Howdy market watchers! 

Well, I’m officially another year older today and this time, it feels like it.  The more time that passes, the more we appreciate family, friends and the simpler things in life.  I have now been back in Oklahoma for 8 years and blessed to be closer to family and friends including a family of my own.  Thankful for all the life that I’ve been able to live with many diverse experiences around the world and at home again.  

What I do miss are the four seasons that we always used to enjoy growing up.  It seems that our seasons are now hot and cold with little transition of those favorite seasons of Spring and Fall.  

With the exception of yet another hurricane, the drought situation in the US continues to intensify.  The situation is getting severe for winter wheat planting that is now more than half complete although slightly behind schedule with some producers waiting for moisture.  

Army worms are active in areas and so vigilant at checking your fields in the morning before it gets hot to see if you need to spray.  We are spraying early planted wheat in hopes of saving wheat pasture.  All in all, there will be limited winter wheat pasture for grazing this year and what is out there will be later into December.  

If these conditions persist, we will likely see further herd liquidation over the coming weeks and months and more calves sold versus retained for grazing.  The result will drive more, light weight calves to feed yards.  Feed grains remain cheap and Friday’s USDA grain reports could cheapen them up even further.  

The USDA increased this year’s US corn yields by 0.2 bushels per acre (bpa) to 183.8 bpa, which was 0.5 bpa above trade guesses.  US corn harvest is now 30 percent complete, behind trade guesses of 34 percent, but ahead of an average 27 percent.  Production increased from last month’s estimates and were also contrary to the cut that traders were expecting.  

US soybean production was slightly lower than previous USDA estimates, but not the cut that traders were looking for.  The same for yield with the USDA cutting US soybean yields by 0.1 bpa versus 0.2 bpa expected in average trade guesses.  
 

The 2024/25 US ending stocks for corn came in 58 million bushels below USDA’s previous estimates, but were 55 million bushels above trader expectations.  US soybean ending stocks were unchanged from last month while traders were expecting a cut of 3 million bushels.  US wheat ending stocks were cut more than expected at 16 million bushels versus only 9 million bushels estimated.  
 

World ending stocks for corn were lower than last month, but largely in line with trade guesses.  Soybean ending stocks globally were just slightly ahead of last month’s forecasts while traders were expecting a modest cut.  The same goes for world wheat ending stocks that came in slightly above last month while traders were hoping for a cut of 1.3 million metric tons. 
 

This fresh data brought about weakness to grain futures that impacted soybeans more than others.  November soybeans closed below the 50-day moving average, but above the $10.00-level.  After an inside chart day on Thursday, we could see follow-through weakness extend into early next week.  

With US soybean harvest now 47 percent complete that is ahead of expectations and well ahead of average and rains in Brazil, we need demand to offset more supply-side pressure that is coming.  

The biggest help would come from more stimulus announced in China.  With the ‘Golden Week’ holiday celebrating China’s National Day concluding on October 7th and resumption of market trading this last Tuesday, the strong rally from the first round of stimulus faded as the week progressed.  Markets across all asset classes are now anxiously anticipating another stimulus announcement by China this Saturday.  

The USDA updated China import estimates for corn and soybeans on Friday.  Corn imports are seen at 19.0 million metric tons, down from 21.0 MMT last month and 23.50 MMT last year.  Soybean imports are also seen lower at 109.0 MMT versus last year’s 112.0 MMT, but unchanged from USDA’s prior forecasts last month.  

This report demonstrated that US and global crop supplies remain large and adequate with demand crucial to maintaining these price levels.  

Equity markets were plenty optimistic on Friday making new, all-time highs yet again after a choppy week.  With Thursday being inside chart days on the Dow Jones and S&P 500 followed by Friday’s push higher, we ‘should’ get a further push higher next week.  

Market exuberance is alive and well despite this week’s jobs and CPI data showing some strength and improving the odds that the Fed may not make another interest rate cut at next month’s FOMC meeting that starts the day after the US Presidential election.  However, we must remember that strength in the labor market is a good thing although it may mean that interest rates remain elevated for longer.  

It has definitely helped the livestock complex to continue extending its rally.  Fed cash cattle trade proved firm again this week with high trades at $187 in Texas. 

The 2024 feeder cattle contracts are beginning to stall at the $250-level.  October and November feeder contracts did not make new recent highs on Friday while January, March, April and May did make new highs.  

March feeder cattle have an open chart gap that will fill at $247.000 while April feeders have gaps that fill at $249.150 and $253.475.  May feeders have gaps that fill at $250.600 and $254.700.  If we continue to have strength in equity markets and fed cattle cash trade, we will likely fill these gaps.  
 

However, if you’ve been waiting to protect any or all your cattle, these would be levels where I would advise to do something and/or do more.  

Keep in mind that if you’re utilizing Livestock Risk Protection (LRP) that federal holidays and government shutdowns make this tool unavailable to use for price protection.  With Monday being Columbus Day, there will be no LRP.  However, CBOT grain and CME cattle markets will be open. Also, there is now no LRP prices offered on Cattle-on-Feed report days the next of which is on October 25th.  This is another reason to also have a CME trading account opened with Sidwell Strategies so that you can supplement your strategy with futures or options and also be active in grains and energy where needed.  

With higher carrying costs, now is the time to utilize futures and options to enhance your operation’s cash flow while remaining in the market versus just sitting on physical grain.  

A word to the wise.  Don’t let this phenomenal rally in the cattle market get you complacent to the need for downside price protection.  The chart gaps just above current levels could coincide with global events and change things quickly.  

We are just over 20 days until the US Presidential Election and absolutely anything could happen.  Hopefully, we’re heading for the old highs around $265 and beyond, but don’t bet the farm on it. 

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. Sidwell Strategies offers both in one place and so join the Sidwell Team today!

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 http://www.sidwellstrategies.com/disclaimer.