The Biggest Wholesale Inflation Spike in Nearly 5 Years - What Now?

追加: 2026-05-16

[00:00:00]Futures trading involves a substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial conditions. The inflation trade is back into gear with this morning's PPI report, which is wholesale inflation, jumping 6% in April on an annual basis, and that is the biggest increase since 2022, and and it's something we've been talking about with a lot of clients. That inflation trade had re-emerging across commodities and potentially adding a tailwind for a lot of commodities, including the agricultural markets, and it may be a bigger catalyst than people think and may push these prices further than people think. We saw some big moves to the upside in grain markets recently with wheat limit up yesterday on the back of that USDA report, which showed poor production, lowest production number since 1972. So, some big moves there. Saw some follow-through in the overnight and early morning trade, but by the end of the day's session, it was kind of like a day of rest as a lot of traders anticipate and kind of hunker down ahead of that US-China trade meeting at the Temple of Heaven Summit in Beijing, and that's Trump's first visit to Beijing since 2017. A lot of business elites from the United States will be joining the president there, including Elon Musk, Tim Cook, Jensen Huang, Larry Fink, David Solomon, to name a few. Then on the ag side of things, Cargill CEO Brian Sykes will be there as well. Now, it's about 2:00 p.m. Central Time here in Chicago, but it is about 3:00 a.m. in Beijing. So, be ready for some headlines to be crossing the wires here within the next 24 hours, and that volatility playing a big role in positioning.

[00:01:30]Now, I'm Oliver Slope, co-founder Blue Line Futures, and if you haven't signed up for a free trial of our morning and afternoon grain commentary, you're missing out. It takes 30 seconds. Head over to bluelinefutures.com, select research, select the grain express, and any other markets you want to take a look at. Get signed up there, you won't regret it. Now that we got that out of the way, we can kind of jump into today's price action in the grain markets, and as mentioned, it was kind of neutral by the close. We'll start looking at this July corn contract. We had a little bit of follow through to the upside and then ended up settling just 3/4 of a cent higher at 480 and 3/4. As you can see up here though, we're kind of bumping our head up against some key resistance and this chart's done on our Blue Line Edge trading platform free to clients. So, if you want to take a that a spin, don't hesitate to reach out. The bulls really need to see a close out above this 487 to spur the next upward momentum uh tailwind and that would potentially take us up towards these highs from back in February and that's going to be closer to that psychologically and technically significant $5 level. Then over on that new crop December contract, certainly a little bit more constructive with new highs for the move made in the early morning trade. That uh December contract up 1 penny at today's close. Over on the soybean side of things, that seems to be the biggest point of interest heading into this meeting with China. Will they live up to their expectations? Will they commit to buying more? To be determined.

[00:02:52]And one thing we've been talking about with clients is you know, potentially, it's not even about the details. It's about coming out of this and presenting the meeting with a big red bow, which this administration likes to do on a lot of things. So, the details, as crazy as it sounds, might not be as important as how uh you know, the delivery of the meeting and how the the summary of it goes uh from both sides of the aisle. Now, again, soybeans here had it back up towards that upper end. We've been more confident in those new crop contracts for December. Corn, as mentioned, the new crop November soybeans as it continues to march to new highs. Now, if you're a producer, you've got to be proactive here. This is kind of a binary event with the meeting in China. Either it's going to be more bullish or it's going to be bearish. It probably just won't stay here flat. So, if you're long in the field, long in the bin, getting some protection ahead of that, I think is crucial. We've been looking at the options market for a lot of producers to at least protect the downside and protect their long position, which is what it is. We've had some guys say, "Hey, let's buy some puts. Let's buy some put spreads, protect the downside." And they asked, "Oh, is the top in?" No, but you're long in the field and long in the bin, and you need to manage that risk accordingly. So, if you have any questions about that, don't hesitate to reach out to our trade desk. We are ready, willing, and able to help. Then, over on the wheat side of things, as Mitch had big limit up day yesterday, we had expanding limits today, 70 cents. Obviously, came nowhere near to using those. That Kansas City contract, though, that's where all the action has been. And this in the overnight trade got up to 750, just ripping higher in the early morning trade. That was at about what, 5:00, 6:00 a.m. And then really petered out when we got more participation on that floor open. So, that's not really what you want to see. You want to see more follow-through to the upside when you get more participation. We always say volume confirms price. So, the fact that we weren't able to confirm that overnight strength when we got more participation, little bit of a caution flag here in the near term. Fundamental backdrop still strong, but you might see little dose of profit taking, potentially down to that psychologically and technically significant $7 to $7.05.

[00:04:58]That's going to kind of be the barrier to keep an eye on. That's psychologically significant, and then that old little peak there from the end of April.

[00:05:06]Now, on the livestock side of things, it was just as volatile as grains were yesterday. Big moves to the downside and to the upside today. We had June live cattle futures up $5.10, settling at 252.80.

[00:05:20]The low this morning, let's jump over there, quite a bit lower.

[00:05:26]Here we are.

[00:05:27]We were all the way down to about 248, then were able to rally back. It's just been kind of ping-ponging around, as you can see, wide wide ranges along that 20-day moving average. We've referenced that as more of like an on and off switch for a lot of agricultural commodities recently. The ability to regain a conviction close out above there gives the bulls a little bit of an advantage here Uh into the back half of the week as well as talks of higher firmer cash trade which continues to be a good fundamental backdrop. As far as support goes if they need to hold the bulls going forward, you've got a beautiful trend line coming in here that we basically kissed over the last couple of days. A break and close below there potentially you spurs more long liquidation from funds who are long a healthy amount about 138,000 futures contracts. So uh funds defending that net long position but again a technical breakdown potentially that opens the door uh for retest of that 50-day moving average which comes in near 242.75.

[00:06:24]Then we'll jump over to the lean hogs which has been just down down in the dumps here over the last several months as long liquidation has been a key theme there. Funds were nearly record net long here at the top about 150,000 contracts been liquidating as of last week's commitment of traders report funds were only long about 30 some odd thousand contracts. So that's a relatively neutral position on a historical basis.

[00:06:47]So the risk of long liquidation has been diminished uh and now you've got risk of upside um uh demand coming into the market which I think is what we saw today along with potential optimism with regards to the meeting in China. Uh with big move higher today next line in the sand as far as resistance go you're looking at this red line the 50-day moving average 106.85 and the 100 day at 107.35.

[00:07:10]You look at this on the chart and you can see that that's been a key inflection point for the market all the way back to January. So this is a big maker break area for the July hogs great session in today's trade but bulls really need to see some follow through in a conviction close out above 107.35 to keep this party rolling on. Uh again if you've got any questions at all want to check out our research head head over to bluelinefutures.com. If you want to get an account set up that is quick and easy as well. So don't hesitate to reach out. Remember trading futures and options involves substantial risk of loss and is not suitable for all investors.