Recent Commitments of Traders data from the Commodity Futures Trading Commission suggests that speculators, including the big “fund” traders, are becoming more interested in playing the long sides of the grain futures markets.
For several weeks now, I have said I believe the grain futures markets may be the next metals futures market, in terms of major rallies driving prices to historically high levels. The precious metals markets at present are a “tired trade,” meaning it’s very likely the vast majority of their bull market runs have already occurred, and the smart money is looking to invest in another sector. Let’s take a look at how the individual grain markets are performing, at present.
Risk Aversion in the General Marketplace Running High
The weekend onset of the U.S.-Israel war against Iran spiked trader and investor risk aversion in the marketplace. “When in doubt, get out” is the typical trading mantra during very uncertain times. However, so far early this week, the grain markets are taking the keener risk aversion in the marketplace well. This is partly due to the strong gains seen in crude oil markets, with Nymex crude oil (CLJ26) futures hitting an eight-month high Monday.
Still, it’s not likely the grain markets will see solid price rallies in the near term, as the Middle East war plays out. The grain markets also digested last month’s Supreme Court ruling against President Donald Trump’s tariff regime fairly well, including the rhetoric that came from U.S. trading counterparts after the ruling.
At present, it seems the best the grain bulls can hope for is steady and sideways price action during these very uncertain times.
Wheat Markets Leaning the Grains at Present
May soft red winter (ZWK26) and hard red winter wheat (KEK26) futures on Monday hit eight-month highs. Last week, May SRW gained 11 1/4 cents, while May HRW wheat lost 4 3/4 cents.
May SRW winter wheat futures on Friday saw technically bullish weekly and monthly high closes, suggesting follow-through buying interest from the speculators early next week. Technical buying was featured in SRW and HRW markets late last week, as price uptrends on the daily bar charts have been re-established.
Wheat traders are watching India’s wheat crop, as that nation is likely to record one of its warmest Marches on record, with above-average temperatures in key wheat-growing states, potentially cutting yields. More high heat is expected in India during March. In the U.S., there are also dry pockets in wheat regions. USDA’s state wheat crop condition ratings have seen a decline in crop conditions.
Constrained supplies in the Black Sea due to logistical hurdles amid the Russia-Ukraine war are also price-supportive for futures.
Corn Futures Hit 6-Week High Monday
May corn (ZCK26) futures in the overnight trade Monday notched a six-week high and prices are trending higher, inviting the speculative bulls to the long side. Last week, May corn rose 8 3/4 cents.
May corn futures last Friday also saw technically bullish weekly and monthly high closes, suggesting follow-through price early this week. Corn traders will continue to look to the surging wheat markets for daily price direction. Surging winter wheat futures prices are also bullish for corn.
Corn traders will continue to closely monitor growing conditions for South American crops. Rains in Brazil corn regions this week will be favorable for crop development and for long-term second-crop (Safrinha) corn prospects. Some Argentina corn regions are getting dry and need rain soon, but most of the Argentine corn crop is not seeing stress from dry weather. 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 major market driver.
Soybean Complex Futures Bulls Enjoying Price Uptrends
May soybeans (ZSK26) in Monday’s overnight trade hit a 10-month high, while May soybean oil (ZLK26) futures notched a contract and two-year high. Last week, May beans rose 17 1/2 cents. May soybean meal (ZMK26) was up $6.70 on the week. May bean oil rose 255 points last week.
Importantly, the soybean meal futures market has performed well over the past week, which is encouraging to the bean bulls. Soybean meal may continue to perform better in the near term as spreaders at some point will have to unwind their long bean oil, short meal spreads. The big rallies in winter wheat markets today were also price-positive for soybeans.
Soybean traders are also closely watching weather conditions in South American soybean-growing regions, with no major crop problems being reported at this time.
Soybean oil strength is helping lead the soy complex higher as U.S. refiners look to lock in supplies following the Environmental Protection Agency’s 2026 biomass-biodiesel mandate, which increased 2.26 billion gallons from 2025. Recently, the EPA sent a proposal to the White House to reallocate exemptions, which triggered an extended rally.
The planned summit between Trump and Chinese President Xi Jinping in April will be very closely watched by the grain markets.
Tell me what you think. Send me an email at jim@jimwyckoff.com. I enjoy hearing from all my valued Barchart readers all over the world.
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.
