8.1.25 Tredas Weekly Recap

Weekly Action: 

Sep25 Corn down 9.75 to $3.90 

Sep25 Beans down 34.00 to $9.69 

Sep25 KC Wheat down 8.75 to $5.19 

Sep25 Chi Wheat down 22.50 to $5.17 

Dec25 Cotton down 184pts at $0.6639/lb 

Aug25 Hogs down $1.15 at $107.425 

Aug25 Fats up $3.45 to $230.00 

Aug25 Feeders up $2.45 to $334.40 

Dec25 Corn down 8.00 to $4.11 

Nov25 Beans down 33.75 to $9.88 

July26 KC Wheat down 12.25 to $5.80 

July26 Chi Wheat down 21.00 to $5.75 

Dec26 Cotton down 120pts at $0.6854/lb 

Corn:  

Corn was able to make a modest recovery after Monday thanks to export demand remaining larger than expected for new corn crop with new crop commitments at a 4-year high.  

 As we get closer to harvest, we start turning our attention to spreads from the Dec contract to the deferred months. Carry from Dec to Mar is 17.5c. Seasonally we’d expect this spread to be the widest in late-August to early September, which would be the most opportune time to roll hedges to capture the most carry (the lowest point on the chart below). 

A big factor in the “cost of carry” is interest. With interest rates being higher, the cost of carrying (storing) a commodity is higher. This chart from StoneX compares carry in previous crop years as a percentage of “full carry,” a calculation that takes interest rates into account. It tells the story that this year’s Dec/Mar spread is wider than usual at this point in the year, but still not as high as last year as a % of full carry. 

Soybeans: 

Soybeans finished the week in the red as we pass the August 1st trade deal deadline with no news of a US-China deal to ease the downward pressure on the market. It’s not encouraging to see beans break the $10 support level that has underpinned most of our seasonal trading range. We do still have one month of soybean “seasonal” left.  

Livestock:  

Cattle markets made a recovery to end the week after sharply lower closes on Thursday. Even with the down day on Thursday, higher cash trades eased the loss in the futures market. 

Below is a chart of Fats and Feeders overlayed with the S&P 500 performance since 2020.  

Weather: 

10-day precip outlook:

10-day temperature outlook:

This week also saw some large wind events in the Midwest with most activity being reported in southern Minnesota as well as northern and eastern Iowa. The blue dots represent high wind measurements from the evening of the 27th when there was forecast talk of derecho type winds. 

Economy:  

The stock market was lower today following a weak jobs report and the White House’s release of a new trade policy beginning August 7th, affecting nearly every nation, signaling a break from decades of free trade. A “Universal” rate of 10% tariffs will remain in place for countries the U.S has a trade surplus with, which is most across the globe. Roughly 40 nations will see a 15% floor, as these are the countries with which the U.S. has a trade deficit. We are still waiting on deals with China and Mexico, and also waiting for more details from the U.S. deal with the EU. 

BEFORE AND AFTER: Trumps revised tariff rates since initially announced in April compared to today’s revised rates.  

APRIL

AUGUST

The US economy added only 14,000 jobs in June and the unemployment rate fell to 4.1%. For July, the US job market experienced much slower than expected growth in July, with only 73,000 jobs added as of the initial release today.

An interesting note, May and June values were both reported initially at 100k+ job gains but were revised lower. This data comes amid debate that the Fed should cut rates based on weaker economic data. 

Something That Probably Means Nothing: 

There’s a town that accidentally elected a dead man…twice. In 2018, the small Nevada town of North Las Vegas elected Dennis Hof to the state legislature, after he had already passed. He passed 3 weeks before election day, but ballots had already been printed, and voting went on as normal. Dennis won by a landslide. Turns out, this wasn’t the first time in U.S. politics that a deceased candidate was elected to office. A similar incident happened in Missouri in 2000. Evidently in politics, being dead doesn’t disqualify you from getting elected, it just means your campaign speeches get really quiet. 

Quote of the Week:  

“Be humble or you’re gonna get humbled.” – Jocko Willink 

Have a GREAT weekend!