Crude Oil Crashed 7% on Iran Deal Headlines — And Grains Paid the Price

• Cargill confirmed it had initiated a lockout starting today at its Fort Morgan, Colorado beef facility while negotiations continue with union workers.

• Crude oil prices took on losses of $6 to $7/barrel today following another round of comments from President Trump that a deal to end the war with Iran is close.

• Last week’s ethanol production came in at 1.111 million barrels/day, up from 1.082 the week prior and up 7.2% from a year ago.

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Grain and Oilseeds Wrap Up

Corn prices threatened double-digit losses today with several grain markets tracking sharp losses in Crude Oil. Headlines are keeping volatility high, and that should keep buyers active following pullbacks and sellers active when prices rally to recent highs. July corn above $4.80 continues to trigger profit taking while $4.55 to $4.60 has been the value zone for buyers. December corn above $5.00 has prompted plenty of new crop hedging, and it’s likely going to take weather threats or lower acreage estimates to push prices drastically higher if the frequency of positive headlines dies down.

Soybean prices took on losses of a little over a dime with sharp losses in the crude oil market weighing on several other commodity values today. If short-term support doesn’t hold up near $11.90, there’s room for another quick plunge down to better support at $11.70. November beans have room to fall at least another dime before 20-day moving average support comes into play near $11.80.

The wheat markets backtracked today following spillover weakness from the energy markets. Weather concerns are still in play as HRW growing areas face another few days of frost risks on top of the severe drought issues. Bears will tell you there’s plenty of wheat around the world while bulls will argue geopolitical risks are keeping solid support under prices. Unless the Middle East conflict abruptly comes to an end, wheat prices likely haven’t seen highs set, especially with so much production uncertainty here in the US.

Cattle

June live cattle initially recovered from losses of nearly $3.00 on the open but any upside momentum couldn’t be maintained following the headline about the beef processing plant closure in Fort Morgan. June live cattle continue to challenge $255, so far failing to break higher as negative headlines have provided an offset to higher cash markets. Ahead of Friday’s monthly Cattle on Feed report, analysts expected placements to come in higher than a year ago, which would make it the first year-over-year increase in placements in 18 months if realized. Considering ongoing cash market strength, we expect new highs can be reached for live cattle prices.

August feeder cattle ended the day $2.00 higher to reach their highest level in over a week. It wasn’t easy either, with prices falling to $5.00 lows around midday, making for another $7.00 daily trading range! Support has proven strong at the 100-day moving average that sits near $357.75 while a clean breakout above $366 will open the door for prices to climb back to recent highs within the $370 to $380 zone.

Hogs

July hogs ended the day with small losses with the market moving to within a tick of its recent low set at $101.35. June and August hogs have already reached fresh lows this week, so don’t be surprised if the July contract soon follows. We might see a quick jump if support holds within the $101 to $102 zone for July hogs, but be ready to get defensive if a rally does materialize. Seasonally, prices tend to bottom soon and work higher into the summer months.

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