The weather was the market mover early in the week as rains fell enough to alleviate traders’ concerns. Then Friday’s USDA report of more corn acres added drama to the virtual pits. The nearby wheat contract sold off 96 cents or 13 percent, while September corn moved 94 cents lower or 16 percent. USDA also said there were a significantly less amount of soybean acres planted this spring. The August soybean contract improved 38 cents, while the July meal added $8.50 per ton. December cotton expanded $1.70 per hundredweight. Over in the dairy parlor August Class Three milk futures subtracted $1.28. The livestock market was higher. August cattle increased $6.40. August feeders put on $13.63. And the August lean hog contract posted a $2.92 move higher. In the currency markets, the US dollar index added 2 ticks. August crude oil gained $1.54 per barrel. COMEX gold slipped $3.10 per ounce. And the Goldman Sachs Commodity Index retreated more than 7 points to settle at 541-even.

Yeager: Joining us now is regular market analyst, Jeff French. What do you say, Jeff? What's the headline of the week? Put this into perspective because we were so different from Monday to today.

French: It's historical. You start Monday out on a nice big rally, especially in the corn. Monday evening you get the ratings, it's some of the lowest rated corn that we've seen since 1988. And we just completely fall out of bed day after day making new lows, new lows, new lows. For the week, corn is down more than 20%. That's the worst week we've had since October 2008 and if you remember, October of 2008 was a financial disaster.

Yeager: There was something going on at that point. Wheat specifically, crop is coming in, we saw in the report it's raining there but we're still losing. Why?

French: You know, coming into the week, the wheat was on a $1.40 rally. So, it had a pretty good uptrend. And then over the weekend, this last weekend we had the unsuccessful coup, military coup in Russia and those type of events here in the last six, eight months, anything out of the Black Sea they just don't stick. And wheat was really following the corn. It was down every day here this week. It was down over a dollar at some point. Look at that December contract in Chicago below $7. If it can get above $7 you might see some buying But Ukraine and Russia out this week saying their wheat crop is going to be bigger than expected.

Yeager: So, if you're a U.S. producer watching this program what do you do?

French: Well, I mean, on that rally you should have been doing some marketing. We were very aggressive the third week of June getting some put options in place as well as selling some cash. At this point, we're actually going to look at this break to reown on the bushels that we have priced. You've got to remember, today was the last day of the quarter, last day of the month. The funds, everything was just sell, sell, sell. So, next week we've got a new month, we get a new forecast, we'll see how the markets react.

Yeager: Corn, more acres, rain, are those the two heads, the two heads leading that?

French: Well, the rain was a start. And again, we were down every day. We did have the rain that moved into Illinois. Now, it was accompanied obviously with high winds. But the trade will look at the rain more beneficial than the damaging winds. So, we'll see if this pattern continues. The forecast says rains the next week as well. Again, tremendously oversold here, 14-month low close. But it will in July if there is rain falling in the "I" states it is hard to rally the corn price.

Yeager: The corn that you just saw on TV looked healthy, but there's others that's not. So, Ryan in South Dakota is asking, when will prices start reflecting the crop conditions?

French: Well, I think we've seen in years past where crop conditions, especially in June on corn don't really necessarily mean, terrible crop conditions mean big yields, or lower yields come harvest. But, if they continue to decline, the trade is anticipating corn yields to start improving now. Illinois might decline because of the wind. But, again, if this forecasted rain next week falls, it's going to be hard to rally this market.

Yeager: And then there's the beans. A whole lot of acres going off that ledger. Where did they go?

French: Well, they went into corn. You look at the corn states that picked up, you had Illinois pick up 500,000 acres of corn, came out of beans. Iowa picking up 300,000 acres out of beans. Texas gained 450,000 acres of corn. That was one of the bigger states. That's a question mark on how good that corn will be, especially with the amount of rain they've had here this spring. But yeah, the bean number is tremendously bullish. Even with record yield at 52 bushels per acre nationally we're at pipeline supplies. The one thing though that you've got to question is corn and beans typically don't do opposite prices. They tend to travel together. So, we are going to have a tug of war here in the next couple of weeks. Do the beans lead the corn higher? Or does the corn lead the beans higher, excuse me, the beans lower? That's what is going to be figured out here in a couple of weeks.

Yeager: So, if you're a soybean holder, you're one of those that stuck it out and you planted something. Are you putting anything -- we almost went a dollar higher at one point today -- do you see that continuing next week regardless of rain?

French: I don't see the beans, from what we know right now with demand as it is, there's really no room for lower prices here right now. Again, if the rains fall it's going to be kind of hard to rally this thing. But demand has been soft. China bought today, that was good to see. I don't know if they can something coming down the pipeline, but they did announce a sale to China. But what you look at on the books for China right now this time of year, it's low. They're 200 million bushels behind bean purchases compared to this time last year. So, they have definitely slowed down their purchases.

Yeager: And then there's the livestock market. Everything is up. Live cattle, another rally. We keep retesting some waves here. Look at this chart. That thing looks like it's headed up again another wave. What do you see?

French: Again, I think you have the funds, they're in control, they're long, they're betting for higher prices. You have the final Friday of the month, you have the final Friday of the second quarter here, they were piling into it. But the feeder cattle love lower prices in the corn, so they shot up, new contract highs. The cattle market is one of those things that we know the fundamentals pretty good. The supply side is going to be tight. What we need to be looking at here is, is the demand going to keep up with these higher prices? Because beef prices are going up from here on out.

Yeager: It looked like previously to this week we were having some steam let out because of the higher price in demand. When you specifically see feeders, at some point that bubble has to pop. When?

French: Well, and that's one thing too, seasonally we're going into July, the hottest part of the year, dog days of summer, seasonally typically you do see demand start to fall off here. But, with this supply, these prices, it looked awfully good on a chart. Again, how long will this demand stay up with the supply? That's the question that we're going to have to see here in the future.

Yeager: Then we have the hog market, which keeps adding, but why?

French: Well, we had that big decline here a couple of weeks ago, last month. Now we are $20 off those recent lows. The hog and pig report, if you look at the main three numbers all hogs kept for breeding, if you look at them compared to last year they're not that friendly. But, if you look at them the last couple of quarters against the hog and pig reports it definitely shows that the herd is contracting, especially if you look at kept for farrowing, it's down 5%. So, Prop 12 goes into effect tomorrow. Now, they have grandfathered in the pork to sell the remainder of the year. But there's a lot of question marks out there on this pork demand. I would just make sure as a producer that you have the downside protected, at least the next couple of months, because the market does not like what ifs and there's a lot of what ifs out there.

Yeager: Final few seconds. Of today's USDA report that came out Friday, the easy headline is bean acres lower. Is that the correct headline of the report?

French: Yeah, but also if you look at the bean stocks, the stocks report, it was down 18% compared to last year. So, domestic bean demand has been phenomenal. So, that is something to take notice and that will also fuel the fire on this rally.

Yeager: And that's going to fuel the end of our show. Jeff French, thank you so much.

French: Thank you for having me, Paul.

Yeager: Appreciate it. We're going to pause this analysis, continue our discussion about these markets in our Market Plus segment. You can find both Analysis and Plus on our website of MarketToMarket.org. These resources, they are free. YouTube is full of content to keep you informed about the happenings in rural America and from this program. Subscribe to our feed for features, full episodes and Market Plus at YouTube.come/MarketToMarket. Next week, we check crop progress in two states with on-the-ground reports. Thank you so very much for watching and have a great week.

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