Market Plus with Jeff French and Ross Baldwin

[Yeager] Welcome back to the table for the Friday, June 20th, 2025 installment of Market Plus. Back with us Jeff French Ross Baldwin. I was going to get him up on one thing. I was going to talk about his softball coaching. If he likes to bunt. When you have runners at second and third, do you coach do that?

[Baldwin] I do coach, I coach my daughter's softball team, but we did not get to bunting this. It was second and third grade girls, so we didn't get to bunting yet.

[Yeager] Which is more stressful. Coaching that or understanding or reading cattle on feed reports.

[Baldwin] Probably coaching for sure, because we got to where it was competitive. Now this year.

[Yeager] Jeff, you I asked you right at the end, you know, kind of put a headline on some things and I want to get to the question here from Scott in Wisconsin to start off, our plus, what's when the Iran regime is neutralized or whatever happens there, what will this mean to the commodity markets?

[French] Well, I think that's still going to be a major question mark. But the one thing that we do know is conflict in that region is not, you know, we've had conflict there for, you know, 20, 25 years pretty much nonstop. I think it's just the initial reaction of it. Obviously, they have a lot of oil that they've been selling. The Russians and the Chinese. So, we'll just have to see, you know, they control that Strait of Hormuz. If they close that, we could have another spike higher. But I think, you know, the initial reaction was just you got wheat down here at four and five year lows. The funds are short with all this risk out here. Why am I going to continue to be short? So that's what we saw. They hit the buyback button. You know we rallied it you know 40 $0.45 in this week. Stalled out here Friday. But we'll have to see. I mean it's a long weekend here and we'll see what happens.

[Yeager] Do you have any I mean is there anything that has happened that matters to livestock? From this region? Because I don't hear anything, read anything that seems to line up that this. I'm not saying matters but --

[Baldwin] From a fundamental perspective, no, there is very little to no impact with what's going on in Israel and Iran that would impact, say, the flow of meat trade from the U.S., whether it's beef or pork. Now, the geopolitical headlines, we're all in the cattle industry or cattle markets. All of us are always worried about the geopolitical headline, because cattle always it seems like they typically respond to negative headlines. I personally don't think any of the selloff cattle have had over the last ten days has had anything to do with Israel and Iran. I just don't I think we were at a point where if cash went lower, with the funds holding extreme positions that they are, that cattle were very vulnerable. And I think that's what we've seen play out.

[Yeager] Again, I'm going to go back to our conversation in March. It was like, when are we going to know when that high is in? I think there's a couple of indicators. Maybe you both kind of have said, have, have, re have emerged. You want to give me some of the secrets.

[Baldwin] I mean there's always going to be that indicator and we've seen it happen. Gosh 4 or 5 times in the last six months where we've had a new contract high, followed by a key reversal, that is, and they have not worked up to this point. Key reversals have not worked, and technicals. I'm of the opinion when you get into an absolute bullish fundamental story like we've had in cattle or corn will get technicals, take a serious backseat to the fundamentals. That's where we're at. We have had another reversal again. I think you're every time we have one of these contract high followed by reversal, you should respect that and think that this could be the time. Right now, we're under some negative pressure again on the technical side, we're and it coincides at the same time the funds have pressed on a record feeder long three of the last four weeks. The funds are holding over 50% of the open interest in the feeder cattle contract. So, when things like that start happening, there's not a lot of liquidity in the feeder cattle market. If the fund said, we want exit 10,000 contracts, say they're still going to be long, over 20,000 feeder cattle contracts, and if they exit 10,000, it's going to be a nasty correction. When they do that. The risk is if you're not prepared for the big sell off the day, they say we've priced it all in or something drives them to exit the entire position. I don't think that's today because the fundamentals are still fine. But even today you need to respect like we talked about on the main show, the 20 day and cash going lower and.

[French] Well, I think too, if those 228 that we saw on late Friday, if that's confirmed in Kansas, I mean that's 5 to $7 lower compared to last week. We haven't seen lower cash prices in months. And that's coinciding with, you know, seasonally, Father's Day weekend. Also, with the boxes breaking at 390. I mean, when this thing and I don't know if it's going to, but when this thing does correct, I mean, it's going to come off in massive amounts.

[Baldwin] And it's not like we're seeing cash pullback from the $2 level. I mean, these are we up here in the north. We got up to two 4245. And you know the south.

[French] We plateaued.

[Baldwin] Up 35. And I mean we're at nosebleed levels. Whether it's the cutout it's the cash market. It's the funds positions. These are none of us. None of us are going to predict the day the top happens. But you got to be prepared for it.

[Yeager] Well, Dan in Nebraska wants to know inputs, help, talk cattle first with the inputs.

[Baldwin] It's one of the largest bullish factors that continues to drive this fundamental story is inputs. And when I say inputs on livestock, I'm talking the feed cost of gain is cheap. Cost of gain is actually reasonable in a normal market. And you've got a lot of with where feeds at. You've got a lot of just call them $1 to $1 five cost of gains. And with $2.35 fat cattle up here in the north, or 240 fat cattle, it works and it works extremely well. And so as long as feed stays this cheap and these markets stay elevated at this, it's going to continue to support this feeder cattle market.

[Yeager] Inputs on the other side for you.

[French] Crude oil and diesel. I mean you're making you know multi-month highs in the crude. And I think we made 12 or 14 month highs in diesel direct result of what's going on in the Middle East. You know that is one market that had been trending lower ever since Trump came into office. But now we've had a correction with what's going on in the Middle East. You know, I think we could definitely go higher. But I think you got to be patient here right now to see how this shakes out with Israel and Iran.

[Yeager] Let's go to Ohio, where Eric is at. Eric had a question for you. What factors caused the wheat market to go higher on Tuesday? And Wednesday?

[French] A couple factors. Number one, we moved higher on the obviously, the Israel bombing, Iran. That was number one. The funds were short 170,000 contracts coming into this week. They wanted to get out of those contracts probably out of winter still. So, they were buying it back. Also, you had Russia announced that one of their largest wheat producing regions is under a drought emergency. But then at the end of the week, you had the Russian ag minister coming out and saying that the Russian crop is going to be 90 million metric tons. So, we're kind of hearing two words, two things. I mean, their crop last year was 82 million metric tons, and now they're estimating this crop at 90 million metric tons. So, there's a story there. But it was definitely the short covering and too much rain at the wrong time in the U.S. Central belt.

[Yeager] In the key areas. All right. And that could continue. Yes. As we start to see harvest pictures and things like that. All right. Let's take Ronald in Iowa. If we could. Jeff, how low will corn go? How high can oil go?

[French] Well, I mean, oil I mean what did it trade. -140. So why couldn't it trade positive 140 how low corn will go. You know? 435 that's my line in the sand. I think the next wave would be in that. 385 area. I think you got to get through the summer, though, and actually produce the crop. And the U.S. Farmers woefully undersold. I mean, there is a lot of percentage out there that have 0 to 10% of new crop. Of new crop of new crop sold, and the market knows that.

[Yeager] And there might be a few old crop still out there too.

[French] Oh yeah.

[Yeager] Let's ask this with oil and corn. Then. Can or is corn looking at all at oil for its trade right now?

[French] You know, they travel together sometimes. But right now, being that it's the third week of June and we have rain in the forecast, crop conditions are awfully good. You know, we see we see crude oil spike up $9 on Sunday night and corn can barely trade positive. So yes, it can. But right now, it's not.

[Yeager] Do you think so.

[Baldwin] The crude oil and corn.

[Yeager] Yeah.

[Baldwin] Yeah, I'm with Jeff I think just seasonally this time of the year. It's hard. And you go back to when crude had that massive spike here last week and corn just was flat. I mean it could not do much. It just shows you the funds have very little appetite to trade corn right now to the long side. I mean, they're holding a large corn short and the weather is supportive of them to stay short corn, especially when you throw in seasonals.

[Yeager] You mentioned the acres report that's coming. Do you expect any surprises there when it comes to acreage on corn or beans?

[French] Well, I mean, the trade is expecting more corn acres. I mean, that's not going to be surprise. We've been trading that now for months. You know, the quarterly stocks number that should show tighter stocks with the continued good exports. We had a nine-week high in exports here this week. The corn demand has been very good. You know one key area I want to look at is feed. I mean feed has been pretty you know lackluster. But the demand from the export market has been strong. So those could be balance each other out. But anything north of 95 million acres I think would be pretty negative.

[Baldwin] Old crop corn still, I mean, has a decent story. It's not that old crop corn is that burdensome. I mean, you got favorable weather and the funds just really looking at that. And it sure seems like with the short position that they're holding in corn, they're looking for more of an increase in the acres like you're talking about in this, this acres report. I think it's going to be a big number to watch on June 30th. Is that Corn Acres number?

[Yeager] Higher or lower?

[Baldwin] I would I would lean towards a more corn acres. You're going to struggle out in the East with how wet they were to see the increase there. You very well could see you're going to see more. I would think more corn acres in the West, less in the east. So, you'll probably switch them for some more bean acres where I think it just gets very interesting. I'm not going to act like I'm going to predict what the Corn Acres is going to be. I think it just gets very interesting with the short position the funds are holding on corn, and if there would be a miss, say the acres comes in less than what people are thinking, that that could maybe spark them to start to cover some of this short. Especially if Wheat's got a story here and you see some more coverage on that wheat short.

[French] Well, and that brings me back to what was it, 2020? The intentions number on corn was 97 million acres. And then we came out with 92 million acres of actual planted on June 30th. So that was a big miss.

[Yeager] And that then set the stage to allow August after the derecho and proving that we didn't have I mean, that set the stage for a lot.

[Baldwin] Of for a lot of things.

[Yeager] So if you're I'm let me see if I get this right. So, if there's a big surprise, will we know it immediately? What you're what you're saying.

[Baldwin] Yeah. But I, you know, I deal with a lot of corn salesmen, at least here in the I states in the Central corn belt. I don't see that missing coming right now.

[Yeager] All right, fair enough. Good to see you. All right, all right. Thank you. Good to see you, Ross. Thank you, Jeff. Appreciate it you guys. Always fun to just, you know, lean back and let you two do the work. So, hey I do want to remind you to get signed up for the Market to Market Insider newsletter. It's free. Go to Markettomarket.org. Sign up there. Next week we are going to look at the past failures in America's land promises, and Dan Huber will join us to talk about the commodity markets. Thanks for joining us. Have a great week.

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