Howdy market watchers! 

It has been a wild week in the markets! How frustrating it is when nothing has materially changed except the rhetoric that wrecks the markets.  However, we have come to learn that the bark is often bigger than the bite in this volatile environment.  

Promises made are promises kept is how this Administration is approaching the negotiating table.  With last months tariff threats delayed on Mexico and Canada, last Tuesday’s deadline for our neighbors and a further 10 percent increase on China were followed through with to keep the poker hand in play.  China then responded with tariffs on US ag commodities among other key sectors.  That was the low in grain and livestock markets.  

Rumors then started swirling that relief may come to a wider array of sectors in addition to autos on our northern and southern trade partners. The chatter was confirmed and brought green back to the screens across all markets with a much-welcomed bounce. Specifically, the relief focuses on goods under the USMCA, successor to NAFTA, until April 2^nd and so we’re not out of the woods just yet.  

The shake up continues with the VIX trading above 20.00 every day this week and making new highs on Friday demonstrating the market’s broad uncertainty amid the changing domestic and international political landscape.  Unsurprisingly, equity markets were hammered this week with new weekly lows made on Friday crossing over the 200-day moving average, but closed above it, and the so-called “death cross” of shorter term moving averages crossing over the longer-term moving averages.  

Friday’s jobs report showed US payroll growth come in less than expected at 151,000 jobs created in February versus the 170,000 estimate.  Federal government employment cuts were not a significant contributor to the decline and overall, government payrolls actually rose 1,000 net jobs.  We may see federal employee cuts becoming a more meaningful contributor to net payrolls in coming months.  

Fed Chair Powell spoke on Friday commenting that “greater clarity” before making additional moves on interest rates.  While tariffs create volatility, it is too early to know if they will have a larger, lasting impact on the economy as they themselves may not be long-lasting.  It is all politics at this stage and so is too early to make longer term decisions based on the actions of today. 

Reciprocal tariffs that will mirror any increases that other countries put on the US in retaliation to Trump tariffs are the mechanism to be activated on April 2^nd although we could see some earlier such as dairy products with Canada.  However, even before this next major international dispute, there is a domestic deadline approaching, which is the potential government shutdown by March 14^th unless the debt ceiling is extended or other means of funding are approved.  

The USDA will release its next WASDE and Crop Production reports on Wednesday, March 12^th that will provide a fresher outlook on production, demand and stock levels.  We will see the numbers from the recent USDA Outlook Forum factored into these numbers. After this week’s report, the market will start paying closer attention to weather as corn planting approaches as does the all-important USDA Planting Intentions and Grain Stocks reports that will be released on March 31^st.  

The US dollar plunged this week filling that November 5^th chart gap on Friday that I’ve been writing about in recent articles.  This weakness could and should help provide underlying support back to the grain markets eventually if buyers take advantage of these prices and currency advantage.  With grain prices selling off sharply with the tariff announcements, it almost seems that the move in futures factors in the higher cost from tariffs.  

Mexico purchased US corn this week that was reported on March 3^rd.  As I observe the dialogue on tariffs with Canada and Mexico, it seems that relations with the latter are progressing much better than those with the former to the north, so far.  One of the most important products from Canada for US agriculture is potash and we have already seen exceptions being made for this important macronutrient for producers.  

Brazil’s soybean harvest continues to accelerate ahead of average and while we’ve seen estimates continue to incrementally reduce the crop size, it remains still at record high levels and above the USDA’s expectations.  The safrinha corn crop continues to be planted ahead of the average pace and in line with last year while the 1^st corn harvest is in line with average.  Bottomline, there seems to be a lack of bullish support from South America planting and harvest.  

Despite some weakness throughout the Friday session, all grain contracts closed with inside chart days and on the stronger side, especially corn and wheat.  This chart action suggests that the move on Monday, if definitive, will likely see follow-through in that direction on Tuesday.  I suspect that direction will be higher, but that depends on headlines over the weekend.  Managed money heavily sold all grain contracts as reported in this week's Commitment of Traders report, which was no surprise.  There is still a massive net fund long position in corn while most all other grains are net shorts.

President Trump is heading to Saudi Arabia this next week with more discussion on the Ukrainian solution, as I’ll call it.  Russia has been stepping up attacks on Ukraine this week with Trump responding with more potential sanctions on Putin for this action, which is the first push back we’ve seen in that direction so far in this Administration.  

The wheat market will probably watch these developments closest, but dry conditions across much of the Southern Plains over the next two weeks with warmer than normal temperatures will bring the need for some moisture soon as wheat comes further out of dormancy.  Can you believe that from the February 19^th high to the March 4^th low, KC wheat dropped $1.01 in just those 10 trading sessions!  Unbelievable. We have a lot of ground to make up, but I believe we could get up to the $5.90 level on July KC wheat by early next week.  China said late week that they are expecting a bumper wheat crop with lower imports expected.  However, it seems they always say this when there is an issue, or they are planning to refill reserves to suppress prices.  

While the grains staged an important turnaround after Tuesday, the cattle market rebound was nothing short of impressive, especially for Live cattle futures.  As I shared with clients this past week, Live or Fed cattle futures look more bullish than Feeder futures and we really saw that play out in Friday’s trade.  It was all driven by cash fed cattle trade.  At the start of the cash trade this week, it looked like $195-196 was going to be the top, but then $198 emerged on Friday followed by $200, topping out at $202. As these cash trades surged so too did futures contracts.  April live cattle futures closed $4.225 higher on the day at $200.35.  There is potential to see $203 next week.  

May and onward feeder contracts made new highs above the January 29^th highs with strong closes.  Could we be heading for that $3.00 level?  It is hard to think in these volatile times that we are ready to make this next jump, but it could be possible if tariff rhetoric tames down. Brazil was said to drop its beef import tariff perhaps in a move to avoid reciprocal tariffs.  We could see more of this type of action going forward and hopefully return to a new normal with fewer trade restrictions after this disruptive dance of escalating trade tensions.  

Sidwell Strategies is the one-stop shop to protect cattle with futures, puts, LRP or a combination of all, which is probably the best strategy overall.  If you’re ready to trade commodity markets, give me a call at (580) 232-2272 or stop by my office to get your account set up and discuss risk management and marketing solutions to pursue your objectives.  Self-trading accounts are also available.  It is never too late to start and there is no operation too small to get a risk management and marketing plan in place.  

Wishing everyone a successful trading week!  Let us know if you'd like to join our daily market price and commentary text messages to stay informed!

Brady Sidwell is a Series 3 Licensed Commodity Futures Broker and Principal of Sidwell Strategies.  He can be reached at (580) 232-2272 or at brady@sidwellstrategies.com.  Futures and Options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at https://www.sidwellstrategies.com/fccp-disclaimer-21951.