Grain futures markets bulls appear to be springing to life in 2026, as corn, soybeans and winter wheat futures prices have all been trending higher from their January lows. I believe the grain markets could well be the next metals markets.
By that, I mean over the past couple of years, the metals markets have screamed higher and hit record highs amid keen speculator buying interest, including from the big hedge funds. However, being bullish on the metals is now a tired trade after gold (GCM26), silver (SIK26), platinum (PLN26), and palladium (PAM26) all scored record highs in recent months. All aboard! The bullish grain market train may be just pulling out of the station. Let’s break each grain market down.
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Wheat Leading the Bullish Grain Markets Charge
July soft red winter (SRW) wheat (ZWN26) rose 1 cent to $6.37 3/4 and for the week were up 21 cents. July hard red winter (HRW) wheat (KEN26) futures gained 1 cent to $6.94 1/2 and for the week were up 24 3/4 cents. HRW wheat hit a two-year high last week.
The winter wheat futures market last Thursday saw some routine profit-taking pressure, but the bulls bounced back Friday, although they did fade a bit to end the trading session.
Most of U.S. HRW wheat country remains too dry. That’s been a major driver for upside price action in winter wheat futures for the past couple weeks. Any little rain that does fall in HRW country over the next week is likely to occur today into Wednesday. There is the potential for freezing temps for the region in the coming week.
The U.S. dollar index ($DXY) sold off late last week and is back near its recent six-week low. Further depreciation in the USDX in the coming months would support better interest from foreign buyers of U.S. wheat and other grains. Harvesting of the U.S. winter wheat crop, including yields and quality, as summer progresses will be a feature in the wheat futures markets.
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Corn Production Potential in Question Due to High Fertilizer Prices
July corn (ZCN26) on Friday rose 5 1/2 cents to $4.80 1/4 and closed at a 13-month high close. For the week, July corn was up 16 3/4 cents.Corn futures bulls last week had a solid week. Friday’s technically bullish weekly high close and a price uptrend in place on the daily bar chart suggest more chart-based buying interest from the speculators this week.
There is speculation among corn traders that sky-high fertilizer prices in the U.S. and around the globe could prompt producers to cut back on fertilizing their corn crops — or switch intended corn acres to other crops such as soybeans.
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Traders will keep watching the weekly USDA crop progress reports on Monday afternoons.
Weather in the U.S. Midwest leans slightly price-friendly for corn. Rain in some areas have slowed down planting and frost and potential freezes are in the forecast for this week.
Domestic and export demand for corn remains mostly strong and offers support as new-crop contracts are working to test the key $5.00 mark. U.S. export sales continue to outpace the seasonal averages of recent years. U.S. ethanol production remains near year-ago levels. These are bullish elements that will at least keep a floor under corn futures prices in the coming months.
Soybeans Attempting to Break Out of Recent Trading Range
July soybeans (ZSN26) on Friday rose 7 3/4 cents to $12.03 1/4, closed at a six-week high close, and for the week were up 24 3/4 cents. The soybean market showed bullish promise last week as prices are now in a fledgling uptrend on the daily bar chart. Gains in corn and wheat futures recently have also helped to pull beans higher. However, soybean meal remains a laggard and that’s worrisome to the bean bulls. Soybean planting progress will be tracked by USDA in its weekly crop progress report the next few Mondays.
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With tensions remaining high in the Strait of Hormuz, crude oil prices have surged, which has helped to rally soybean oil to contract highs, due in part to expectations of increased demand for biofuels around the globe. That strength is boosting soybeans.
The next three months will see U.S. soybeans pop out of the ground across the Midwest, and as legendary grain analyst Conrad Leslie used to say: “All eyes will be on the skies,” watching the weather. More years than not, some degree of a weather market develops in soybeans during the summer months. And given the past couple years have not seen significant weather scares develop in the summer, this year soybeans are overdue for such.
Tell me what you think. I enjoy hearing from my valued Barchart readers from all around the globe. Email me at jim@jimwyckoff.com.
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. This article was originally published on Barchart.com
