MARKET UPDATE

You can scroll to read the usual update as well. As the written version is the exact same as the video.

Timestamps for video:
Corn: 0:50min
Beans: 6:00min
Wheat: 8:00min
Cattle: 10:10min

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Overview

(Format is slightly different today than usual. Kept the overview very brief)

Grains slightly higher across the board.

We struck a trade deal with Japan. But the market says it's not enough, because it really isn’t enough to change much in the grand scheme of things.

The market never thought Japan business was going away to begin with. The one and only trade deal that really matters is China.

The details of the trade deal were vague.

It said Japan will buy $8 billion worth of ag and "other" products, while boosting rice purchases by 75%. Japan's average annual ag imports from the US are $11-12 billion or so.

But it is nice to see trade deal progress.

This morning the USDA reported that China bought US corn for the first time since 2023.

Later on in the morning it was confirmed that this was a false report from the USDA and it was actually South Korea.

Todays Main Takeaways

Corn

Corn Demand Overstated?

Some are saying that the USDA is too optimistic with it's export projections for new crop corn and that we have to compete with Brazil.

Maybe. Maybe not.

But what we do know is that new crop exports are better than they were last year at this time.

And we now have trade deals made with Japan and the EU.

Chart from Allendale

Here is a good point from @MisterCommodity on Twitter.

He basically said that at some point the Brazil supply will inevitably come to the market.

But it might not be until later this year and by that time the US crop could’ve already found a home.

So I don’t see the argument where corn exports are drastically overstated.

World corn stocks to use minus China is still at one of it's lowest levels ever.

Meaning the world is still going to have to come to the US for their corn needs because there isn’t all of this extra corn floating around globally despite the big crops out of the US and Brazil.

What year has been most similar to 2025 for July weather?

July has been extremely wet, yet it has featured some of the warmest overnight temps on record.

The trade isn’t concerned about the hot nights.

It sees plenty of rain and good crop conditions.

Overnight heat's impact on yield isn’t going to move the market here. That is why we haven’t rallied and will probably continue to struggle to find a reason to rally until harvest.

But what happened the last time we saw weather like this in July? Where it was really wet, but really hot overnight?

The Answer: 2010

This is the closest year in the 2000's that resembles what we've seen this year weather wise in July.

Here is a side by side visual for the past 30 days of both our precip and overnight temp rankings for 2010 vs 2025.

They are very similar, altough 2010 did have more widespread heat.

What happened to yield in 2010?

2010 was coming off of 2009's record yield of 164.4

In the May 2010 USDA report report they estimated corn yield at 163.5

Final corn yield in 2010 was 152.8

However, this was pretty much right at trendline yield at the time.

But the point is, overnight heat can have an impact on yield.

BUT in 2010, we did also have a very hot August with hit or miss rain.

So 2010 might be an extreme example.

As August this year isn’t expected to be quite as hot as July was.

Either way 2010 is the closest to what we've seen this year.

Here is 2010's August overnight temp and precip rankings.

Does this overnight heat matter to the market today? No.

But this corn crop isn’t perfect and there are plenty of headlines about pollination issues. I can’t imagine this heat is adding bushels.

The bad part is that even if there is pollination issues or heat concerns, it probably wouldn’t show up until boots are on the ground in September.

It took the USDA until January to realize the damange a hot and dry finish had on the crop last year.

The point is, we could have a record crop. Very easily. But we are taking the top end off of those +185 numbers.

The bright side to the entire industry forecasting a +185 yield?

It's probably almost priced in.

I showed this next chart recently, but this gives you a good idea on why a +185 crop might be priced in.

Dec corn is the same price as it was last year.

At the same time, carryout then was +2 billion bushels vs sub 1.7 billion today.

So the market is pricing in a carryout closer to 2 billion than 1.7 billion

To get a carryout of last year's 2 billion we would need to see a +185 yield (with no demand changes).

So the market has likely already priced in a +185 yield.

Hence why prices are the same as last year.

Balance Sheet - 181

Balance Sheet - 185

Final Thoughts:

Corn doesn’t have to rally tomorrow, next week, or even month. It probably won’t until harvest.

I am not bullish corn here yet.

Seasonally we carve out our lows here in the next month or so.

Corn rarely doesn’t take out it's lows from July even if it just marginally.

But that doesn’t mean we have to go to $3.50 to $3.80 corn.

(Below is Dec corn's lowest prices for the year)

But does it really make sense to sell corn here below the cost of production? No. Most would be better off if corn tanked to $3.50 than if it stayed at these levels simply due to the payments etc.

Overall I'm just remaining patient in corn. Opportunities will come eventually.

Technicals:

Dec corn needs to hold $4.09 or our next stop could be $4.00

If we can run up to $4.38 or higher I think that's a decent spot to look to de-risk.

That gives back 50% of the April highs.

Soybeans

Fundamentals:

Today's corn section was on the long side, so we're going to keep it short with soybeans.

Soybeans are made in August. So we have a long ways to go before this crop is made.

Most say that the corn crop looks better than the bean crop.

There is very little room for error on the US balance sheet due to less acres this year. Which could create opportunities down the road if we don’t get a massive yield.

Trump and China are suppose to meet here next week, but most don’t think it'll go anywhere and probably won’t until we get closer to harvest.

Really nothing new in soybeans. The market is waiting to see how weather plays out which is why we've been sideways for the most part.

Matter of fact, this year soybeans have had a smaller trading range than corn.

That is how small of range soybeans have traded this year. Completely stuck in pretty much a 70 cent range for a year now.

Patiently waiting for an opportunity in beans.

Technicals:

The level Nov soybean bulls need to hold?

$10.15

That is the 61.8% retracement of this recent little rally.

Between the 50-61.8% level is where the market makes a decision.

We either bounce there, or we go down to that blue box right around $10.

If the blue box fails? We still have a gap of air down to that black trendline. So the blue box is the "major" must hold spot.

We do still have this potential bull flag set up in place.

However, we need to hold $10.15 or this set up becomes invalid.

$10.15 again is the 61.8% retracement of the flag pole.

Ideally, you don’t retrace more than 50% of the flag. But invalidation is usually considered at the 61.8% level.

To the upside, we first need a break out of the flag for confirmation.

But if we do, the implied upside target would take us right back near those June highs.

Wheat

Fundamentals:

The main news today was the North Dakota spring wheat crop tours.

The combined tour's yield estimate was 47.8 bpa.

Which is below last year's 52.4 bpa, but above the average. The tour seemed like it confirmed a pretty decent crop.

Export demand has been great for the wheat market.

Here is a chart showing our current pace for new crop vs the USDA's estimate pace.

Chart from Robert McClure on X

Wheat has done anything but follow seasonals.

Just look at where the black line on this chart is for the KC wheat seasonal.

But, the 5-year seasonal says we carve out some lows soon (red)

The 15-year seasonal says we don’t bottom until September (blue)

However, with the funds as short as they are and with winter wheat harvest wrapping up, I don’t see a reason for them to continue pounding wheat to zero.

Spring wheat on the other hand does tend to struggle a little more until September.

Here is the 5 (red) and 15 year (blue) seasonals.

Technicals:

Here is one reason why I think the wheat market starts to carve out some lows, or at the very least stops completing collapsing.

This is continuous wheat.

We've continued to hold this $5.20 level for 17 months straight.

Every single sell off since 2023 has found life there.

There is really nothing to update on Sep Chicago or KC wheat charts.

So let's just go over the Dec wheat chart today.

This is the 4-hour chart.

We rejected right off that 23.6% retracement up to the Feb highs. Which is resistance level 1.

If we break above that, we should go and test resistance number 2 at $5.89 which is the 38.2% retracement. We have rejected that several times.

If we break above the 38.2%, that would be agood indication of higher prices.

The target is then $6.04 to $6.18 which is 50-61.8%.

If you want to take risk off before that, the 38.2% at $5.89 would be an area of high interest since it has been resistance.

Cattle

Fundamentals:

Friday we have the July cattle inventory report that will come back after being discontinued by the USDA last year. We also have the cattle on feed report.

I still want to show this seasonal pattern in cattle.

This does not mean the bull run has to be over or anything like that. But seasonally we do get a correction going into August.

We are in a bull market, and bull markets can go much higher than anyone believes they can. But if we are going to get a correction, it probably happens soon. Seasonally we then bottom in fall.

Doesn’t have to happen. But be aware of that.

Technicals:

Since Aug feeder broke above the 161.8% retracement level of the June rally.

Our next target is going to be the 200% at 335.

I think that is a very good place to de-risk if it hits.

This target also lines up nicely with our Aug live cattle target (scroll to view this target).

Unlike in feeder cattle, live cattle never hit the 161.8% level of the June rally.

That golden fib target still sits just above 229.

So that is our target we want to be looking to de-risk.

As the golden fib is a very common spot to a rally to pause.

We are also seeing some slight bearish divergence in both live and feeder cattle.

Where the price is making a new high but the RSI is not.

This has led to past corrections.

It does not mean a correction is going to happen immediately or even at all. But bearish RSI divergence signals upside momentum is slowing down.

Something we need to watch here if we approach those next targets.