going to impact Chinese buying when China isn’t buying anything to begin with.

China has pretty much already bought what they are going to buy this year.

We've already shipped most of our sales, so this trade war makes a bigger impact on new crop beans than it does old crop beans. A trade war isn’t going to impact the old crop balance sheet.

Below are two visuals to show you how buying from China turns into nothing soon, trade war or not.

Now if we get into harvest and we still do not have a deal made, then this of course becomes a big issue for new crop. Prime soybean sales are in Oct to Nov.

Today's Main Takeaways

Corn

The Relative Strength in Corn:

Monday the USDA said we were planting a massive amount of acres.. corn traded higher because it was priced in.

We have a trade war announced.. corn traded higher because our top buyer is extempt.

While the entire outside market bleeds.. corn remains strong.

Here are some YTD performances:

🌽 Corn: +0.70%
🌱 Beans: -2.89%
🌾 Wheat: -4.00%
📊 S&P 500: -15.00%
🛢️ Crude Oil: -16.38%
🟠 Bitcoin: -17.56%

The outside markets are full of fear and panic, yet corn is telling a completely different story.

Here is corn vs crude oil.

Often times, they somewhat move in tandem.

Corn has not separated itself, demonstrating a massive amount of relative strength.

To me, this price action speaks immense volume.

Like I mentioned last Thursday (Click Here) what bullets do bears really have left in their chamber?

We got the big acre print. We have a trade war. We had the funds already puke 75% of their longs. But what argument do they have going into a growing season where the world can’t afford a hiccup in US production?

They don’t, not until we have an idea of what this crop looks like.

The funds are still long over +100k contracts despite once being long nearly +400k.

What reason would they have to actually get short?

They went from record short, to near record long in just a few months. It makes zero sense for them to give up the entire position and go short corn.

This past week was the first time the funds actually added to their corn long since early February.

We will touch on yield, weather, production etc more in the future.

But do you really expect me to believe we are going to see a 181 bpa yield? especially with +95 million acres..?

The USDA has started with a 181 yield several years in a row now.

Average yield the past 10 years: 174.16

The world situation is one of the tightest ever, but at the end of the day the US crop is really the one that matters. The world needs us to perform.

Technicals:

Corn's price action has been phenomenonal and the chart looks great.

We broke the newly formed downtrend (good sign).

We closed right at the 100-day MA. A close above this is what bulls want to see to get confirmation that we are starting a new upward trend.

We have a huge amount of support beneath us like I've been outlining for weeks.

1) $4.54 is 61.8% of the entire rally off of contract lows up to the Feb highs. This is the golden retracment and standard correction level as I have mentioned several times the past few months.

2) This area was old key resistance. We topped out here in Oct, Nov, and Dec. It is now key support.

3) The 200-day MA kept a lid on corn since 2023. It is our new floor to hold.

Next Upside Objective:

Still going to be $4.80

That gives us back 50% of the sell off. It is also key support from last year. Now resistance.

Here is a closer look for details.

Not as clean of a breakout in Dec as May.

Rejected right at the 100-day MA. A close above would be the green light to confirm we are starting our next upward trend.

Next upside objective is still $4.60

Soybeans

Fundamentals:

A trade war is obviously not good for soybeans.

But at the same time, a trade war doesn’t really impact actual demand until later in the year when China is suppose to buy from us.

Aside from the trade war, the US soybean situation still has a clear path to get very tight.

The recent sell off increases the odds for even less acres which impacts the S&D situation even more.

With a record yield of 52.5 bpa.. the new crop situation is already projected to be far tighter than last year.

That type of yield is certainly possible, but it would take an amazing growing season.

Average yield past 10 years: 50.08

Barring some disaster with the trade war, soybeans are undervalued here.

BUT we of course have to realize the risks of a full blown trade war. I would like to think we see a resolution faster than last time, but if we don’t have a deal by the end of the summer then this could be a major bearish factor.

Here is Nov-2024 soybeans.

Our absolute low last year was $9.57

Yet.. our US situation is projected to be far tighter and we are going to be planting a heck of a lot less acres than last year.

Technicals:

From a textbook standpoint, bulls hope of this inverse head & shoulders pattern is still alive (not by much).

The pattern becomes invalid if we take out the contract lows.

We broke below key support.

That box is now key resistance.

We rejected off of it today. A bust above gives the green light to go higher.

Otherwise, it could've simply been a textbook re-test before we head back lower.

(Old support = New resistance)

Same exact set up in Nov beans.

However, the price action the past 2 days has been different than May.

The trade is probably realizing a trade war impacts new crop more than old crop.

Yesterday we did post an inverted hammer in Nov beans (scroll to view)

Despite closing off the highs, this is a bullish pattern that pops up in a downtrend because it shows buyers are stepping and trying to reverse us.

Follow through for confirmation is key in this pattern.

Wheat

Fundamentals:

Don’t have much on wheat today as there isn’t anything new.

There isn’t a ton of new factors. Like corn, the trade war fear doesn’t affect the wheat market drastically.

One positive factor has been the weather.

We have the flooding out east that I’m sure caused a little damage, but then the plains are still awfully dry and look to stay that way.

Here is the next 2 weeks.

Here is the outlook for May.

I think wheat is severaly undervalued at these levels.

Still have a very friendly global wheat situation as well that we have been several times in the past.

Technicals:

This is continuous Chicago.

We have held this support box for over a year now.

We once again are bouncing here.

A break below would not look good, but I think we continue to hold.

We are getting very close to breaking this downtrend.

The last 2 times we did a downtrend, it led to a nice breakout.

May Chicago bouncing right at the bottom of the channel where needed.

Next upside objective is the top of the channel.

KC wheat still holding this +7 month long support.

Until we break the lows, or break the Feb highs we are simply in a giant range.

A break above or below gives us our next direction.

Next upside objective is a 3rd test of $6.34