What Made Friday's Headlines Expected?

• (The US president) reportedly told Fox “News” that China's President Xi agreed to buy US oil, sent the Energies sector higher overnight. 

• Meanwhile, Metals continued to collapse, led by a nearly 10% selloff in silver. 

• The Grains sector was under pressure as well as new-crop markets possibly turn toward more favorable weather forecasts. 

Morning Summary: One look at markets early Friday morning and my thoughts for what all this – Venezuela, Iran, Greenland, Canada – has been about were confirmed: The accumulation of other counties' oil. The lead headline screamed, “Oil prices jump are (the US president) says China agreed to buy U.S. crude following Xi talks”. Did you see what I saw? The one statement that colors the headline as nothing more than another play to trigger Watson? “The US president ‘says’…”. A quick check of the article and we find, “Oil prices rose after (the US president) told Fox News in a pre-recorded interview that China has agreed to buy U.S. oil…”. So, while I still see the various wars and takeover attempts by the current US administration as a way of paying off large political and business associates in the oil industry, I need to see something more substantial than a pre-recorded message to Fox News. As for markets, WTI crude oil (CLM26) rallied as much as $4.14 (4.1%) while diesel fuel (HOM26) jumped as much as 14.3 cents (3.7%). Meanwhile gold (GCM26) fell by as much as $149.90 (3.2%) and silver (SIN26) slid as far as $8.12 (9.5%) lower. 

Corn: The corn market was lower overnight through early Friday morning on solid overnight trade volume. What stands out to me is July (ZCN26) posted a trading range of 7.75 cents, from up 6.25 cents to down 1.5 cents while registering 50,000 contracts changing hands through the pre-dawn hours and was sitting 1.0 cent lower at this writing. Recall July closed 13.25 cents lower Thursday, followed by the National Corn Index coming in near $4.2725, also down 13.25 cents for the day. A look at the CME website and we see the expected change in open interest: July decreased by 3,560 contracts while new-crop September (ZCU26) added 7,900 contracts and December (ZCZ26) increased by 5,025 contracts. This indicates Watson was liquidating some of its net-long futures position while the commercial side was selling new-crop following the recent rally. A look at Friday’s forecast maps (slide 2) and we see most of the US Midwest and parts of the US Plains are expected to see rain and plenty of late spring heat. The latest 6-to-10-day forecast (May 20 to 24) calls for near normal temperatures across the middle third of the US mixed with above normal precipitation for all but the northern growing area. In other words, forecasts look generally favorable for new-crop corn heading toward the weekend. 

Soybeans: The oilseed sub-sector was mostly lower pre-dawn Friday with the outlier what you likely suspect – soybean oil. Given the rally in diesel fuel, and factoring in Thursday’s session saw July soybean oil (ZLN26) close lower, it isn’t overly surprising to see the nearby issue up about 0.3 cent to start the day. We’ll see if bean oil can build any bullish momentum heading into the weekend, particularly on the commercial side of the ledger. As for soybeans, the July issue (ZSN26) posted a 16.0-cent trading range overnight, from up 9.5 cents to down 6.5 cents on trade volume of roughly 30,000 contracts. All the pre-meeting talk of US soybean sales to China don’t seem to have materialized, but let’s give it a few days to marinate. Recall July closed Thursday’s session 36.5 cents in the red after falling as much as 47.5 cents, followed by the National Soybean Index coming in 36.0 cents lower for the day. Similar to corn, the July soybean issue saw its open interest decrease by nearly 9,500 contracts while new-crop November (ZSX26) grew by 5,160 contracts. The carry in new-crop futures spreads strengthened yesterday as well with the November-January closing at 12.0 cents and covering 42.5% calculated full commercial carry. 

Wheat: The wheat sub-sector was in the red across the board early Friday morning, led by the HRW market. Here we see July (KEN26) down 5.5 cents after falling as much as 7.75 cents through the pre-dawn hours on trade volume of about 4,600 contracts. Recall Thursday’s close saw July down 19.5 cents after falling as much as 25.5 cents over the course of the day, followed by the National HRW Index coming in near $6.3875, down 19.25 cents from Wednesday. It will be interesting to watch a couple numbers as Friday’s session progresses: This past Monday’s closing price of $6.8625 and last Friday’s settlement of $6.7575. Why these two numbers? Recall July HRW closed the daily limit 45.0 cents higher post-WASDE Tuesday as Watson was triggered into buying. If commercial selling erases that gain by the weekend, then that speaks volumes about what the weather-reduced 2026 crop means short-term. Also, if the July issue posts a lower weekly close, from a technical point of view it would complete a bearish reversal pattern. What does this mean? That and a crisp $5 bill might get you a cup of coffee from your local barista, or in other words, nothing. Again, let’s see what commercial interests do to close out the week.