Gold Higher with Midweek Pressure in Grains, Livestock and Crude Oil

Added: 2026-05-21

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[00:00:10]Well, we had kind of a down day in the market trade on Wednesday. Not what I wanted to see, a bit of red on the screen across the grains and oil seeds.

[00:00:19]Crude oil under pressure as well. You look at the livestock trade, we did find some green in feeder cattle, but that was really it along with the stock market, the Dow and the Nasdaq higher.

[00:00:30]Let's talk about what we're seeing in this market trade.

[00:00:35]Joining us now, Mike Zuzolo with Global Commodity Analytics. Mike, good to have you back with us here this week. And you know, uh a volatile stretch run for the markets with everything last week with US-China news and then into Monday, felt like we took a bit of a breather Tuesday, but we kind of faded into the close and it feels like that might have followed through a little bit on Wednesday here, Mike. Yeah, I agree. And it's not what we want in in terms of heading into the first three-day weekend of the summer. We wanted to keep that momentum higher. At least I did, Jesse, because we had that great news over the weekend with some details on the US-China trade deal on ag.

[00:01:16]And we shot higher. Then we got the crop progress numbers, which showed the very poor poor conditions continuing to increase in the winter wheat, 43% of the crop. Some of our key states like Kansas above 50, very poor poor conditions.

[00:01:33]Surprised the trade. Did not I didn't I was not surprised by it because we have seen a lot of missed rains, a lot of fires in Southwest Kansas, a lot of losses, unfortunately. My heart goes out to everybody that's had issues with either the tornadoes or the fires uh this spring. Um and then we also heard that Australia's wheat plantings may drop substantially to the point where their production between lost acres and not using as much nitrogen could drop double digits. Some people putting it at 20% loss in production. You talk about one of the top five wheat exporters in the world. And so you have the fundamentals, I think, to what it would take to continue on higher this week heading into the 3-day weekend and challenge those highs from last week.

[00:02:22]But really what came in and and caused this market to really stumble and fumble around was once again, um the outside markets. And you and I talked about this last Wednesday about the bond yields.

[00:02:35]And unfortunately, that hit the market faster than I was hoping it would.

[00:02:40]Well, and to that point, let's start with the financials and the outside markets and the metals. I left out gold in my open. Gold was higher on the day as well on Wednesday. Maybe uh seeing this become a safe haven play once again with all this volatility and uncertainty in the global markets, Mike. What's your thoughts on gold right now? Yeah, this is going to be one of the top two factors, I think, for the big picture trend in the grain complex and the commodity complex as a whole because one of the things that we have to realize is that since the US-Iran conflict started, gold's lost about 15% of its premium. And you have to wonder, okay, wait a minute. We've got all this inflation data saying it's getting hotter. We've got the dollar that's not going up unless the crude oil market's going up.

[00:03:30]And if the crude oil's going up and it's increasing inflation even more, why would the gold be going down? And it's we've hit a point now, Jesse, where the higher crude oil prices are starting to create an environment where the marketplace, not the real economy, not the real world, but the funds and the investors, again, like we talked about last week, are seeing the idea that the Federal Reserve, the Bank of Japan, the European Central Bank, they're all going to have to raise rates to get ahead of this inflation that's still barreling at us because these higher energy prices.

[00:04:07]And so, we've gotten into this negative feedback loop where as crude oil prices go higher, the bond yields go higher, bonds go down, bond yields go up. And in fact, Japan had 30-year yields hit its highest level since 1999.

[00:04:22]The UK, 1998, the highest on their yields for 30 year. And then we here in our Treasury market, the 30 year on Tuesday hit its highest level since 2007, before the financial crisis. So, this is taken premium out of the gold market because this higher interest rate mindset to get ahead of inflation. So, if the if the gold turns higher now as we go forward, that would indicate to me that the funds are less worried about the rates, more worried about commodities going higher.

[00:04:57]Let's talk on the corn side of this market. And I've made this comment a few times, and I I told you this before we went on the air, is that you look at corn, soybeans in particular. I mean, these levels, 5 and 12, you know, Dec corn, Nov beans. It just seems like we've hit it a couple times now on the future side, can't push through it, and then we fall back. I know basis, a different story. I mean, you know, 20, 30, 40 under, maybe more in some areas.

[00:05:28]But then I look at a chart like this, and I see this steady uptrend of corn with those few dips there, etc., etc. So, what's your thoughts in this corn market right now? Can we continue a steady grind higher potentially here, Mike?

[00:05:44]Yeah, I think not only can we, but we should. And this goes back to the price of Black Sea corn, Ukraine, Romania is not only about $30 a ton higher than us right now, but it's actually higher than the wheat price in the physical market. And we've got that wheat corn spread at the Board of Trade, soft red wheat minus corn dancing once again close to $2 a bushel. We've got a very strong demand in ethanol globally. We have one house uh one side of the uh Congress that's passed the year-round E15. I am hearing there might be frictions from uh big oil in Arkansas and Oklahoma right now in the Senate.

[00:06:27]That might be working itself into the trade here midweek, but this this chart right here really is what it's all about as far as when do you sell? Like you said, when do you sell? When do you re-own? When is the trend no longer up and when is it sideways or lower? And you've got a really nice blue uptrending channel. And complementing that is a major moving average that's not been taken out on a weekly basis since we started the calendar year. You know, Jesse, one of the things that I have to go back and talk about a little bit and it goes back to the debt load and the interest rates and why investors would create this corn market and it create a a the loss of the uptrend. Um new numbers just came out from the International Institute of Finance, which keeps track of all the banks and the debt loads that we're carrying around the world. And we're at $353 trillion of global debt, and that ends up being over 300% of the world GDP. And so, if someone would walk up to me and say, "Well, why do the bond yields matter now? Why did the bond market get so upset now with this higher crude oil price?" I don't think you can have the crude oil market see the dramatic supply shutdown that we've seen since February and then also have to deal with the debt loads that we're dealing with right now. The The economies, the governments of the world can't take both and I think that's the issue that I see coming up that I'm going to be talking about and writing about with my clients here in the next couple weeks.

[00:08:03]I think we're coming to a head. We can't have both high crude oil prices and high interest rates at this point and like I said a minute ago they're feeding off each other and I think that's why on one hand President Trump says, and he said it again today, I heard him, "I've got all the time. I'm in no hurry to make a deal." But then he says, and this is part of the reason why I think the market broke so hard in the crude oil market today, was he said, "We're in the final stages of an Iran deal."

[00:08:31]You We've got to get that Strait of Hormuz open in the next 30 days or I'm really nervous that the global economic wheels are coming off the bus. So then that boils it down to this for us, you and I. Does the corn go sharply higher with crude or do we have a financial crisis and everything goes down? And that's the thing we're going to have to talk about in the next 30 days and I've been reaching out to clients at this stage to try and address this with them even though I know they're cash strapped right now. This is a really big deal and it could be on the lines and along the lines of 2007-2008 I'm afraid if this goes much further.

[00:09:09]Well, and to that point I I wanted to ask you maybe about farmer selling and things of that nature. You figure in what's going on with basis levels right now and this is a chart looking at Memphis, the river action, river prices, etc. So share a little bit more with us.

[00:09:26]What are you seeing when it comes to the cash market? Yeah, I mean I'm I'm I'm very well taken by the clients and subscribers when I talk about paper positions instead of physical cash sales right now because they know what's on the line. They know, like you said, what the basis is around the country. I mean, some guys I'm hearing in eastern Indiana, western Ohio, near ethanol plants, near poultry feeders, they're getting over $5. And so, that's a different story. But, generally speaking, when you look at this chart, you think, "Okay, why aren't we at 2022 levels in crude oil and therefore 2022 levels in the grains and soybeans because that's when Russia invaded Ukraine?" And that's the kind of the gauge, that's kind of the um standard that that I'm watching and I think a lot of the clients are watching right now. But, this is where okay, we're at 2-year highs in many cases on all three of these, but we're not even close to where we were back in 2022. And that's why I like the paper positions, especially if you can get a 480 D split bought, you know, and put in a floor that puts you right at break even or a little bit above break even. Uh if we would get another move back up to the old highs, something like that. Um and keep your cash powder dry in case we do see a move like we saw back in 2022 because remember what USDA did to us on the WASDE report compared to the current marketing year, they're saying in 2026-2027 the world wheat number, the stocks ending stocks, not stocks to use, just outright ending stocks of 275 million metric tons is going to be down 1 and 1/2% from 2025-2026. Coarse grains going to be down 6%. Soybeans going to be about even. So, we are going to see declining supplies unless we cut and ration demand.

[00:11:13]We are having a conversation today with Mike Zuzolo from Global Commodity Analytics. Let's go to livestock, Mike.

[00:11:20]Let's talk a bit about this cattle complex. I mentioned at the top of our conversation, feeders futures held on to some green on the day, but we found a a little bit of pressure in the fat cattle. Hogs were a little bit lower. Uh Your thoughts as you look at this protein complex midweek?

[00:11:38]Yeah, the next 2 days I think are going to be almost all about the cattle on feed report on Friday afternoon, Jesse.

[00:11:45]Because it is a 3-day weekend, they can't do anything about the trade in their positions after the numbers come out. I suspect we'll see a lot of pre-report positioning, but this chart really kind of says it all. We are not giving up at all in the live cattle market thanks to the stellar cash market, which I think is very indicative, like we talked about last week, of being very current. That June-December cattle spread, live cattle spread, June minus Dec futures got to positive $18 today during the intraday on Wednesday.

[00:12:20]June being so premium to the December says to me again, we're very current in these markets. And I'm looking for a a lot better marketings number as a result of that in the cattle on feed report.

[00:12:31]But you see also in this in this chart the the real dog, and I was hoping it wouldn't be this way, is the June hogs.

[00:12:39]I thought once the May expired, those old lows, right about where the hogs word is, I was hoping those lows and thinking those lows would hold. They've given way, and it's because we've got new news coming out of China that they're cutting out some of their breeding inventory again. I think we're also seeing a slippage in the belly cutout. And and that's kind of seasonal, but we're very close to that BLT seasonal, that bacon lettuce tomato seasonal, not too far away in July. So, I'm still, I guess, a permanent perma-optimist when it comes to the hogs, even though it's working against me.

[00:13:16]Looking at the cash side of this cattle market, let's talk about this a little bit cuz I know cash we set more records last week. We've stayed red hot. I look at Wednesday, you got a major in Eastern Nebraska reportedly paying 260 live, a regional paying 415 dressed. I mean, talk about this cash cattle market that just continues to remain on fire, Mike.

[00:13:40]Yeah, it very stout, very very welcome and and I think it really helps support the live cattle futures. And you know, the bad thing about the live cattle when it comes to the deferred contracts is they just are getting cheaper and cheaper and you can't make any money on hedging them right now. So, the name of the game when I look at a chart like this where you got a 263 plus cash market versus a 253 plus futures market, just stay current. I don't think we have a lot of upside potential in the cash market from here until we get closer to the July 4th buying seasonal unless we get a shock, a surprise in the cattle on feed report. So, my motto is stay current and stay out of paper hedges in the deferreds especially.

[00:14:24]You mentioned the cattle on feed report as well. Let's pull up those estimates real quick. This will be out Friday after the close and into that 3-day holiday weekend. So, we'll get an extra day to digest whatever the numbers tell us. What's what's your thoughts, any more feelings going into that on feed report?

[00:14:43]I I feel as though that we have got to find a month and and a time where USDA acknowledges either we don't have to only 2% less on feed than we did a year ago or they acknowledge that we're going to see a major increase in in slaughter in Q3 and Q4 to make up the fact that we're down 9 and 1/2% right now on year-to-date slaughter closing in on the end of the fifth month of the year.

[00:15:17]And and to put it in the context, Jesse, we're on April 26th of this year, USDA said the on-feed number was 11.576 million head. May 2025 on-feed, we were 200,000 less than that. And so they're saying we have 200,000 more than last year in the spring. Yet we have the smallest herd since the 1950s.

[00:15:41]And we've got the absence of about 1.25 million head a year of Mexican feeders that are not coming into this country.

[00:15:50]That ends up being 104, 105,000 head per month. And so when you look at a placements number of 1.5, 1.6 million head, you're talking about 8 to 9% or 7 to 8% of the total. And so you can say beef on dairy can explain some of that, but I don't think it can explain all of it. And so I still think that we are due to get these two numbers to come together. And I think I hope that this month the USDA starts to do that by taking the on-feed below 100%. I mean, look at that on-feed as of May 1 average number 101.6 in a very tight range. No one below 100%. So this is the number I'll be watching to see if the feeders finally pick it up and start to support the fat cattle. That I think would be the fuse that could be lit to give the fat cattle the chance to get up to the cash market price.

[00:16:47]Good stuff as always, Mike. We got a couple minutes left. Final thoughts from you? Anything you would mention, reiterate to folks in grains or livestock here this week? Yeah, you know, one of the things that I think we have lost sight of at this stage in the trade because of Wednesday's trade specifically. When you hear that we might be getting a US Iran peace deal, the market falls, you know, $7, a barrel or 5, 6%. And yet we've been in this this, you know, loss of production and we're up to a billion barrels of lost production at this point, Jesse. If we carry this on into the end of May and into June, we're going to start working on our second billion barrels of lost production that we'll never get back. I mean, the Department of Energy said this past week that we we've lost 2.6 million barrels a day, period. There's no way to get it back. That number's only going to get bigger as this straight stays closed. So, unless we open that Strait of Hormuz up, I just don't see anything but upside potential in the crude oil market and then dips will be bought by the funds. And so, I think that's what we're going to have to work into our marketing plan, something we're not used to.

[00:17:56]Folks want to reach out, talk with you there at Global Commodity Analytics, take a look at that marketing plan that they might have and and get some insight. What's the best way to do that?

[00:18:06]It's a great time to do it because as you saw in that corn chart, we're getting close to the bottom of that trend line and that support and that channel. It'd be really wise, I think, to if you've made some sales earlier at a lower price, discuss with me whether you want to buy it back or not and get a risk reward, you know, type mindset put in place as we pull back here during this May time period. Same with feeders.

[00:18:30]If you're a cattle feeder and you're in the drought, I think you really want to be looking at the grain side of the equation for the long side.

[00:18:38]Folks can I now go to your website?

[00:18:40]That's a great way to get started, isn't it, Mike? Yeah, globalcomresearch.com.

[00:18:44]It's globalcom with two M's, research.com.

[00:18:48]Mike Zuzolo, Global Commodity Analytics, always good to talk with you, my friend.

[00:18:52]Thanks for joining us on the show. Have a great holiday weekend. We'll talk to you next week. You too, Jesse, and thank you to all the people who have served in this Memorial Day holiday and all their loved ones.

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