7.3.26 Tredas Weekly Recap

Weekly Action:

Grains:

June 30th USDA Grain Stocks & Acreage Reports Summary

Tuesday's USDA reports are behind us, and if you were bracing for fireworks, you can exhale. Corn and soybeans came through without major surprises, while wheat — the crop nobody was talking about heading in — ended up with the friendliest set of numbers on the day.

Corn: Pre-Report estimates were expecting bigger-than-expected stocks stacked on top of more acres. We got neither. USDA pegged June 1 corn stocks at 5.295 billion bushels, about 113 million under the average trade guess. That's a friendly miss, but stocks are still up 14% from a year ago and sit at their highest June level in seven years. There's plenty of corn in the country; there's just a little less of it than the trade had penciled in.

The Acreage report was a shrug. Planted area landed at 95.3 million acres, virtually identical to the March intentions number and only modestly above trade expectations. The "found acres" scenario some feared never showed up.

The quarter-to-quarter stocks data continues to imply feed and residual use running well ahead of what livestock inventories would suggest is realistic, and that disconnect probably won't get sorted out until the September stocks report, when USDA has historically trued up the prior year's crop size. Between now and then, the July 10 WASDE is the date to circle. If USDA leans into Tuesday's stocks figure, old crop ending stocks could get trimmed — a modestly supportive tweak — but the market's attention will shift quickly to weather and the August yield estimate, where a 95-million-acre crop at trendline yields still points to a big pile of new crop corn.

Soybeans: About as close to a non-event as these reports get. June 1 stocks of 1.061 billion bushels were within 15 million of expectations, and the acreage bump to 85.4 million (up about 665k from March) hit the trade guess almost on the nose. One wrinkle worth noting for the history buffs: this was the first June report in eight years where soybean acreage didn't come in under expectations.

The reason we stay constructive on beans despite more acres is the demand side. Crush continues to run at record levels on the back of renewable diesel capacity, and export business has held up better than many expected late in the marketing year. More acres means a bigger crop is coming, but a bigger demand base is absorbing it — the balance sheet math still points to carryout staying historically manageable rather than burdensome. Watch for USDA to raise both production and demand on July 10.

Wheat: Here's your headline. June 1 stocks came in under expectations, which means old crop carryout gets marked down in the July WASDE. But the acreage side is where it got interesting: USDA cut winter wheat planted area nearly 900k acres from March, and total wheat acreage of 42.7 million came in more than a million acres below what the trade expected — down roughly 2.6 million from last year. Layer on a winter wheat abandonment rate that ranks among the worst in four decades, and the supply side of the wheat ledger is genuinely shrinking.

The caveat — and it's a big one — is that a smaller crop only tightens the balance sheet if export demand shows up. Domestic wheat usage barely moves year to year, so exports do all the heavy lifting. If global buyers shift their business elsewhere, most of this tightening leaks right back out. Constructive story, yes. Guaranteed rally, no.

Bottom line: The bearish corn scenario headlines warned about didn't materialize, beans confirmed a stable and demand-supported outlook, and wheat handed the bulls something real to chew on. July 10 brings the next WASDE and the first spring wheat production estimate, and July weather will do more to set the range.

Livestock:

Cattle futures closed out the week under pressure, with fats and feeders each giving back 2-3%. Technical indicators are tilting bearish, and October live cattle now sit right on key support at $2.34. A break below that level would put the 200-day moving average at $2.28 squarely in traders' sights. The cash market, meanwhile, hasn't blinked — still firm at +15 over August futures.

Weather:

Economy:

Traders are still pricing in another Fed rate hike, but the timing has been pushed back to December from October, which is a slightly less hawkish shift. The jobless claims data showed layoffs remain low, but not strong enough to force the market to fully price an earlier move. For markets, this keeps the “higher-for-longer” rate story in place, supporting the dollar and Treasury yields, while creating a headwind for risk assets and commodities. For grains and livestock, the direct impact is limited, but firmer rates can pressure fund appetite and make rallies harder to sustain unless supported by weather, exports, or supply concerns.

Something That Probably Means Nothing:

Here's the current rundown for this year's holiday — and since it's America's 250th, the numbers are running hot:

·        Food: Americans are expected to spend about $9.4 billion on food for the Fourth

·        Beer and wine: Over $4 billion, most of it beer — July 4th weekend is the single biggest beer sales period of the year, topping even the Super Bowl

·        Hot dogs: An estimated 150 million eaten on the holiday

·        Fireworks: Roughly $2.95 billion spent last year, with record demand expected for the 250th

Quote of the Week:

"Success is the sum of small efforts, repeated day in and day out." — Robert Collier