Howdy market watchers! 

It’s been an active weather and market week.  

First things first, we recognize the passing of his Holiness Pope Francis the day after he appeared to the public on Easter Sunday.  Over 200,000 mourners are expected to attend the funeral on Saturday at St. Peter’s Basilica including President Trump.  He was the first Latin American Pope and the first non-European Pope since 741 A.D.  Soon the Conclave shall commence, and the world will be watching and waiting for the white smoke.  

Spring weather systems have made headlines this week with active storms bringing hail and tornados across the Southern Plains and parts of the Midwest.  A major hail core destroyed thousands of acres of winter wheat in the Oklahoma panhandle into northwestern counties as well as areas of southern Kansas.  Thankfully, these areas also received needed rainfall with more on the way.  

Western Kansas finally caught some rains, which was largely responsible for Kansas City wheat futures sliding below the major support level that has been in place since December 2^nd last year. 
 

Thursday’s low touched down exactly on the trendline started on August 26^th last year and bounced to close in the upper half of the daily range.  Strength in overnight and the day session on Friday was encouraging for the well-worn bulls, but the market closed slightly negative on the day. Trade action next week will be important for the bulls to regain ground, but it could be a slow go without market moving headlines.  

With recent precipitation, Monday’s crop conditions could see improvement. Tensions in the Black Sea could bring some buyers back to this market as Russia attacked Kiev this week in one of the largest drone escapade since the war began in 2022.  The Trump Administration has also shown diminishing interest in a prolonged conflict.  With Russia and Ukraine yet to commit and honor a ceasefire as well as the terms that the Parties have discussed, it was suggested this week that the US may ‘step back’.  Rather this means less military and funding support for the Ukraine remains unknown, but seems to be insinuated.  We could see more attacks by Russia to strengthen their position ahead of a negotiation, which is certain to include some territorial secessions by the Ukrainians. Trump has political capital invested in the ending of this ‘war’ as he proclaimed in his campaign and so US political patience is wearing thin.  Trump met Zelenskyy briefly one-on-one at the Vatican City while there for the Pope's funeral.  Europe may soon be passed the torch to keep Ukraine in the game.  

Late last week, commodity markets were concerned with fees being placed on China-linked vessels at US ports that will increase year-to-year. At the 11^th hour, exclusions were made on bulk commodities, which was well received by markets.  As this high stakes poker game continues to play out, there seemed to be some cooling this week with President Trump commenting that tariff rates were too high and will come down, but didn’t say when or how and wouldn’t be done unilaterally, of course.  He further added that President Xi called indicating dialogues were in motion, but then China commented early Friday morning that there were no high-level talks taking place.  

Meanwhile, we believe a trade deal with Japan, which may buy more US corn and even soybeans, and/or India is imminent.  With so many hot irons in the fire, I believe the Administration is increasingly motivated to make some deals happen.  

Planting progress in the US continues to press ahead.  The USDA reported this week that corn planting has reached 12 percent, ahead of the 10 percent expected as well as last year’s 11 percent and the 10 percent average.  Soybean planting was reported as 8 percent complete, also ahead of the 7 percent expectation and the average pace of 5 percent.  Spring wheat planting is now 17 percent complete, well ahead of the 13 percent expected and 12 percent average pace.  Cotton planting is now 11 percent complete, right in line with last year and the average pace. Cotton futures have rebounded sharply from the April 4^th low, filling the chart gap from April 2^nd and 3^rd and trading to the highest level since February 19^th.  

Winter wheat conditions declined to 45 percent Good-to-Excellent versus 47 percent expected and 50 percent last year.  Conditions in Oklahoma declined 5 percent week-on-week to 39 percent versus 49 percent last year, while Kansas declined 2 percent to 41 percent, but ahead of last year’s 36 percent.  Nebraska was unchanged while South Dakota declined 8 percent.  Illinois soft wheat conditions declined 11 percent to 55 percent, down from 83 percent last year.  After rains this week that started last weekend, I expect improvements in Monday’s winter wheat ratings.  

There is talk of cold temperatures returning to Russian wheat areas, but conditions are better than previous years given soil moisture levels.  Recall last year that wheat futures surged through mid-May due to dryness in the Black Sea region.  We will see what develops over these next several weeks both there and here. 

Friday marked expiration day for May grain options and Wednesday, April 30^th is First Notice Day for May grain futures, which means front-month basis will be priced off of July futures by then.  

Old crop soybean futures surged this week trading to the highest levels since late February.  This has started to spillover to new crop, November soybeans, but we need to get a close above the 200-day moving average at $10.36, that we could see next week. Old and new crop corn futures have found support and slowly carving out a bottom here.  

If US planting progress continues at this pace, it will be a headwind for the bulls.  Solid corn export sales may widen the spread between old crop and new crop contracts.  

So far, corn prices have not deterred cattle buyers. How could anything when fed cattle are trading at $217 cash!?  Yes, that was the high trades in Nebraska and Colorado on Friday.  Kansas traded to $213 and Texas to $212.  “They” said they’d get $210 again, as I wrote a couple weeks ago. That they did.  I guess this is just the new normal…?  

Bullish supply fundamentals aside, the real question is can consumers continue to afford beef at these price levels.  Furthermore, packers are losing money and the higher the price of fats go, the more money they lose.  What will give first?  I would watch consumer data closely, especially if interest rates do not ease. All feeder cattle contracts made new, all-time highs on Friday except for August and closed at or near session highs. June and August fats also made new highs.  With managed money continuing to be active buyers, the next stop could be $3.00 feeders. New highs are often followed by profit taking and so tread carefully on the long side.  The summer grilling season is just around the corner, but it is yet to be seen if consumers will have sticker shock and trade down in a meaningful way.  Import restrictions and tariffs only tighten domestic supply and pricing.  

Equity markets marched higher this week with the Dow closing back above 40,000 for the first time since April 15^th. Chart action suggests we could see further upside follow-through next week.  Let’s see if the bulls can continue to overcome the bears.  

For our Oklahoma readers, join us Wednesday at Enterprise Grain in Kremlin for a pre-harvest cook out and enjoy delights from Enid Brewing Company and Eatery!  

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.