Market Analysis with Ted Seifried

[Yeager] Cold weather in key wheat growing areas offered some heat to the trade. For the week… 

The nearby wheat contract added 23 cents and the March corn contract gained 6 cents. 

Improved harvest conditions returned to Brazil allowing for more of the large South American crop to enter the pipeline. 

The March soybean contract strengthened 8 cents while March meal put on 30 cents per ton.

March cotton shrank 25 cents per hundredweight. 

Over in the dairy parlor, March Class Three milk futures increased 4 cents.

The livestock market was mixed. April cattle declined $5.52. March feeders cut $10.83 and the April lean hog contract put on $1.80. 

In the currency markets, the US dollar index lost 35 ticks. 

March crude oil fell $1.87 per barrel. 

COMEX gold expanded $52 per ounce, and the Goldman Sachs Commodity Index added more than 3  points to settle at 564 – 05.

Joining us now is regular market analyst Ted Seifried. 

Welcome.

Ted Seifried: Hi Paul.

Paul Yeager: Hi Ted. How are you doing? I’m well. So is the wheat market. By 4% this week. The winner.

Ted Seifried: Very nice.

Paul Yeager: Is this a fundamental or a technical thing for you?

Ted Seifried: I think my view is always both. Right. But, you know, I think you touched on it there has been some bouts of cold weather, and there are more to come, at least in the forecast, that get us concerned about winter and things like that. Although, you know, weeds the crop, we say every year we kill nine times and it ends up fine. Keep in mind those winter wheat crop conditions were really bad, before, you know, when we go into dormancy. We stopped talking winter wheat crop conditions. That those will come back soon. but either way, they were very poorly rated going into that. So that is part of it. I’m going to say that the talk about, the potential end of the conflict in Russia, Ukraine, I think, you know, longer term you have to say that’s bearish because that could mean more wheat production specifically from the Ukraine. But in the short to mid run, you know, it occurs to me that, you know, Russia has needed as much funds as possible, to fund this. And, you know, you get the idea or the feeling that they’ve been selling wheat. not they’re not trying to sell it for less than what it’s worth. They’re just trying to sell a lot of it. So they’re having to take lower prices. And I think that’s kind of artificially kept wheat prices down for a bit. But with the idea that that might change and this might come to a conclusion sometime relatively soon, is giving wheat, a little bit more of a reason, I think, to go higher. And then you look at the technicals and you have with what’s called a cup and saucer formation, bottoming formation on, on a wheat chart. And it’s a, it’s a formation that if I had my speculative hat on Paul, I’ll search through a whole bunch of different, commodities or markets looking for this exact formation, because it’s one of my favorite ones that suggest a long term bottoming and some pretty significant upside potential. Now I find it in the wheat market, and I take pause because I say, well, this is wheat, but I really like the look of the chart and the way we finished off the week, especially on Thursday, really makes me feel good that there might be some pretty decent upside potential for wheat. And again, I don’t have a whole arsenal of fundamental reasons for that. But I really like to look at the chart right now.

Paul Yeager: So it’s we know exactly what if I’m sitting there with some wheat to sell, to move, to forward contract? Am I holding right now then, given what you just said?

Ted Seifried: I’m very cautiously optimistic in wheat. That’s the best way I can say that.

Paul Yeager: All right, fair enough. We’d also to that help and spill over into corn.

Ted Seifried: Yeah, yeah. You always expect that to be the case. But, you know, the wheat corn relationship, when you look at it from a fund perspective, the funds have been really long. Corn. About as long as they’ve ever been for this time of year. and then really short wheat. So, you know, something kind of had to give, I think because of that, we can have more upside potential, and corn doesn’t have to follow along step for step, because the funds are already in on the corn. They’re already long. They’re, so might not be as tight of a relationship or correlation as we normally would look for, but it’s certainly it’s I really don’t think it hurts higher wheat. I really shouldn’t hurt corn prices.

Paul Yeager: Well, corn also this week wheat was one thing. But you also have yes to GMO corn resuming to Mexico. You have, more stories with Mexico. We’ve got trade stories. Tariff stories. I mean, if I look at what was in the market this week, it’s screams more fundamental news than technical.

Ted Seifried: For wheat?

Paul Yeager: For corn.

Ted Seifried: Yeah, I would say so. but I mean, look at the corn market. It was very choppy this week. And we’ve got fundamentals that are a bit of a tug of war. We’ve got bullish, we’ve got bearish. We’ve got a whole mix of stuff. And we’re trading headlines because tariffs all the policy and tariff talk and trade talk has this on the edge of our seats. So we are really kind of choppy even in intraday. One of the days this week was Wednesday or Thursday. Thursday. We were down hard right out of the gate. But then midday the U.S. Trade representative, nominee said something and we went sharply higher. Right. And so we’re hanging on every word of whatever. But yes, there’s a lot of fundamentals that are involved with corn right now. the normal fundamentals, which would be, hey, South American weather. Right. And we know we have a problem with Argentina. Is it getting better? Yes. They’ve gotten some rains. It does seem like the weather pattern is improved, but is it been enough to really fix or, keep away, any permanent damage? And does the forecast in the future really, give us a whole lot of confidence in that? No. Not really. It’s still developing thing. I think it will get better, but it’s not fixed. It’s that’s not a story that’s behind us. And then obviously, the second season planting, in Monte Grosso has been a major talking point. but that’s sort of changed this week as well, too.

Paul Yeager: We’ll get to soybeans in a minute, but I want to use the tariffs as a transition between the two if we could. Dan in Iowa’s question for you, Ted, is how will the new tariffs affect corn and soybean prices for farmers? And I’m going to put this a little bit for you, Ted, because this is a it depends. It depends on the country. Right. Let’s start Canada and Mexico first.

Ted Seifried: Yeah Canada and Mexico. And again, that was the big news story throughout last weekend and into Sunday. Monday. You know, those have been delayed for months now. Either are tariffs on them or they’re retaliatory tariffs on us. But if Canada and Mexico respond with 25% tariffs across the board, like what we’re talking about doing, well, that is that’s a bit of a problem, right? I mean, you have Mexico, who is traditionally our number one or number two corn buyer than Japan. Wow. That could push them at a time of the year where they could really start looking at Brazil. And if Mexico fosters that relationship with Brazil over corn over us, that could have a very long term lasting effect, negative effect on our relationship, and our corn sales to Mexico.  I’m very worried about that. However, I also feel like that, Mexico situation could I don’t know what I don’t want to say. Easy. You know, trade wars are quick and easy to win. But that, I think, is something that is resolvable. I think there’s a I’m optimistic that that does get resolved. before the month delay is over. I think Canada as well, the big one is China, but that’s more of a soybean question.

Paul Yeager: So let’s go into that then. What’s the impact on soybeans with the China relationship and trade? 

Ted Seifried: So the interesting thing about that is that we delayed the tariffs to Mexico and Canada, but we did not delay the 10% increase on tariffs to China. We went through with that. China did retaliate, but there was nothing in agriculture on there aside from agricultural equipment. so no soybeans and no corn. Not that they’ve been they haven’t bought any corn from us. So that doesn’t I think we had a sigh of collective sigh of relief when that wasn’t on there. but as we ramp up tariffs with China, China has already been trying to avoid us as much as possible for their purchases. I mean, their purchases from us are down significantly. I should say, on market share on our global soybean exports to China. We’ve lost significantly to Brazil in this last year. That’s been a trend that’s been happening for quite some time. But this last year it’s been really emphasized. So it doesn’t help with that. It doesn’t it doesn’t really give you the warm and fuzzy feelings of, hey, China’s going to, you know, start preferring us a little bit more. There’s some optimism about that because there’s talk that, you know, we’re going to really put it to them to, to hold up to the trade one or, phase one trade deal. I don’t know. I have skepticism about that. The market seems to be pretty optimistic, though.

Paul Yeager: Are you skeptical and selling November things ahead right now in beans?

Ted Seifried: I’ll give you numbers. I think. I think I should be anywhere from 20 to 35% sold on November on new crop November soybeans. November beyond soybeans at this moment.

Paul Yeager: Okay. livestock huge. Not correction, but sales in live cattle, feeders, $5, $10. Expected?

Ted Seifried: Well, I mean, we had a market that had gotten very overbought. You had funds with a record long position in the cattle complex. You knew that any correction could be violent. And then on Thursday, you had the news of, bird flu and the really dangerous version, found in a dairy cow, in Nevada. that causes panic. Speculators funds run for the doors. And when they’re sitting on a record large position on a long term bull market, it can create for a very deep correction. Now, we held his support at the end of the week, but that could come under fire early next week. I’m worried if the funds do continue to, exit their long positions, this could be a much bigger correction than I think most people would expect.

Paul Yeager: And commitment of traders would tell you that it’s the funds that have entered this market and helped push it up. And so that’s why you have such the alarm for, for them exiting.

Ted Seifried: They have a large, they have a large percentage of the open interest. It’s not just them. Open interest is at highs too. But just the sheer amount of, of, contracts that they have on I mean, if they’re getting out of 153,000 contracts in a live cattle market, that’s, that’s going to hurt.

Paul Yeager: And same with feeders. They’re kind of done in feeders, too, right? Right. All right. Hog market. this is something where I think, there was a story late today, U.S meat export Federation said pork exports that records in volume and value in 2024. Can we do it in 25 as well?

Ted Seifried: Well I mean that concept and the in the hog market in general dodged a major bullet when we deferred tariffs, on Canada and Mexico, specifically Mexico. Mexico is a big business partner for us for pork exports. and yeah, if we can forego those, if we can negotiate, what we want from a trade war between now and when those are, those tariffs are set to take place. Yeah. I think there is a very good possibility that we can increase our pork exports, but tariffs would be a very limiting factor on that. So I don’t know. We’ll find out in about a month.

Paul Yeager: Lastly on the dollar, weaker this week. Is there anything that is even a part of this discussion, or is it really just dominated by tariffs in commodities as a whole?

Ted Seifried: I mean, look, you’ve got a whole lot going on for the dollar right now between tariffs and policy. But then, you know, we’ve got a fed meeting coming up. We had unemployment numbers on Friday that was positive for the dollar by the way. And just like we talked about in corn, you’ve got a whole lot of conflicting factors. And that’s headline driven. I think ultimately we want the dollar value to come down. And when I say we, I mean, the current administration wants the dollar value. They want to get rid of inflation or really tame inflation, while at the same time fostering a good economy, which is an extremely difficult thing, almost impossible thing to do. I still think the dollar has more upside potential, but there are a lot of things that can get in the way.

Paul Yeager: Of that said, good to see you. Thank you so much.

Ted Seifried: Thanks. Paul.

Paul Yeager: Ted Seifried everybody. All right. Thank you. 

We are going to pause this analysis and continue our discussion about these markets in our Market Plus segment. You can find both Analysis and Plus on our website of markettomarket.org.

An old-fashioned email can be the answer to your questions about this program to register a comment on a story or idea for coverage. 

Our inbox is always open. 

Drop a line to Market to Market at Iowa PBS dot org. 

Next week, new farmers get some insight on navigating the business of producing food. 

Thank you so much for watching. Have a great week.

Announcer: Market to Market is a production of Iowa PBS, which is solely responsible for its 

content.

Announcer: What’s next doesn’t happen by chance. It happens when researchers and farmers work together to solve tomorrow’s agronomic challenges. We’re committed to creating what’s next because at Pioneer our name is our mission.

Announcer: For over 45 years, Steiner Tractor Parts has shared your love of antique tractors. New parts for old tractors. Learn more at Steinertractor.com or at (877) 559-7887.

Announcer: Tomorrow. For over 100 years. We’ve worked to help our customers be ready for tomorrow. Trust in tomorrow. Information is available from a Grinnell Mutual agent today.

Trading in futures and options involves substantial risk. No warranty is given or implied by Iowa PBS or the analysts who appear on Market to Market. Past performance is not necessarily indicative of future results.