Markets Now Early 5/28 Grains Recover with Oil, Talk of China Tariff Drop: Cattle Try to Extend Gain

追加: 2026-05-28

[00:00:03]And welcome to Markets Now. I'm Michelle Work with Mike Minor of Professional Ag Marketing. Well, grains trying to push to the plus side except for HRW wheat this morning in the livestock space cattle mixed hogs are lower.

[00:00:15]Mike, let's talk about the grains of corn and wheat headed down day yesterday. I know we did some chart damage. We're back up today. Is it just about the fact that crude oil is back higher today? Is that the simplicity of it?

[00:00:29]>> Yeah, market direction here is being totally dictated by the oil market and any Iran oil news that's happening in those outside markets. So, it's it's very predictable at this point just following whatever the oil market's going to do and and that situation right now is is very difficult to know what's going to happen because we're getting very conflicting reports still out of the US and Iran. Both of them are basically saying now that each other they violated the truce and it's putting some things at risk. So, the the problem is up to this point Trump has been really preaching that we're really close to a deal. We're going to sign. Iran comes out, we're not signing anything.

[00:01:10]So, the market can maybe trade a direction. It just can't buy in yet and you can really see that out of these markets, Michelle. And as much as I would like to believe that we're entering June now on the grain markets and we could trade other fundamental things. We could trade weather. For the time being if there's no news, we're trading the oil news.

[00:01:28]>> And when does the market get worn out or tired of that?

[00:01:32]>> A few months.

[00:01:33]We saw it in the Russia-Ukraine war. I don't think it's much different really for a time frame perspective. We know that we've seen the immediate supply chain disruptions, the bottlenecks.

[00:01:44]We've seen the immediate shock and awe.

[00:01:46]So, after a while here if nothing changes dramatically on the story, it'll soon become old news especially as we can talk about other things like actual relevant WASDE reports where we could see changing acres, or we could see changing yield. We'll actually get to trade some real fundamentals in this corn and soybean market after a while.

[00:02:05]And And you're starting maybe see the first phase of it based on a lot of combines are headed down south right now to harvest winter wheat crop that was pretty poor. So, we'll get some harvest reports there. That market's pretty much died off now after the immediate uh supply shock or weather shock from those. So, we're getting through the first phase of this probably, where we'll start to care about some other things more. And And one could say oil's too cheap today. It likely is, but it makes it too cheap because we can't get a clear direction out of both our government and Iran and whatever situation they have going on with the decision-making. So, if we had a clear direction, the market could really buy in. But at this point, it just it's uncertain.

[00:02:46]>> Uncertain, for sure. Uh the other uncertainty that we've had in the market is when is China going to buy? We have had since the Since the China summit, obviously, we've been all talking about the $17 billion of additional egg purchases on top of the 25 million metric tons of soybeans China's supposed to buy. But really, we don't have any indication of that from China. Uh some talk today that maybe they're starting to look at lowering their tariffs. Is that the first indication from China you think that there's actually a deal and they're going to make purchases or not?

[00:03:22]>> It's a really good point. At the end of the day, the economic way of looking at it is still it doesn't make sense for China to want to buy any of our soybeans or corn or anything uh with their declining sow herd. They've got cheaper prices in Brazil. Uh so, really economically speaking, they shouldn't buy anything from us. But the fact that they're willing to take the time to say, "Hey, we'll take the tariffs off. Maybe look into some of those things. Maybe uh look at some bids uh on uh the US export prices." That look is is a good sign.

[00:03:51]Now, they have to follow through. that's the one thing, but the China is one of the three main legs of this stool that can really move this grain market going forward. It's obviously weather, it's the Iran oil situation, and then if China does step in buy something. The market's clear indication of I think the bias towards if China is going to buy something at this point or not is likely the spread action. We saw a major disruption in spreads on soybean specifically between July old crop soybeans in '26 and November new crop soybeans of '26. We saw that spread go massively inverted. We saw that go up to over 80 cents, and then it's pulled all the way back down now. So, from that perspective, just looking at the spreads in corn and soybeans, they're pretty weak recently. The market doesn't have a fear that China's going to come in, make a big purchase, or really even front running it at this point. They're looking more at the fact that 95 million acres, if we are anywhere close to that on corn, it's a lot of acres. There's no weather disruption so far that could equate to a lower trend line yield.

[00:04:56]So, at this point it looks like the market's sitting comfortably believing that we'll have enough soybeans around, we'll have enough corn around, and even the USDA I thought in this last WASDE report coming out at a 1.6 billion bushel export number on soybeans. That doesn't show much of an increase on new crop soybean purchases from China. Very similar to what they would have done this last year. So, they're going to want to see some purchases, they're going to want to see some proof for them to really bump that number back up to a a 25 million metric ton number that China was more accustomed to in the past, Michelle.

[00:05:29]>> Yeah.

[00:05:30]And actually tagging on to what you said about weather, obviously the market comfortable, like you said, that we're going to have a good crop. 86% of the corn planted, 79% of the soybeans planted, well ahead.

[00:05:43]Uh obviously that kind of feeds into that argument as well, though, doesn't it?

[00:05:48]>> It does. And weather-wise, I'm not seeing anything too dramatic. This is the time of the year where you start to look and and maybe the drought map is looking pretty scary or there's delayed planning. You start to talk about a weather problem of some sort or potential at the end of May normally.

[00:06:04]And this year, it's mainly been in the western Corn Belt where very dry where you and I both sit, Michelle, in this part of the world. We've missed a lot of rains between the Dakotas and Nebraska.

[00:06:15]And that pattern's changing here. We We continue to get more confirmation that the El Niño switch is coming. And with that, it looks like our rainfall is starting potentially as soon as this weekend all the way through the next week with chances of rainfall through the Dakotas and Nebraska in major areas that really need it. That would heal up a big portion of the western Corn Belt.

[00:06:36]I think that if there was a weather problem that was brewing, seems like that's getting healed up there. And then the other part would be the southeastern United States. We all know 2012, that drought started in Florida and worked its way up into the I states. That's getting kind of cut in half with some of the recent rainfall patterns. So, not quite as much of a a threat as what some were hoping, Michelle.

[00:06:59]>> Yeah, and I I think the talk of rain or the rains that have and will supposedly fall in some of those HRW areas like Nebraska are maybe pressuring the HRW wheat and it's kind of late for it to be very helpful, isn't it?

[00:07:15]>> It seems like it. It just combines are headed south. The harvest is starting.

[00:07:20]We know it's a bad crop, but we're too expensive compared to the rest of the world on wheat and most of the buying and funds has just ran out of it. Maybe your last hope could just be, yeah, we didn't have a very good wheat crop this year. Crude oil's running up in the rest of the grain markets because of inflation. That would maybe give you your next boost down the wheat market, Michelle.

[00:07:40]>> All right.

[00:07:41]Quick technical talk here just about corn in particular. Yesterday we took out uptrend lines. I know July was below the 200-day moving average.

[00:07:51]Do we get back above those today with in close above those levels and negate that you think?

[00:07:57]>> We're going to need to continue to feed the bulls. The start of it and we're following it is a crude oil market. So we need some more confirmation that maybe the ceasefire is in in danger or the talks aren't going well as escalation. So that's got to pick up a little bit for us to continue. But I believe yesterday's price action that closed below 480 on December corn similar on July there for just a prorated. If you look at it, we had a pretty poor close yesterday on the corn market and I think the the thought of that poor close, we pushed it a few more cents than we needed to, but the price action now is still being dictated by oil, so it kind of shot that bearish technical away there for the time being.

[00:08:39]>> Yeah.

[00:08:40]All right, the cattle market had a big update yesterday. Not a lot of follow through at least early this morning in the live cattle futures.

[00:08:47]So boxes, did that drive the rally that we saw yesterday and why is it not continuing today?

[00:08:54]>> Well, from a chart perspective, it looks really nice. It looks like a recovery could be imminent.

[00:09:02]It's been led by a nice product bump that was encouraging at the time of the year that makes sense, something we've been waiting for. As we just sold off here technically speaking and it got pushed pretty hard, it didn't take much of good news to really give us a bump.

[00:09:18]You know, that little product bump we saw was really all the bulls needed to latch back onto. At the end of the day, supplies are still historically tight.

[00:09:26]Supply has a strongest correlation to cattle price of any other fundamental.

[00:09:30]So at this point, the the supply chain being as tight as it is, the the demand side is is concerning still with consumer sentiment being as poor as it is, but at this point it seems like no one is really giving up steak or hamburger in the United States to too big of an extent yet. You could see early signs of it, but at the beginning of summer it's pretty rare for us to get too bad of news when it comes to demand anyways. So, did the part of it too is that when we look at at this chart, it looks like you could have this top end of the range back in play again. And I think that's a little hopeful.

[00:10:09]We didn't do any chart damage really at this point. You saw a small product bump coming out of the holiday weekend. I I think it's pretty much business as normal when it comes to the cattle market.

[00:10:20]>> Yeah, and it was end of the month, so you kind of expected maybe a little bit of this back and forth. Let me also throw this out at you though. Yesterday we had crude oil down pretty hard and I felt like maybe the market was perceiving, hey, lower gas prices at the pump, that will help keep demand maybe strong on beef today. Crude oil back up, is that a little bit of a headwind you think for beef?

[00:10:43]>> I I would like to think those two are still somewhat connected. And I I know that beef has been thrown into the talk about it a little bit more with inflation because you've heard oil being the first first part of it. Energy prices make up half of your inflation gauge basically. And then beef has been quickly getting mentioned as the second to that. And the problem is people really don't seem like they're giving up on either one of those for demand at this point. It's just starting to crunch them. And normally that's what happens until they get financially stressed down the road, but something we're learning about consumers now is that they keep spending regardless if they think they have the money or not.

[00:11:21]The frugality aspect of it seems pretty rare. So, they're going to buy, continue to live the life that they want, but at this point it seems like the cattle market hasn't been too concerned about the economics and demand side and especially when the stock market's at record prices still, it doesn't make too good a good of a case.

[00:11:41]>> Yeah, for sure. And it's interesting the fact that consumers have not been trading down to proteins like pork is part of the hog problem, isn't it?

[00:11:50]>> It's got to be part of the hog problem and and bellies, I think, has been one of the main focus points on that. Cutout hasn't responded like it normally does this time of the year. The belly market's been part of that problem. It's been struggling and that's no that's no new new source there. That's just something we've been watching for quite some time now. Not breaking news by any means. But one of the things that could be tied to that and I want to be a little careful here is because let's say folks are aren't going out in the quick service industry and buying a hamburger or buying a cheeseburger.

[00:12:23]Now if they're not buying that, they're not putting bacon on it either on the top of it. So that's what we're maybe concerned on a little bit more.

[00:12:30]Um also if the meat that you're buying is expensive, it's going to be difficult to say I want to throw bacon on top of that and make it even more expensive.

[00:12:39]So we're we're maybe seeing some of that hit the belly market. The good news is bellies are basically the the least amount of anything we need to be concerned about. So from that perspective, I think give it a little bit of time. Give it the holiday here.

[00:12:52]We got some nice product values not yesterday but the day before.

[00:12:57]A nice cutout bump there. Hopefully we can continue to build on that for the hog market.

[00:13:01]>> to say, do you think maybe we started the process of bottoming with the update yesterday? I mean we're not getting a lot of follow through today but >> Well, I think it was a combination of a couple things. You had two very very quiet weeks. We didn't we didn't kill a lot of hogs through that time frame. So one, I think just from a supply side, we got a little tight. Two, we went through three-day weekend, Memorial Day weekend.

[00:13:24]We had some nice product buying coming out of that weekend and I thought that I thought that was some of it there 2 days ago that mattered. Now, I would have loved to seen another cutout that got posted higher again yesterday. So, it was a little disappointing to that.

[00:13:40]But, we'll just need to continue to follow that trend. I think we'll still come out of this hole. I would say that when you look at the premium in this hog market when the June traded down to 95, there wasn't any premium really left in that verse what the CME index was trading at at 91. So, I do believe that's a pretty solid firm support point in this hog market for the summer, Michelle.

[00:14:03]>> That's a really good point, Mike. All right, let's lastly talk. You mentioned inflation PCE data is out this morning and it does show inflation is starting to tick up. What do you What did you see in the report?

[00:14:17]>> So, the the report for PCE was through the month of April. And with that, I want to caution because through the month of April, that does not include an 18% drop in crude oil prices that we've experienced since then. So, I do believe that the market front ran this thing. I thought that the little bit hotter inflation numbers that we've had since basically the highest since 2023 here for both of the main headliners there. I would say that that was basically baked in the cake. And this is relevant this week, I'd probably argue because it's really the only real data that we had to come come and look forward to on the outside markets this week for data.

[00:14:58]Am I concerned? Obviously, inflation's high. It's not 9% by any means like we saw a few years ago, but it's still making it a very, very tough case. If we're going to have inflation still picking up, being a little bit hotter, it makes it really tough for this new Fed chairman to make a decision to say, "Hey, we should drop interest rates."

[00:15:17]And it's more of a case that we're hearing more about by the end of the year, we'll likely raise rates. There's over a third chance of that happening now. It's been picking up quite a bit. So, that's more of the concern I think with inflation, and it'll be something to watch mainly as we go towards Q4 this year. I think it'll become a lot more relevant.

[00:15:36]>> Yeah, I think the Fed meets June 16th and 17th. So, that'll be the first test under Kevin Warsh and how this is all going to play out, I think. We'll get a good tone from him.

[00:15:48]>> Yeah, that'll be his first one, and who knows what type of tone he'll take. You know, he's had one stance in the past, but it looks like Trump is really encouraging to take another stance. So, we'll see if the Fed is truly independent or not here going forward, Michelle.

[00:16:03]>> Yeah, good point. All right, thanks so much. Mike Minor with Professional Ag Marketing and Markets Now.