May soft red winter (SRW) wheat (ZWK26) futures on Friday rose 13 1/2 cents to $5.80 1/4, hit a 6.5-month high, and for the week were up 38 1/4 cents. May hard red winter (HRW) (KEK26) wheat futures rose 8 1/2 cents to $5.85 1/4, hit a seven-month high, and on the week were up 31 1/2 cents. The winter wheat futures markets saw technically bullish weekly high closes Friday that suggest some follow-through, chart-based buying early this week.
However, these two markets are now short-term overbought, technically, and due for routine and arguably healthy corrective price pullbacks very soon.
New U.S. Tariffs May Throw Monkeywrench into Grain Rallies
Wheat, corn (ZCK26), and soybean (ZSK26) markets have rallied recently due in part to the improving trade relations between the U.S. and its global counterparts, including the U.S. making trade deals recently that highlight more purchases of U.S. ag products.
However, Friday’s Supreme Court decision striking down President Donald Trump’s administration’s tariff regime is throwing near-term uncertainty into all the grain markets. Why? Trading partners might start to reject finalized trading agreements due to the new U.S. levies announced by Trump this past weekend. How the Supreme Court ruling against the Trump administration’s tariff regime plays out in the coming months, and Trump’s reactions to it, will be closely monitored by grain traders. Will previously agreed-upon U.S. trade deals with other nations hold up? Will the Trump administration find legal workarounds to continue the tariffs? Nobody knows right now. However, the uncertainty of this important matter will not be a bullish element for the grain markets in the coming months.
Corn Will Look to the Wheat Markets for Daily Price Direction
May corn futures on Friday rose 3 1/2 cents to $4.39 3/4 but for the week were down 2 1/4 cents. May corn on Friday did see a technically bullish weekly high close, suggesting some follow-through price strength early this week. Corn traders will continue to look to the wheat market for daily price direction.
South American Corn Crop Closely Monitored
Brazil’s second-crop (safrinha) corn plantings continue to trail levels seen one year ago and are below the five-year average as the ideal planting window is passing. Better moisture will be crucial for the crop to achieve full production potential. Some rainfall is in the forecast for the coming days for key growing regions in South America, with no region being deemed in serious drought conditions.
As springtime comes into view, grain trader focus will shift from South American weather to U.S. weather. The USDA’s late-March Prospective Plantings Report and its results will also be a next major market driver.
Soybeans, Meal, and Bean Oil in Price Uptrends
May soybeans Friday fell 2 3/4 cents to $11.53 1/4 after hitting a three-month high early in the session. For the week, May beans rose 4 3/4 cents. May soybean meal (ZMK26) gained $4.90 to $313.80 and hit a 2.5-month high. May bean oil (ZLK26) fell 79 points to 59.30 cents, near mid-range but for the week up 183 points.
The soybean market Friday saw some mild selling pressure amid the uncertainty regarding the Supreme Court striking down the Trump administration’s tariff regime. However, soybean meal prices surged as spreaders were featured unwinding long soybean oil, short meal spreads. The solid gains and new for-the-move high in meal Friday are positive signals for the soybean market, too. Soybean complex traders will keep a closer eye on the wheat markets this week, given their recent strong price rallies.
Soybean traders are still closely watching weather conditions in South American soybean-growing regions. Weather reports Friday said rain into the middle of this week should leave the soil moist enough to support developing crops into at least early March.
The strong U.S. soybean crush use continues to help firm the soybean market.
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On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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