Happy Mother’s Day weekend market watchers!  

Since we last wrote, we have a new Pope, Warren Buffett has retired as the CEO of Berkshire Hathaway and the Fed Reserve has held interest rates steady.  

As we speak, a delegation from the Trump Administration is meeting with Chinese officials in Switzerland to see if progress can be made towards a trade agreement and de-escalation of the prohibitive tariff levels now in place on both sides of the Pacific.  

Late this week, new trade terms were set between the US and the UK with more such deals expected to follow in the coming weeks and months.  While Trump so far has held a hardline on the campaign to renegotiate international terms of trade in the name of reducing the US deficit, I’m beginning to believe that he is still the market-oriented capitalist that we all knew he was and not allow the stalemate linger for too long should it really begin to impact the US markets.  

However, this is the month before summer holidays when fewer investors are paying as much attention and so perhaps it is the ideal time to negotiate until the end of Q3 once everyone is fully re-engaged.  

This weekend’s trade discussions with China have the potential to be a market mover, but expect different interpretations of the extent of the progress from both sides of the negotiating table.  President Trump mentioned Friday that 80 percent tariffs sounded like a more reasonable area than the current 145 percent, but that is still escalation in our mind.  Even the deal announced with the UK still maintains the 10 percent tariff minimum. Vis-à-vis China, I do not expect the situation to be fully “solved” during Trump’s time in the White House as the entire point of this change in policy is to “reset” the terms of the trade relationship.  

The USDA’s monthly WASDE and Crop Production updates will be right out of the gate on Monday at 11 AM.  This report will also include the USDA’s first forecast of this year’s winter wheat production.  While there was some expectation of short covering in wheat on Friday ahead of Monday’s report, Chicago and KC wheat contracts made new recent lows.  We could, however, see that ahead of the report on Sunday night or Monday morning.  

Corn and soybeans did manage some strength on Friday after a week of softer trade.  The US corn crop was shown to be 40 percent planted as of last weekend, slightly behind expectations, but ahead of average. Soybeans were 30 percent planted, just behind 31 percent expected, but well ahead of the average 23 percent. Spring wheat is now 44 percent planted, also behind expectations, but ahead of last year.  Cotton planting was 21 percent complete, just ahead of the average pace.  

Winter wheat conditions improved by 1 percent to 51 percent Good-to-Excellent, just ahead of last year.  The biggest improvements were seen in South Dakota, up 8 percent week-over-week, Colorado up 5 percent, Oklahoma up 4 percent, Montana up 9 percent and Oregon up 8 percent.  Recent rains have added 15 bushels per acre in many areas while abundant rains have caused lodging and erosion damage in others.  However, all-in-all, we have a decent wheat crop ahead as reflected by the continued slump in prices.  

Chicago and KC wheat contracts closed at new lows on Friday after losing 27 cents and 30 cents, respectively, this week.  With basis levels around -$0.40, that puts the farmer’s cash price around $4.80 per bushel. Also of note is Chicago wheat futures are now higher than the higher quality KC wheat contract.  

Based on the Commitment of Traders report released Friday for positions as of last Tuesday, managed funds have put in a record net short position for KC wheat for the 2^nd week consecutive week.  Soybean meal has also reached a new record net short position. Significant selling was seen for corn and soybean contracts, but managed funds still have a small net long position for both contracts.  

Monday’s USDA reports are calling for a slight decline in US ending stocks for the current marketing year for corn and soybeans while slightly higher for wheat. This is in contrast to next year’s marketing year whereby US ending stocks are expected to surge well above last year levels for corn, soybeans and wheat.  Relative to the February Ag Forum forecasts, US corn production is expected to increase nearly 200 million bushels to 15.787 billion bushels while soybean production is expected to be reduced by about 30 million bushels to 4.338 billion bushels.  

This will be the first 2025/26 US wheat production forecasts with all-wheat expected to be 1.885 billion bushels, down from 1.971 billion bushels last year. Similarly, hard red winter wheat is expected to be 748 million bushels, down from last year’s 770 million bushels. Soft red winter wheat was left unchanged from last year at 342 million bushels.  

Brazil soybean and corn production is expected to be adjusted upwards as is Argentine soybeans with a slight decrease in corn production.  Globally, corn ending stocks are expected to increase nearly 10 million metric tons for corn next year and 5 million metric tons for soybeans.  World ending stocks for wheat are however expected to decline by 100,000 metric tons. 

With weather being pretty favorable overall around the world despite some pockets of issues, it’s getting difficult to expect any kind of major rally across the grain and oilseed complex, tariffs and summer growing weather issues aside.  With the right trigger, the oversold nature of wheat and corn could result in sharp, upside movements.  US export sales have been strong, but a strengthening US dollar has muted the response of the futures contracts.  

In sharp contrast, the cattle market surpassed another milestone this week with August and September feeder cattle contracts trading and closing above the $3.00 level on Thursday.  June fat cattle futures traded to a new high at $215.600 on Friday with cash fats reaching a high of $228 in Nebraska and Colorado and $220 in Texas and Kansas. This $3.00 level on feeders is expected to be psychological resistance, but August feeders still managed to close above that level on Friday.  If you’ve ever wanted to protect these historic levels on cattle through futures, puts or LRP, give us a call to profit this phenomenal profit level especially for home raised calves.  

This week marked the 2-years since losing a very special colleague and friend, Cody Dotson. I loved everything about this man and thought of him as a brother.  He was one of the most talented people I have ever met and had the pleasure of working with. I think of him everyday and pray for his wife and two kids.  Enjoy every day this life offers no matter how difficult some days can be.  Life is short, but a blessing.  

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 https://www.sidwellstrategies.com/fccp-disclaimer-21951.