Grain markets opened lower on Tuesday, May 5, with livestock trading higher as traders engaged in profit taking following recent highs in corn and soybean contracts. Brady Huck of Empower Ag Trading said that grains saw a pullback after reaching new contract highs, while the energy sector also showed weaker prices.
The performance of grain markets is closely tied to the energy sector. “I think every day when you wake up, you got to ask yourself, where’s crude at? Where’s energy markets? And that’s the first place to go to look to maybe set the tone for where these markets are going to be at across your grain,” Huck said. He noted that December new crop corn made a new high overnight but pulled back towards $5 per bushel—an attractive level for producers. Huck added, “Yeah those round numbers stick in producers mind for sales targets.”
Huck observed that managed money positions have shifted significantly since March: “Funds were net short 13,000 corn contracts. And now as of last Tuesday, 264,000 long. And there’s estimates that they’re closer to 300,000 net long currently.” He advised caution regarding potential pullbacks from long liquidation but noted continued support from inflationary concerns if crude oil prices remain elevated.
Fast planting progress is also affecting market sentiment. U.S. corn seeding was at 38% compared with a five-year average of 34%, while soybeans were planted at a rate ahead of normal averages. “No significant problems getting the crop in…we’re getting beans in the ground and they’re ahead of normal,” Huck said.
The wheat market fell after recent highs due to improved crop conditions and forecasts for rain in some areas. Despite tough conditions further west into Colorado and Kansas panhandle regions, Huck said he was “pleasantly surprised” by some wheat fields’ resilience: “Wheat’s a very resilient crop…I wouldn’t underestimate.”
In livestock trading, cattle futures attempted recovery after record highs last Friday followed by declines on Monday. “The cattle market’s strong and we’re up here…very near record levels,” Huck said. He pointed out upcoming beef month and grilling season could provide support but cautioned about consumer demand driving future trends: “If they’ve got an appetite for beef, I would not guess how long this good market can last.” The cash feeder market remained robust despite volatility from macroeconomic factors such as energy prices.
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