Grains remain under selling pressure as trading closes | Tuesday, March 29, 2022

May corn ended the day down 22¢ while December was down 11¢. The May contract came within 2 pennies of the 35-day moving average today. Although this moving average has not been a closely monitored level of support in the past, it may be worth watching going forward.

May soybeans ended the day down 21¢ on the day. That was a small win for the bulls as prices were down over 40¢ at one point on the day. The close was important as the bulls were able to close over the 40-day average. Prices have not closed below that moving average since early December. November soybeans ended the day down 20¢ and below the 40-day average. Prices came within a nickel of the March 4 low, which will be an important level to watch over the short-term.

Livestock prices ended the day mixed. Feeder cattle closed $2.30 up to $4.30 higher on the day. Traders attributed the weakness in corn as a good reason for the bulls to take a run at upside targets. Live cattle were 60¢ higher in April and $1.70 higher in June. There has not been much for cash cattle reported early this week. Lean hogs closed out the day softer. April was down $1.52 while June was down $1.42.

Crude oil is down $1.50 this afternoon. That was quite impressive given the market was down over $7 during the day. Headline risk is going to remain high for the energy markets as peace talks go on today and tomorrow. Option volatility is off the high, but still very elevated. Traders are still wanting to manage risk, so option volume is high. 

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12:00 p.m.

Although prices have bounced off the earlier lows, May corn is down 27¢, May soybeans are down 23¢, CBOT wheat is down 46¢, KC wheat is down 44¢, and Minneapolis is down 37¢.

The headline from earlier this morning indicating that Russia is considering halting the offensive and maintaining current positions sent the grain bulls scrambling. There is still considerable headline risk for the grains as negotiations commence today and tomorrow between leaders of Ukraine and Russia.

Crude oil is $4.00 off the low of the day, but still down $3.50.

Traders are seeing bearish news from Shanghai closures due to COVID, and the possibility of Russian oil hitting the world market again if peace talks go well this week. We also have to consider the month-end, and quarter end is on Thursday. Fund managers often adjust positions during these time frames.

Livestock prices are mixed at midday. Feeder cattle are still strong as April is up $3.10. Live Cattle futures have backed off their high but are still up 50¢ on the day in the April contract. Lean Hogs are down on the day. The April contract is down $1.50.

Economists suspect the Federal Reserve may take more aggressive action on interest rates if the war is resolved soon. They are seeing inflation data become more concerning than they were hoping. Some traders are even thinking we could see a rate hike ahead of the next scheduled meeting of the Fed. The bond market is already starting to adjust to this more aggressive approach. The 30-year mortgage rate is nearly double what is was from the low just a few months ago. 

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9:00 a.m.

Grain prices are under heavy selling pressure this morning as Russia is indicating a move toward de-escalation in Ukraine. The early indications are that Russia will cease advancing their military position. Does that mean entirely or just for the short term?

May corn is limit down, 35¢, while May soybeans are down 38¢. CBOT wheat is down 77¢, while KC is down 68¢. Minneapolis spring wheat is down 54¢. Traders are thinking the actions by Russia could allow for Ukraine to get spring crops planted. However, there are some analysts that feel there is a long road to recovery, and Ukrainian farmers will not be able to plant all the normal acres even if they wanted to.

Livestock prices are mixed this morning. Feeder cattle are up $3.70 in April while May is up $4.20. Live cattle are quietly higher as the April contract is up 55¢. Lean hogs are down $1.75 on April and down $2.90 on the June. 

Crude oil is down $5 this morning as the headlines would suggest Russian oil could soon be available to the world. May crude did break down to $98.44 low, but has rebounded back toward the $101 level.

Watch for reports from the peace talks scheduled for today and tomorrow between Russia and Ukraine. Any signs that a deal is not going to happen could bring grains off their lows. 

Editor’s Note: Bob Linneman is a commodities broker with Kluis Commodity Advisors. Linneman grew up on a diverse farm in eastern South Dakota. Between milking cows, managing a beef herd, and farming various crops, he experienced many aspects of agriculture firsthand. After graduating from North Dakota State University with a degree in business, he moved to Hawaii with his wife. There he was an associate portfolio manager for a fixed income firm that managed $2 billion in assets. After nearly two years in Hawaii, he moved back to the Midwest and began his career in commodities. Linneman is licensed as a Series 3 and Series 30 commodity broker.