I joined Michelle Rook on AgWeb's Markets Now today to discuss the corn, soybean, wheat, and cattle markets. I also spoke about the impact of the International Trade Commission (ITC) Court ruling against the Trump tariffs and what it means for markets. You can watch the full interview HERE.

Michelle Rook: Welcome to Markets Now. I'm Michelle Rook with Darin Newsom, Senior Market Analyst with Barchart. Well, grains were lower in corn and soybeans this morning. Wheat's trying to hold on to some gains. Cattle are to the plus side, and we do have, well, at least the financial sector still holding on to gains as well. Darin, a lot of that has been based on the news that the ITC court has ruled that these tariffs the President put on are actually unlawful, right?

Darin Newsom: Correct. We knew that. We knew that the law that was being cited basically was supposed to keep approval of things like trade wars, tariffs, and so on in the hands of Congress, that one person, depending on their mood that day, could not completely control either threatening tariffs, taking them off, and so on. Naturally, it has been illegal. It always was illegal.

The question is now, does it matter? Because, as we've seen, what is legal and what is illegal doesn't necessarily concern the US administration all that much. It all has to do with what kind of "deals" can be made, like private jets, $400 million private jets, and so on. Now, that's really the key to all of this.

Michelle: You think even if it goes to the appeals court, that's all just smoke and mirrors here because the President's just going to do what the President's going to do?

Darin: Yes. Yes, it's not going to change anything. In fact, we're coming up on another weekend. Don't be too surprised if we don't see headlines again saying, "Oh, we're going to threaten the EU with another 150% tariffs," or whatever it was last weekend. Then we'll get through the weekend, and late Sunday afternoon, after his rounds of golf or something like that, he will say, "Oh, wait a minute, I'm going to postpone them again," or some country, some alliance somewhere.

It's just more of the same. At some point, the market's going to figure this game out. It did back between 2016 and 20. We'll see. So far, it seems like the intelligence part of artificial intelligence, with these algorithms, is a little bit slow to learn this lesson or relearn this lesson.

Michelle: That's right. My question is, even if it isn't true, you said the market is starting to be kind of in disbelief about tariffs. What leverage does the administration have in the long run to negotiate all of these trade deals that they've been talking about?

Darin: Yes, there's actually no trade deals. The question is, what leverage does the administration believe that it has? Quite frankly, it comes down to US resources. The US still has a great deal of resources that other countries do want. Again, this game has grown thin. We've seen other parts of the world just say they've had enough of it. Quite frankly, few countries around the world, anymore, take the US very seriously.

I don't know that the leverage is there like the administration thinks it is. Who knows? Maybe it actually is. These negotiations have nothing to do, or these "negotiations" actually have nothing to do with US trade. In the end, I just don't know that it's going to make any difference.

Michelle: Well, and the response that we've seen has been somewhat positive, at least initially in the financial sector. The ag market acted like it really didn't care, right?

Darin: Right, which is a relief because here, again, the ag markets are weather derivatives. We can look at the cash prices. As we come upon the end of another month, into the marketing year for the wheat subsector, we could see that by using cash markets and applying the economic law of supply and demand that there is there's plenty of supplies on hand to meet demand, whatever demand might be, whatever supplies might be.

We don't know the actual numbers, but we can tell by the market price that we have plenty on hand. As we look ahead, we're getting ready to move into winter wheat harvest. There's going to be some early corn harvest again because we saw early planting. We could tell that in the September-December spread, particularly along the East Coast and in the Southeast.

We know there's going to be new corn supplies coming on hand. As we reach, as we get into the summer months, all these new supplies are going to start refilling the pipeline. We're not going to run out of any of this. This is where the pressure is coming from. This is why the markets do not have to care about all of the silliness, all the threats, all of the postponements coming out of Washington, because the reality is, it's a supply and demand situation. Weather is the key driver. Weather right now seems to be favorable for most of the crops.

Michelle: We've been trading weather. We did yesterday. That's why corn and soybeans tanked. We're seeing some follow-through selling this morning. We also saw bear spreading in the market, in the corn, which was very interesting, with talk of maybe some cancellations of export business. Yet this morning, we saw a couple of flash sales. What's going on?

Darin: Yes, to begin with, it's very difficult to read. We don't really have any old crop future spreads. While there looked to be some bear spreading, we have to draw the line. Remember, we're talking about two different markets. Yes, July corn was down 8.5 cents. Yes, September was down, what, 3, 4 cents, something like that. The September contract is a hybrid.

Right now, it's leaning more towards new crop, which means, which tells us that we had all those acres that we thought were going to get planted, watching the markets over the last fall and winter. We knew there was going to be more acres, and they got planted early. That September contract moved from being an old crop to a new crop contract. It's hard to say, yes, there was some bear spreading. Just by this July contract itself, it looked like there was some cancellations without all the rumors and everything.

Then, sure enough, turn around this morning, and we do get that flash sale of a small sale to Mexico, and another small sale to unknown destinations. It was interesting to see again, but we're continuing to see some pressure on the July issue. What it tells me is, again, the market knows we've got enough corn to get through the rest of the old crop year. The attention's turning to new crop.

Michelle: Plus, we're also seeing Brazil's corn just about ready to come to market. There's increasing production estimates there on the second crop. Is that also pressuring the corn market, you think, or not?

Darin: Oh, I think so. Yes, because again, if we look at the weekly export sales and shipments reports, particularly on the weekly export sales, we see that it is still Mexico that holds the bulk of the unshipped sales here for 2024-'25. Well, Mexico has an interesting Southern neighbor, and there's been a lot of work done on Mexico's Southern ports and Brazil's Northern ports.

Back in this administration's first time around, there was a lot of infrastructure work being done because of all the trade nonsense that was going on. If Brazil all of a sudden is raising this larger second crop and they're going to have more supplies, not only are we seeing that possibly start to affect the July contract here in the US, but it could be part of the pressure on the September as well, as it's been losing ground to December. Again, it could be telling us that not only is the US going to have plenty of supplies, it could start to lose some of its demand as we look ahead into the next marketing year.

Michelle: Yes, and July corn took out $450. That was pretty good support, wasn't it?

Darin: Yes, it was. As you know, I like to watch the round numbers in corn. I call it corn's characteristic round-number reliance. Not only did July take out 450, but we've seen new crop December take out 440 here Thursday morning. These round numbers are starting to give way, and what usually happens or what tends to happen when this occurs is they drift to the next, they go down to the next.

It opens the door to 440 July, 430 December. Then, if those don't hold, it's just a repeating cycle. Certainly, something to watch is, again, the closing price is more important to see if we can bounce back and get back above those levels. Again, we're coming in at the end of the week, end of the month, and end of the quarter. It's going to be an interesting time.

Michelle: Yes, and that's true for soybeans as well, as we've taken out some key moving averages here this morning, but we don't have the funds short in the bean market like we do in the corn market, so a little difference there, right?

Darin: Yes, and it's actually a bit more of a risk to the soybean market because the funds are still long, still have a net long futures position. They could start to liquidate, particularly, again, as we come towards the end of the month, into the quarter, and all of this other stuff. There's the possibility that we could see some liquidation because, again, we saw the cash index drop below $10. It came in at about $9.99, Wednesday evening.

We're seeing that the cash market is continuing to come down. We've got quarterly available stocks to use running around 15% or something like that. It's quite high for this time of year, about average for the past 10 years. There could be some renewed pressure on the soybean market if we see funds say, "Okay, this market's not going anywhere. We can just start dumping this," and maybe looking for another market that has a fundamental reason to rally.

Michelle: Right. Weather is favorable, so the soybean market is basically trading that, right?

Darin: Yes. As we look out into the new crop, that's certainly the case. We can see that in the November contract, just basically locked in these levels, not really able to go anywhere. Again, there's just not going to be any big push on the buy side because there's still going to be plenty of soybeans, even with fewer acres. We don't really know what production is going to be, but whatever it is, the commercial side continues to indicate it's comfortable.

Michelle: The wheat market, trying to hold on to some gains here, most of those seem to be short covering. My question is, now that we're getting into harvest, Texas has already started. Are we going to be able to hold any gains at all, or are we going to have to take out the contract lows here as we start to move the harvest forward?

Darin: I think we will take, and again, wheat is wheat. It's always a fool's game to try to guess. Just looking at seasonal patterns, looking at supply and demand, we've got future spreads covering a large amount of calculated full commercial carry. The indications are, as these supplies continue to come in and with very little demand, we are going to take both the hardwood winter and softwood winter markets to new contract lows.

Then, possibly we start to bottom this thing out. If we keep a close eye on what the cash indexes are doing, a national average basis for both is running weak. It just tells us that the commercial side is expecting more supplies to come in and that we're not going to run out of wheat anytime soon. Again, we can take this out to the September-December spreads as well, where they're still covering 67% to 70% calculated full commercial carry. Again, commercial traders are confident that whatever the harvest turns out to be, it's going to be plenty, at least to get us through the winter.

Michelle: All right. Well, you're our assured Debbie Downer this morning.

[laughter]

Darin: Yes, that's my job, isn't it?

Michelle: Okay. Thanks so much, Darin Newsom, Senior Market Analyst with Barchart, and that is Markets Now.

On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.