MARKET UPDATE

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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
Acres Impact: 2:00min
Weather: 5:45min
Corn: 6:45min
Soybeans: 9:15min
Wheat: 11:10min

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Overview

Grains higher across the board following yesterdays non-eventual USDA report.

Here was yesterday’s report recap in case you missed it: Click Here

Now that the report is out of the way, the trade is going to focus on 2 main things:

1) Tariffs (Trump is scheduled to add reciprocal tariffs tomorrow)
2) Weather & planting progress.

For the report, corn acres came in at 95.33 vs the 94.36 estimates.

We mentioned last week this report had all of the symptoms of being a "sell the rumor, buy the fact" event. That is exactly what we saw. The market had already priced in this big number on the recent sell off. Now that is was confirmed, we can go higher.

From Last Week's Update

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Soybeans were under pressure yesterday as acres didn’t fall quite as much as much as bulls had hoped for (83.495 vs 83.762 estimates).

However, soybeans are finding some life today. The trade must be realizing that with this acre number, the US soybean situation is on the tight side EVEN with a RECORD 52.5 bpa yield.

(We will touch on this more later in today's update)*

Wheat had the most bullish report as acres surprised low at 45.350 vs 46.475 estimates.

The stock numbers came in right in line with estimates. So nothing noteworthy there.

March to June Acres

I showed this last week, but now that we have the acres here is how acres have shifted from March intentions to the June report in the past.

Corn:

Rose 4 years in row. Have not shrank since 2020. Rose past 7 of 9 years. Corn has only seen a sizeable move lower 3 times in 19 years.

So history suggest acres likely won’t be coming in lower.

Soybeans:

Have shrank 3 years in a row. Shrinking the past 4 of 6 years.

From 2009 to 2018 we had a stretch where we rose a decade straight, have not seen a big upswing since then.

Acres Effects on Balance Sheets

First let's look at the new crop soybean balance sheet.

This is the current balance sheet.

With these acres, we get a carryout below 300 million bushels and a stocks to use ratio of near 6% (vs 8.70% for old crop).

This is with a record yield..

Well we have never even seen a yield of 52.5.. with the average yield for the past 10 years being 50 bpa.

The market is currently expecting a perfect growing season.

But what if it is not so perfect?

Here is what that same balance sheet looks like if we drop yield down to 50 bpa.

Our carryout evaporates to nothing and our stocks to use drops to 1.75%.

This wouldn’t happen to this extent, as the USDA would offset some of it with demand. However, to ration demand prices have to go higher.

The point is the US soybean situation could get VERY tight if we do not get a perfect growing season.

This gives soybeans some definite firework potential despite the bearish global situation. As the global situation is already known and has been priced in for several months, hence why soybeans have sucked.

Now let's look at corn.

Here is the current new crop balance sheet with the new acres.

It is actually pretty bearish, with a 2.2 billion bushel carryout and a stocks to use ratio of over 14% (vs 10.20% for old crop).

However, the issue here is that this balance sheet uses a 181 yield.

You really believe we are going to see a record yield with near record acres?

Last year saw 179 with 90 million acres and a pretty ideal summer.

Red dots are current projections.

We've never even sniffed 181. When acres are this high, it makes it all that more difficult to raise some crazy yield. As most of these extra acres come from fringe acres.

Just like soybeans, the market expects a perfect growing season.

Corn's average yield for the past 10 years is 174

Here is what that balance sheet looks like with a 179 yield. On par with last years yield.

Still gives us a bearish balance sheet, with a 2 billion bushel carryout and a stocks to use over 13%.

To achieve a "bull market" stocks to use ratio below 10% we would have to see yield drop below 174 based on these numbers and no demand changes etc.

So this gives new crop corn a little less "explosiveness" compared to new crop soybeans. As the margin of error in the US crop is wider with the extra acres.

Here is a visual of the stocks to use ratio for corn.

Again, this current new crop projection would be bear market numbers.

Where as our current old crop number is flirting with bull market territory.

I mentioned this last week, but something to note is that this is roughly where we started out last year. With a +2 billion bushel carryout and you see how that ended..

We're starting with the same numbers as last year, the difference is that Dec-24 corn was trading around $4.60 to $4.90 until June.

Meanwhile Dec-25 corn is trading at $4.45

Seems undervalued in comparison.

Weather

The next week is suppose to bring HEAVY rainfall to the south east corn belt.

Areas such as S. Illinois, S. Indiana, Arkansas, and W. Kentucky are expected to see rainfall of up to +10 inches the next week.

This could definitely cause a little bit of planting delays in those areas, as early planting begins right now.

However, it does look to dry out in the 7-14 day outlooks.

Planting delays are short term bullish, long term bearish.

For real pricing opportunities, you'd rather have a drought scare vs a planting delay. As a drought scare will provide far more upside than delays. Because the crop is going to get planted one way or another.

Next 7 Days of Rain

2 Week Outlooks

Overall, April as a whole is expected to be far wetter than normal for the eastern and south east corn belt.

Looking to May it does appear to dry out for the most part, with rain more secluded to the east.

Today's Main Takeaways

Corn

Fundamentals

I still think corn is undervalued here. The old crop situation is still tight.

Despite the bigger acres, the world situation simply cannot afford a hiccup here in the US.

If we get a trendline yield and a perfect growing season then yes we will get a massive carryout, but that is a very big IF. Any number over 180 should be ignored.

The funds have sold a ton of corn but still aren’t "getting short" corn.

I do not see a reason for them to do so either.

If you were to get short the corn market, the risk to reward is not there. You got your big acre number, now what? You still have to battle an entire growing season where the world doesn’t have all this extra corn.

Just makes zero sense for the funds to get short ahead of growing season knowing the possibilities. After we get an idea of what the crop looks like is when they typically crash this thing, not before.

Overall, still being patient waiting for opportinues that will hopefully come from that seasonal scare.

Technicals:

The corn chart looks very promising here. I think there is a decent chance we put in our bottom.

We posted a double bottom pattern (bullish pattern).

We are back above the 200-day MA and key support.

The 200-day MA had acted as key resistance since 2023. Now heavy support.

This is the 61.8% retracment of the entire rally off contract lows. It was also key resistance 3 straight months to end the year. Now support.

Just like I mentioned last week, this little spike below key support was probably just a bear trap in my opinion.

Need to break this new mini downward trend to confirm the next leg higher.

Next upside objective is $4.80. (50% of the sell off and old support from last year).

Dec corn found support at the 78.6% retracment of the entire rally.

Next upside objective is still $4.60

The 100-day MA (purple line) just crossed over the 200-day MA (pink line) for the 1st time in over a year.

Some call this a golden cross, it is a very positive upward trend indicator. Signaling the trend is shifting higher.

Soybeans

Fundamentals:

Bearish global situation?

Already known.

Massive Brazil crop?

Already known.

Every bearish factor aside from a trade war has been priced into this soybean market for the past several months.

This has kept prices suppressed and led to less acres. This is one way low prices fix themselves.

Because now it opens the door for the US situation to get extremely tight.

I think soybean bulls finally have a story moving forward.

Just like in corn, I am simply waiting for that usual opportunity.

Technicals:

The soybean chart looks very promising as well.

We posted a key reversal (taking out yesterday’s lows, closing above yesterday's highs).

We also finally closed above the 100-day MA.

This was key resistance several times.

This should result in a test of the 200-day MA. Above that the sky is wide open.

We have an inverse head & shoulders pattern that has an implied move of over $12.00

First big picture target is going to be $11.29

That is 61.8% of the May 2024 highs. It is also the Feb 2024 lows.

Exact same set up in Nov beans.

That first big picture target is $11.11 instead.

Wheat

Fundamentals:

The USDA report showed that wheat isn’t winning over any extra acres.

Spring wheat acres projected at record lows.

Wheat is simply at levels that I can’t get bearish at.

We have a world situation that is the tightest in years.

Winter wheat country is dry and the forecasts point to dry for the next few months.

Russia has issues and their exports are forecasted to be down heavily.

The funds are heavily short wheat, but at some point it doesn’t really make sense for them to keep adding shorts here, especially at these levels.

There are several friendly factors. Just seems like wheat is undervalued here moving forward and I have zero interest selling anything close to these levels.

The market will see the wheat story eventually, but it doesn’t mean it has to happen when you want it to.

Technicals:

KC bouncing exactly where it needed to in this key support box just like it has done every time for the past 7 months.

Next upside objective is $6.34, a break above there opens the door to much higher prices. That is key resistance.

Simply stuck in a massive range. Bulls want to hold this key support and take out those Feb highs. Everything in between here is noise.

Chicago also boucing exactly where it needed to at the bottom of this channel.

Just trapped in this channel now.

Next upside objective is the top of the channel.