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Friday was a reminder that markets driven by weather or geopolitical headlines – or both – can get extremely volatile. Murky reports that Ukraine was pursuing a proposal to keep vessels moving in the Black Sea after weeks of trading attacks with Russia on shipping and ports was enough to spark a massive selloff in MATIF wheat futures in Paris, with U.S. wheat contracts quickly following suit. Chicago September SRW wheat and Kansas City HRW wheat futures both fell over 30 cents before coming off lows at mid-morning.
September SRW wheat ended 18 ¼ cents lower, leaving it negative for the week, while September HRW wheat closed with a loss of 14 ½ cents, trimming its weekly advance to 13 cents. Both hit contract highs in overnight trade and had rallied sharply as the intensified fighting threatened to sharply curtail grain flows from the region. Today’s price action produced technically bearish “key reversals” down on the daily bar charts, which can be early technical clues a potential market top has been put in place. But the weather and geopolitical backdrop give bulls ammo to push back and argue that markets are now prone to big daily price swings driven by headlines and forecasts.
Check out this week’s Pro Farmer newsletter for advice on how to navigate a summer weather market that’s seen wheat, corn and soybeans take turns in the driver’s seat.
Cattle data dump: A trio of eagerly anticipated USDA reports on cattle inventory, cattle on feed, and cold storage are unlikely to move markets in a big way early next week, doing little to offset downward pressure tied to negative packer margins and concerns about consumer affordability while also offering no sign beef supplies are likely to grow over the next year. Cattle inventory showed the first July 1 increase since 2018, but herd rebuilding still appears to be a slow affair.
Cattle on feed as of July 1, June placements and marketings, meanwhile, were all somewhat below estimates. The heifer-steer ratio, a proxy for heifer retention, came in at 37.4%, up a meager 0.1% from last quarter but down 0.7% from the previous year.
Cold storage data also showed beef stocks down 3% from month-ago and year-ago levels, indicating consumer demand was likely slightly firmer than was seen the month prior.
Read Pro Farmer’s full breakdown of the data here: USDA’s Cattle Report shows first year-over-year inventory increase since 2018
Broader ag commodity breakout?: The S&P GSCI Agricultural Index, the second-largest of the five S&P GSCI commodity sub-indexes at a 17% weight, warrants a look “because it is breaking out,” wrote technical analyst Walter Murphy in a note for Rosenberg Research. The index tracks a production-weighted basket of global agricultural commodity futures contracts, including major crops like corn, wheat, soybeans, sugar, coffee, and cotton.
Murphy highlighted the index’s “Coppock configuration.” A Coppock Curve is an indicator that measures how fast momentum is shifting overtime. Murphy observed that the daily Coppock Curve is at a four-year high, which he said confirms a “good overbought” condition – a sign that powerful buying interest is validating the trend.
The index was down 0.3% at 396.83 Friday.
- “Given that May’s year-to-date high was 397.27, this week’s 399.71 high is a new seventeen-month benchmark,” he wrote. “Attention will now be paid to the 413-418 area, which covers February 2025’s weekly and closing highs.” He put nearby support on either side of 375, with failure to hold there representing a potential breakdown that could test the 360-355 area.
Trump undecided on major strikes: It could be a tense weekend with big implications for how global financial markets open Sunday night. President Donald Trump told reporters Friday he was undecided on whether to launch a round of major new strikes on Iran. The escalating conflict has drawn fears Iran and its proxies could move to target more energy production infrastructure in the region.
- “We’re locked and loaded and ready to go,” Trump said, according to Bloomberg. “But we’re talking to them, so I think while we’re talking, we’ll see what comes of it,” he said, adding he saw Iran “getting more and more serious as the days go by, for maybe the obvious reason.”
Super El Nino adds to inflation risks, says JPMorgan: Economists at JPMorgan on Friday said that higher energy prices and a rapidly strengthening El Nino could add 0.3 percentage points to global inflation next year, Reuters reported. The economists estimated that a so-called “super El Nino” would raise global food inflation by around 0.7 percentage points at its peak, with the biggest impact typically seen four to eight months after the onset of the weather phenomenon. Combined with the jump in energy prices as a result of the Iran war, which has boosted the cost of diesel, fertilizer and food packaging, the effect on global food inflation could double to around 1.3 to 1.5 percentage points, the economists argued.
Monitoring firm sees best Canadian crops in decade: Canadian farmers are seeing the best crop conditions in a decade at the halfway point of the growing season, monitoring firm EarthDaily found in its analysis of satellite and agronomic data, Reuters reported. The upbeat outlook comes despite floods, tornadoes and hailstorms that have hit the Canadian Prairies.
- “The vast majority of the western prairie is ahead, and looking pretty darned good,” Nick Ohrtman, global crop analysis lead for EarthDaily, told Reuters in regard to the entire Prairies region. The 120 million acres of prairie farmland produce the world’s biggest canola crop, are often the largest source of spring wheat, and the main global supplier of myriad smaller crops, including lentils and mustard, Reuters noted.