Howdy market watchers! 

The year is half over with Friday marking the last trading day of the month and 2nd quarter!  Time is marching along.  It’s always at this point in the year when we ask ‘where has the year gone’!  

I think Thursday’s first Presidential debate made us either wish we could make time stand still or fast forward to 2025.  It’s going to be an unpredictable time between now and the election and be prepared for the unexpected.  

We witnessed some of that on Friday in USDA’s market moving grain stocks and planted acres reports.  The numbers were supposed to released at 11 AM CDT, but the message on USDA’s website continued to read “our services aren’t available right now” for a whopping 5 minutes, which is an eternity in the markets ahead of a highly anticipated release.  Futures contracts seemed to freeze for those minutes until alternative access finally got the news to traders.  

At that point, the bears took control of the corn market that pulled down wheat while the bulls cautiously and temporarily supported the bean market.  While June 1st US grain stocks were higher than expected for corn, beans and wheat, the larger headline came from the acreage report. 
 

Two days ahead of the USDA reports, Successful Farming released estimates of their 2024 planting survey. The results showed that 6.1 million fewer acres of corn were planted this year compared to last year’s 94.6 million acres.  That translates to 88.5 million acres of corn planted in 2024.  This starkly contrasted the government’s 91.475 million acres in Friday’s reports, cutting acres only half of what the Successful Farming survey suggested.  This was also 1.122 million acres above trade expectations for Friday and 1.439 million acres more than USDA’s March forecast.  
 

There were plenty of gasps happening at 11:06 AM in my office and many others. Where did all these acres come from? Corn futures plunged, down nearly 30 cents at one stage, but closing 9 cents off the lows on December corn to finish the session at $4.20 ¾.  Next week’s action will depend much on this weekend’s rain chances in the Eastern corn belt.  Suffice it to say, there is no weather premium in this corn market with a lot of summer left and plenty of late planted corn from what I understand as well unmeasured damage from recent heavy rains.

US corn crop conditions were pegged at 69 percent Good-to-Excellent this past week, as expected, but another three percent decline from the prior week’s rating.  Bean conditions were also cut three percent G/E this past week and slightly worse than expected.  

USDA’s soybean planted acre report was actually bullish with 86.10 million acres seen as planted versus trade guesses of 86.753 million acres and last years 83.60 million acres.  The Successful Farming survey saw soybean acres higher at 88 million acres.  So, there is a 1.5-million-acre swing factor between USDA numbers for corn and bean acres versus the SF survey.  November soybean futures traded a 25 daily range with session lows right at $11.00, closing near the open at $11.04.  
 

The funds are holding large net short positions again and are betting on large crops and average demand.  July weather for corn and August weather for beans along with demand strength will be needed for a short covering rally to re-emerge for row crops.  

The wheat market is somewhere in between.  Despite weaker action on Friday that I attribute more to the corn market, the wheat market held relatively well.  In fact, I liked the chart action for the bulls in wheat.  Chicago wheat held above Thursday lows and closed well off session lows Friday.  KC wheat held prior session lows on the December contract and made a slight new low on the September contract, but both closed decently off the lows.  On top of this, USDA’s acreage report actually pegged all wheat and winter wheat acres below trade expectations and the agency’s March forecast.  Winter wheat acres were nearly 400,000 acres below trade guesses.  While production is higher, this lower acreage number could be supportive down the road.  

It is also worth noting that spring wheat conditions declined this week to 71 percent G/E from 76 percent the week prior and 75 percent expected.  
 

Cotton acres came meaningfully higher than expected at 11.67 million acres versus 10.829 million acres expected.  Cotton conditions have also improved in the recent week, up two percent G/E ratings from the week before to reach 56 percent G/E. 

The fact that Friday’s reports also coincided with the end of the month and end of the quarter makes it difficult to judge as sellers were active going into the weekend.  The US dollar is near a triple top going back to mid-April.  If US dollar strength tops out here again and moves back lower, this will be supportive of commodity markets.  Demand for US grains is already strengthening given the slump in futures markets and could become a key factor in getting grain markets out of this rut.  

While grain markets have been trending weaker, the cattle market has been attempting to sustain the rally.  Fed cattle contracts have been holding better than feeders on strong cash fed cattle trades that reached $190 in Texas and Kansas.  This is slightly lower than last week, but also more trade further south at these levels.  There was a late Friday trade at $198 in Nebraska on 4,000 head and 1,000 head in Colorado.

The feeder chart action has started to wane in the middle of the bull channel and now forming more of a wedge.  This week’s high failed to make a high above the June 17th high and looks to be stalling.  Recent action in fed cattle charts look quite a bit different, but the topping action is looking to me that it is starting to tell the same story.  There is a chart gap on August fed cattle that will be filled down at $179.675 as below.  We could see some weakness in this cattle market next week. 
 

I just wasn’t impressed by the cattle response to much weaker corn prices today and could suggest the push is softening for now.  If you’ve been waiting on more up in the cattle market to get protection in place, I think this is an area to get more protection in place.  The cattle fundamentals are extremely bullish as long as the consumer stays intact, but that also doesn’t mean the charts will continue moving higher always.  

If you would like to sharpen your knowledge on LRP, futures and options trading, Sidwell Strategies and Sidwell Insurance are hosting training classes on July 26th at Autry Technology in Enid, OK.  Online access will also be available.  Get registration requirements, cost and sign-up by emailing trade@sidwellstrategies.com.  
 

Sidwell Strategies is the one-stop shop to protect cattle with futures, puts, LRP or a combination of all, which is probably the best strategy overall.  

If you’re ready to trade commodity markets, give me a call at (580) 232-2272 or stop by my office to get your account set up and discuss risk management and marketing solutions to pursue your objectives.  Self-trading accounts are also available.  It is never too late to start and there is no operation too small to get a risk management and marketing plan in place.  

Wishing everyone a successful trading week!  Let us know if you’d like to join our daily market price and commentary text messages to stay informed!

Brady Sidwell is a Series 3 Licensed Commodity Futures Broker and Principal of Sidwell Strategies.  He can be reached at (580) 232-2272 or at brady@sidwellstrategies.com.  Futures and Options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at http://www.sidwellstrategies.com/disclaimer. 
On the date of publication, Brady Sidwell 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.