Howdy market watchers! 

It’s June and summer rains are quickly changing the shade of the US drought monitor.  With the exception of Nebraska that is completely covered by some level of drought, every central and Midwest state from the Mexican to the Canadian border and east to the coast is only partially if not fully drought free. The major drought issues remain in far southwest Texas, across the desert southwest and Florida.  

Further precipitation is forecast for the Southern Plains wheat belt over the coming 10-15 days after an absolute deluge has already delayed harvest the past week.  In addition to heavy rains, high winds have laid over thousands of wheat acres.  Ripe wheat that is lodged followed by more heavy rain can begin to create quality issues in the form of reduced test weight and eventually sprouting.  Hopefully, the weather will cooperate and combines will begin making progress before we get to that stage, but time is of the essence, especially for mature fields further south.  

What a season it has been, again!  From too dry to too wet and everything in between, a decent yielding crop is out there, but more rain at this point is the opposite of what is needed to meet higher yield forecasts.  Funds returned to short covering in the grain markets this week, finishing up particularly firm on Friday with corn, beans and wheat all staging strong closes. Chicago and KC wheat contracts both put in key reversals higher with outside days, lower lows and higher highs, on the chart and closing at session highs.  

The US dollar rebounded on Friday, but remains in a bearish pattern.  This has supported US grain exports as of late with wheat in the lead and likely to now exceed USDA projections for the 2024/25 marketing year about to conclude.  Friday’s May jobs report, however, was stronger than expected with US payrolls increasing 139,000 versus Dow Jones estimates of 125,000.  The unemployment rate remained steady at 4.2 percent. Average hourly earnings for workers also increased more than expected up 0.4 percent on the month and 3.9 percent over a year ago.  

While high interest rates and tighter credit conditions continue, these latest figures suggest that consumer spending strength could remain intact and perhaps strengthen further.  This is another data point suggesting that the Federal Reserve does not need to succumb to the continued calls for interest rate reductions with the latest being Trump’s ask on to Chair Powell on Friday for a full point rate cut.  Inflation has softened, but tariffs remain inflationary on supply chains, and the uncertainty of such policies is as damaging as knowing they will remain in place.  

The Trump Administration made fresh headlines this week with the fallout with Elon Musk on full, public display.  Musk has been very outspoken and joined critics of the spending in the “Big Beautiful Bill” despite the GOP touting its record breaking cuts to the government’s budget.  

Trade tensions seem to be cooling between the US and China with talks announced to start in London next week.  Ahead of the talks, Boeing said that plane deliveries to China will now resume.  Could we see US grain purchase announcements coming soon from Beijing?  I think it is possible as part of a broader deal, but it may still be premature.  At the current price levels, this may be a decent time for China to buy.  Commodities across agriculture, energy and metals started to bounce back this week after retesting recent lows.  

US corn conditions came in as expected at 69 percent Good-to-Excellent (G/E), but below last year’s 75 percent.  In the first rating of the year, soybean conditions came in at 67 percent G/E, one percent below expectations.  Corn is now 93 percent planted while soybeans are 84 percent planted.  US winter wheat conditions increased to 52 percent G/E, 2 percent above expectations and 3 percent ahead of last year.  

Winter wheat harvest is said to be 3 percent complete, one percent behind expectations, but in line with last year.  With rains ahead, we will see this progress slip further behind last year.  Spring wheat conditions increased to 50 percent G/E, ahead of expectations, but still well below last year’s 74 percent G/E.  Cotton conditions are now at 49 percent G/E, well behind last year’s 61 percent for the first rating.  I believe we will see more up in the grain markets next week.  

The cattle market continues to defy gravity.  Feeder and fat cattle futures made fresh, new record highs this week. Just when we thought that $3.00 was major resistance, we’re now at $3.10 on August feeder futures with Friday’s high at $3.1055.  

The chart gap below will fill once the market trades to $3.04375.  June fats traded to a high of $226.750, closing above $226.000. Chart gap below will fill at $218.500. 

What’s even more unbelievable is fed cattle cash trade that topped out this week at $235 in Kansas and $244 in Nebraska!  That means that cash is trading $9+ above front-month futures.  First notice day for June Live cattle futures is Monday along with option expiration.  

This type of market breeds complacency as each selloff is met with higher highs. Well, we know it cannot go up forever, but for now, the charts continue to point to more up.  We had good closes Friday, but as fast as we surged in the last three sessions of this past week, the market can be impulsive “up” here. Play it careful if you are going long here or carrying on with physical assets unprotected.  The start of summer has its history of seeing softer trade. While the timing is never the same year-to-year, we could see some fatigue for the bulls before too long.  Having said that, the bulls remain firmly in charge in the cash market and the futures bulls are yet to catch up!  

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.