Grains Recover on Technical Buying Amid Mixed Market Signals

Grain markets saw a bounce early Tuesday, driven by technical and corrective buying after significant losses last week. Corn dropped 30 cents, soybeans fell 40 cents, and wheat declined 15 to 25 cents. Darin Newsom with Barchart attributed the rebound to funds moving money out of grains and into other markets, such as the NASDAQ, which hit new highs. He noted that the fundamental market conditions hadn’t changed, suggesting the sell-off was more about market positioning than actual supply-demand shifts.

One notable change was the USDA’s discovery of an additional 173 million bushels of corn in its quarterly stocks report. Newsom explained this wasn’t surprising given weak corn basis levels, indicating ample supply. He also highlighted that harvest progress was slower than usual, with corn and soybean harvests lagging by 4% and 8% respectively. Crop ratings also declined, partly due to excessive rain in key states like Iowa and Nebraska, where crops faced waterlogging and disease issues.

Geopolitical tensions added to the market’s volatility. Russia escalated attacks on Ukraine’s grain export facilities, sinking two commercial vessels carrying corn and wheat. While Newsom downplayed immediate supply concerns, he acknowledged the logistical disruptions. Meanwhile, President Trump’s claim that China would double its purchases of U.S. goods sparked brief optimism, though Newsom cautioned that similar promises had not materialized in the past.

Other factors influencing the market included the strengthening of Brazil’s real by 5%, which could impact the competitiveness of Brazilian goods. The U.S. bond market also hit multi-decade highs amid inflation fears, signaling long-term economic concerns. President Trump’s executive order allowing highway use of dyed diesel was seen as a short-term political move, unlikely to have a lasting impact on supply or demand.