Weaker US$, weather could spur grain bulls after holiday
Happy Memorial Day weekend market watchers!
Let us honor those who have and continue to serve our country and remember those who have given the ultimate sacrifice to keep our nation free. Take this opportunity to go visit those family and friends who are now only with us in spirit.
This weekend marks the official unofficial start to the summer season!
For many of us, it is forecast to be a rainy five days ahead. That is good news for summer crops already planted or about to be, but less ideal for ripening winter wheat near maturity. There is still quite a bit of green out there in wheat and so overcast conditions may still help quality, but for earlier varieties and areas further south, additional precip at this stage could begin to impact quality, particularly test weight. However, I believe we are okay in Oklahoma and north, but there is an above normal probability that the end of May through early June is going to be wetter.
US winter wheat conditions actually declined by two percentage points in the Good-to-Excellent ratings this past week led by a ten percent decline in Texas and Colorado, four percent in Montana and two percent in Nebraska. Oklahoma conditions improved by three percent, Kansas by one percent and South Dakota by four percent, but from a very low base at only 23 percent G/E versus last year's 74 percent. Suffice it to say there is a lot of variability around the country, but Oklahoma and Kansas yields are likely to be a decent crop overall, barring any widespread weather issues during this season of severity.
Last week's USDA reports that included the 2025/26 wheat production estimates grew the US winter wheat crop to 1.364 billion bushels while versus last year's 1.349 billion bushels while traders were expecting a cut to 1.325 billion bushels. Hard red winter wheat, traded as the KC wheat futures contract, increased to 784 million bushels from 770 million bushels last year while traders were again expecting a decline to 748 million bushels. This increased new crop ending stocks for wheat to 923 million bushels from 857 million bushels expected and 841 million bushels last year.
Kansas was a major contributor to these increases with the recent Wheat Quality Council tour pegging this year's state average at 53.0 bushels per acre versus USDA's 50.0 bpa, last year's 46.5 bpa and the five-year average yield of 44.3 bpa. This is a tall order to achieve, but responsible for the relentless selling pressure in wheat that led to managed money setting three weeks of consecutive new record net shorts in KC wheat futures.
For now, I believe the lows are in after July KC futures touched a low of $5.00 ¼ on May 13 th. July KC finished the trading week Friday with an inside day on the chart, closing at $5.38 ¾. July Chicago stalled at the 50-day moving average and closed the week at $5.43 ½ despite being a lower protein wheat contract versus the KC. While I could see these contracts softening to their respective 9-day moving averages short-term, I believe we could see more strength return to the KC complex, in particular, especially if the US dollar continues to weaken as it looks set to do. The heat and dryness in China's key wheat province continue to build.
Corn and soybean futures rebounded firmly this week with the moving averages beginning to point up as weather premiums return. US corn planting is now 78 percent complete, one percent behind trader expectations, but well ahead of average. US soybean seeding was called 66 percent complete, one percent ahead of expectations and a whole 13 percent ahead of average.
The USDA's recent supply side reports assumed trendline yields with corn at 181.0 bpa and soybeans at a new record yield of 52.5 bpa. This plus acreage expectations brought US corn production to 15.820 billion bushels, ahead of average trade guesses as well as the February Outlook Forum. US soybean production was largely in line with expectations, but below both the February Outlook Forum as well as last year. US ending stocks for the coming marketing year were, in fact, lower than expectations for both corn and soybeans.
The USDA held soybean yields steady for Brazil and Argentina. World ending stocks for corn and soybeans came in lower than expectations with corn being much lower than both expectations and last year levels. Wheat ending stocks were higher, but in line with last year.
With the Trump Administration keen to cut inflation in order to reduce interest rates, I'm expecting much of this to come from lower commodity prices, particularly energy. However, agriculture commodities now trade at their energy equivalents with the sheer volume used in biofuels. Therefore, lower energy could mean lower agriculture commodities with hopes that the Big Beautiful Bill and Farm Bill, with higher reference prices, will help fill the gap. The lower-than-expected renewable energy targets were less than desirable for soybeans and hopefully we will gain more clarity on 45z soon.
Recent inflation reports show progress continues towards the Federal Reserve's 2.0 percent objective, but tariff policies cloud the view. We will dive into the policy side deeper once there is signed legislation.
While tariff disputes with China have recently cooled, Trump announced a bombshell 50 percent tariff escalation on the EU before the long, Memorial Day weekend. Markets will be closed on Monday with grains re-opening on Monday at 7 PM CDT to start the Tuesday session.
The livestock markets will resume trading on Tuesday at 8:30 AM CDT. After the recent $12.50 per cwt selloff in feeder futures that came in just two trading sessions followed by choppy trade, cash trade of fed cattle came back stronger yet with futures catching up with futures discounts still trading below cash. May feeders expired Thursday with August now the front-month.
Feeder and fed cattle futures contracts are above the 9- and 20-day moving averages and look set to resume the bullish trend after the Thursday break higher.
USDA's monthly Cattle-on-Feed report for May was released Friday at 2 PM CDT. May 1 st on-feed numbers came in as expected at 98.5 percent of last year while April placements were higher than expected at 97.4 percent versus 96.8 percent. April marketings also came in higher than expected at 97.5 percent versus 96.7 percent.
While these reports provide a perspective, cash prices are hard to ignore. Fed cattle trade summary for the week topped out at $220 in Texas and Kansas and $231 in Nebraska, although we didn't confirm any head traded at that level in the north. Regardless, June fat futures traded to a high of $216 on Friday, $4 below the cash price. There are gaps higher on the feeder contracts with the gap filled on August feeders at $301.325. Unless we hear of other headwinds, cattle markets look set to move higher next week even once the gap is filled.
These are fantastic price levels, but we could trade above this $3.00 mark for a bit longer, but don't lose perspective of these price levels. Feeders are just shy of the record net long. Watch for a new record net long to gauge a potential turning point, but the bulls seem to be back in charge for now.
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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
42 minutes ago
- Globe and Mail
Where Will Energy Transfer Be in 1 Year?
Energy Transfer (NYSE: ET) is a midstream master limited partnership (MLP) with a lofty 7.5% distribution yield. There are a couple of big-picture reasons to dislike the business, but there are also some notable reasons to like it. One big reason to be positive is the growth opportunity in the years ahead for this diversified MLP. Here's what you need to know. What does Energy Transfer do? Energy Transfer owns energy pipelines, storage, and transportation assets that help to move oil and natural gas from where they are produced to where they are used. The MLP largely charges fees for the use of this vital energy infrastructure, with about 90% of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) tied to fees. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » The business itself is fairly well diversified. Natural gas liquids and refined products account for 24% of EBITDA, midstream assets 23%, natural gas pipelines and storage 21%, crude oil 18%, and its stakes in two publicly traded MLPs 14%. Energy Transfer's leverage is within management's target range, and it's projecting 3% to 5% annual distribution increases for the foreseeable future. That said, too much leverage led to a distribution cut in 2020, a time of great uncertainty in the energy sector thanks to the coronavirus pandemic. Income investors were severely let down right when they likely would have most wanted income consistency. That cut comes on top of an unfortunate event involving peer Williams (NYSE: WMB) in 2016. Energy Transfer agreed to buy Williams and then chose to back out of the deal because it would have required a dividend cut, taking on massive debt, or both. Part of the process of killing the deal was the sale of convertible notes that look like they would have protected the then-CEO from the effect of a dividend cut, if one had been needed. The deal was called off, but this event, coupled with the distribution cut in 2020, should cause more conservative investors to pause here. There are equally attractive midstream businesses that don't have similar, potentially objectionable, histories. There are 5 billion reasons to like Energy Transfer However, there are reasons to find Energy Transfer attractive. That starts with the fact, as noted above, that leverage is back down to levels with which management is comfortable. A stronger balance sheet is the foundation on which Energy Transfer is spending $5 billion in 2025 on capital investments. The investments are spread across its business, with the midstream segments getting 30% of the cash, natural gas liquids and refined products 28%, natural gas pipelines 28%, oil 6%, and "other" the remainder. There is an array of different types of projects in the works, from incremental improvements to existing assets to the ground-up construction of new assets. A number of capital investment projects will be completed in 2025, but there are others that will start adding to cash flow in 2026 and beyond. There are additional projects waiting in the wings that can be added to Energy Transfer's capital plans in the future. The big picture takeaway is that slow and steady growth seems like the order of the day, which is backed up by management's target of 3% to 5% distribution growth over the longer term. Where will Energy Transfer be in 1 year? Energy Transfer's business should be slightly larger and more profitable in a year. That is likely to mean a distribution that's a little bit higher, too. If you can look past the trust issues that have arisen in the past, this high-yield midstream MLP looks like it is on a more sustainable path today. However, more conservative investors should note that the same sustainable growth path is expected from many peers, including Enterprise Products Partners, a competitor that has increased its distribution annually for 26 consecutive years. Should you invest $1,000 in Energy Transfer right now? Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor 's total average return is987% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
CTV News
2 hours ago
- CTV News
Cold, wet spring forces family farm southeast of Montreal to adapt
The Vergers Pierre Tremblay et Fils is about 50 kilometres southeast of Montreal. (Anastasia Dextrene/CTV News) It's strawberry fields forever at Vergers Pierre Tremblay et Fils, about 50 kilometres southeast of Montreal. 'We've been in berry production since 1998,' says co-owner of the farm, Luc Tremblay. Growing strawberries, blueberries and other crops on the 35-hectare property has been a family affair for four generations. Over time, his crops have endured weather patterns of all sorts, but this year, 'the cooler weather and temperature has been unpredictable. There has also been a lot of water,' he said. Sure enough, Tremblay has had to adapt. The farm planted its strawberries last fall, when the crop is typically seeded. The strawberries were then covered with a tarp to create a make-shift greenhouse in the winter. Come early spring, they were pollinated in time to bloom in June. strawberries A bundle of strawberries grown at the Vergers Pierre Tremblay et Fils farm in Mont-Saint-Grégoire, Que. are shown on Tuesday, June 3, 2025. (Anastasia Dextrene/CTV News) What was inconvenient this season was having to remove and reinstall the tarp repeatedly, Tremblay said. Once removed for pollination in the day, it had to be reinstalled to protect from frost at night. However, according to the Quebec Association of Strawberry and Raspberry Producers (APFFQ), 'strawberries are not like other crops, such as sweet corn, where growers need sunny days to be able to plant.' They say sun, just enough rain and warmth are the ideal conditions needed for strawberry farming and despite temperature swings, the fields are in good condition. The same can be said of Tremblay's crops, as he prepares for the thousands of berry-pickers to grace his fields.
Globe and Mail
3 hours ago
- Globe and Mail
Septic System Owners Are Ditching the Old Way of Cleaning Toilets
You're already cleaning your toilet — why not clean your septic system too, with the same flush? The first and only 2-in-1 cleaner that cleans your toilet and treats your septic system at the same time. Instead of using harsh chemicals that can harm septic health, this foaming formula uses Dr. Pooper's proven Accelerator by Dr. Pooper® bio-technology to safely break down septic solids. Hockley, TX - Jun 3, 2025 - In a market filled with 'single-purpose' bathroom cleaners, the new Accelerator by Dr. Pooper® Toilet Bowl & Septic Cleaner is simplifying routines — and septic system maintenance — with a smarter, dual-function approach. What makes this product so different? It's the first and only 2-in-1 cleaner that cleans your toilet and treats your septic system at the same time. Instead of using harsh chemicals that can harm septic health, this foaming formula uses Dr. Pooper's proven Accelerator by Dr. Pooper® bio-technology to safely break down solids in your pipes, tank, and drain field. 'It's the easiest and most effective septic maintenance you'll ever do,' said Chris Denny, CEO and co-founder of Dr. Pooper. 'You're already cleaning your toilet — why not clean your septic system too, with the same flush?' The 2-in-1 Toilet Bowl & Septic Cleaner has quickly become a favorite among homeowners with septic systems, especially those looking to: And because it's totally non-toxic, there's no risk to pets, kids, or groundwater. The 2-in-1 Toilet Bowl & Septic Cleaner is available now on Media Contact Company Name: Dr. Pooper Enterprise LLC Contact Person: Chris Denny Email: Send Email Phone: 8323016075 Address: 27122 FM 2920 City: Hockley State: Texas Country: United States Website:
