Howdy market watchers! 

Where to begin…  Well, April showers bring May flowers and we are very thankful for the rain!  It came at a critical time that probably saved tens of bushels of the wheat crop and will help newly planted dryland corn in the Southern Plains to get off to a great start.  However, this wheat crop is not out of the woods just yet with a weekend freeze followed by hotter and dryer conditions in the two-week forecast.  

The first, nationwide USDA winter wheat conditions start next Monday with the report released at 3 PM.  While we’ve had select state-by-state updates in recent weeks, next week’s report will give us a national view.  There have indeed been beneficial rains in several portions of the US wheat belt, but the heaviest rainfall has not been statewide in many cases and so we will have to see where the figures come in.  There are also areas receiving excessive rains as well as straight line winds and so that corn should be glad it hasn’t emerged just yet.  

If your weekend has been missing this commentary in the last two weeks, I have to apologize as it has been a busy travel season and I’ve been from San Francisco to Orlando to Las Vegas with brief stops back in Oklahoma in between each over a two-week time period.  This used to be routine for me, but I’m definitely older… Of course, I’m always watching and trading the markets, which makes travel that more taxing, but it also helps provide interesting insights and perspectives to factor into my thoughts and outlook on the market.  

Bottomline, there is a lot of nervousness out there all throughout the value chain. While Trump’s election had markets feeling optimistic, the policy uncertainties and extremes that have been actioned especially this week has brought much of that exuberance back into focus. Trump has always been seen as a President that pays attention to the market’s reaction to his actions.  Having said that and as I mentioned in recent commentary, I believe this time is different.  While he is still a market-oriented capitalist, he aspires to aggressively cut spending, balance the trade deficit and bolster the economy through bringing manufacturing jobs back to the US versus globalization to make consumables cheaper for US consumers thereby improving our purchasing power parity.  The Dow Jones plummeted from above 42,800 on Wednesday to 38,300 by Friday.  

Also, a major threat to our economy has been inflation that is tamed through higher interest rates, that have their own set of implications, that Trump has been very public in trying to get the FOMC to slash. However, as we know, you cannot cut interest rates until inflation is under control.  Contrary to driving inflation lower, tariffs actually increase inflation. The Administration’s pressure on the Fed to lower interest rates while simultaneously announcing more tariffs has been a conundrum for us all, but the plan is becoming very clear that slowing down the economy and lowering energy prices is the strategy.  Now the concern is how slow and low can we go before sparking a recession or worse.  

Energy and metals sank dramatically.  Crude oil went from a Wednesday high near $72.30 to a low of $60.45 by Friday.  Cheaper energy to lower inflation and interest rates as I mentioned.

For ag markets in general and livestock markets in particular, the primary issue is the strength and resilience of the consumer.  Frankly, I have been, but now increasingly concerned about the strength of the consumer.  This week’s purge in the equity markets, namely the last 3-days, would be enough to make everyone pause at the near-term outlook.  The selloff started with Trump’s April 2^nd so-called “Liberation Day” announcement of 10 percent baseline and reciprocal tariffs to go into effect April 9^th on all major economies with Canada and Mexico shielded from some under the USMCA, but the salt in the wound was China’s overnight announcement on Friday of additional 34 percent tariffs on US products.  This bold response along with reporting the US to the WTO, dashed any remaining hopes for cooler heads to prevail before the weekend.  Late on Friday, the Trump Administration reported that “every country” has called the White House in response to tariffs with several ready to come to the negotiating table.  

Could this whole fiasco potentially be short-lived?  Potentially, but I do not expect the China dual to be quick, which I believe is by design. The CBOE Volatility Index (VIX) that usually tops out around 20-22 surged above 33 this week, as a sign of the broad-based uneasiness of sentiments.  The China announcement Friday overshadowed the US payroll data for March that showed 228,000 jobs added versus just 140,000 expected. However, the unemployment rate increased to 4.2 percent, 0.1 percent ahead of forecast as the labor participation rate increased.  

I have also witnessed this in our local market that more people are looking for jobs including second and third jobs.  Conditions are tighter than ever for many households and understandably so with soaring food and necessity item prices, insurance costs and just hope your car doesn’t break down.  I have seen this across our various businesses and hear it from other colleagues across the country.  

Beef prices, which are always higher than pork and poultry prices, are now above the upper band of the relative pricing.  Demand rationing has already started.  It will be the consumer, not the supply tightness that will break this market. Cattle futures could definitely bounce back from Friday’s limit down close on all feeder contracts except front-month April, but caution is advised.  If you haven’t protected the downside, you have not missed it.  We are still $10-14 per cwt higher than many people thought we would go.

Fed cattle cash trade did develop this week and topped out Friday at $208 in Kansas and Texas and $210-213 in Nebraska.  The feeder-packer standoff that the feeder has been winning to keep fed cash trades strong despite negative packer margins needs this consumer to stay strong or risk the pricing power to shift back to the packer.

As I have said many times this week, these cattle prices are like $13.00 wheat or $8.00 corn.  It was already good at the $11.00 or $6.50 level and then it pushed even higher, but then it sold off 25 cents and people hesitated thinking either a) they missed the top and/or b) it will bounce back.  One or both may be true, but if it is above your breakeven plus a good profit margin, lock it in!  We are now at $12.50 wheat and $7.50 corn.  What we all would do for these levels again and it is here right now for cattle, still! 

Due to limit down moves in feeder cattle, there was no LRP covering feeder cattle on Friday, only Live cattle. In fact, Live cattle futures locked limit down except for the April fat contract.  Regular session feeder limits are $8.25 per cwt.  Expanded limits for Monday will be $12.25 per cwt!  For Live cattle, limits will be expanded to $9.75 per cwt. Get ready!  

One of the most highly anticipated ag reports of the year was released on Monday at 11 AM.  This was the USDA’s Prospective Plantings and March 1 US Grain Stocks reports.  It was also the last day of the month as well as first quarter of 2025.  

US corn stocks came in lower than last year and exactly in line with average trade guesses, oddly enough, at 8.151 billion bushels.  Soybean stocks were higher than last year and just 9 million bushels above average trade guesses at 1.910 billion bushels.  Wheat stocks came in higher than last year as well as 22 million bushels above trade estimates.  

And then there’s the acre number!  US corn acres came in at 95.326 million acres, higher than the 94.361 million acre expectation and last year’s 90.594 million acres.  Yes, we love to plant our corn!  Soybean acres came in at 83.495 million acres versus trade guesses of 83.762 million acres, down from 87.05 million acres last year.  The biggest surprise, surprisingly, was for wheat acres.  All wheat classes came in at 45.35 million acres versus 46.475 million acres expected and below last year’s 46.079 million acres.  This is the second lowest all wheat planted acre number since the USDA started keeping records in 1919!  Winter wheat acres, which represent nearly 75 percent of the total, came in at 33.315 million acres versus 33.966 million acres and 33.390 million acres last year.  Cotton acres came in even lower than already low expectations of 10.189 million acres at 9.867 million acres versus last year’s 11.182 million acres.  Sorghum acres were around 550,000 acres higher than expected. 

Despite downward pressure on all markets including grains on Friday, old crop corn closed positive while wheat was off its lows.  Beans were hit the hardest due to the China pressure.  Amidst the market turmoil, I believe corn and then wheat look decent for more upside on the chart.  Beans have a chart gap above to fill and I think we could see that contract rebound as well. Mexico is a huge buyer of US corn and that should remain unharmed.  

Turkey is removing “all” of its wheat import tariffs and India is making concessions, which both could see global demand firm.  It is also being reported that Australia’s may drop by as much as 16 percent this year due to drought conditions, but that is down off of last year’s record crop.  Regardless, it is building the case.  The US dollar index weakened on tariff news, but rebounded to put in an inside chart day on Friday.  A weaker US dollar is another support for US export demand.  

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.