PM Comments April 7 2025
Good afternoon. The ag space in Chicago finished Monday mixed to higher despite further ongoing capitulation in the financial markets, as headline risk remains extremely elevated, and possibly at some of the highest levels of all-time with how computer-driven today's markets are. CBOT futures saw their fair share of jumpiness this morning also, but that the board was somewhat able to separate itself and trade its own fundamentals fairly early on was seen as potential positive for the rest of the week.
CK closed Monday at 4.64 and 1/2, up 4 and 1/4. CN was up 3 and 1/2 at 4.70 and 3/4. Both took out last week's highs. SK closed at 9.83, up 6 cents. SN finished at 9.97, up 4 cents. Both made new lows for the move early last night before reversing and finishing higher. WK was up 7 and 1/2 cents at 5.36 and 1/2. WK also took out last week's highs. Products were mixed, May soybean meal closed at 288.40, up $5.30/ton, and May soybean oil closed at 45.15, down 0.69 cents/lb. Inside day for meal, and bean oil took out last week's lows. Cattle markets saw a lower start to the week similar to last week, with June live cattle closing at 194.17, down $4.02, and May feeders closing at 271.27, down $3.60. Each gapped lower this morning, but managed to fill the gap on the chart by the end of the day. June hogs closed at 90.05, down $1.50, and also gapped lower on this morning's open. Outside markets have a wild day and are currently trading mixed; crude oil futures are down around $1/bbl and have had a roughly $5 trading range today, the Dow Jones index is down 300 points and has had a roughly 2,700 point trading range, and the US$ index is up around 20 points, and has had a nearly 140 point trading range. The S&P500 and NADAQ are each about 30 points lower as of this writing, but have also had wide-ranging days. Gold futures took out last week's lows and are down around $40/oz, while cotton traded sharply higher and coffee traded sharply lower.
Spreads started the week firm, corn spreads were up a quarter cent to up 5 and 3/4, and soybean spreads were up a quarter cent to up 9 and 1/4. CK/CN closed Monday at -6 and 1/4, up 3/4 of a cent, and SK/SN closed at -14, up 2 cents. SK/SN matched the contract low made Friday at -16 and 3/4.
We mentioned it briefly in our mid-day comments, but the major headline news from Monday included a series of reports on social media that first indicated a potential 90-day pause in Trump's tariffs, and then several minutes later a rebuttal from the White House indicating that the report was false. The headlines, which appeared within 20 minutes of each other on X, caused Dow futures at one point to trade a nearly 1,600 point range over the span of five minutes, and then were followed less than an hour by later by further news that Trump was not only not considering a 90-day pause in tariffs, but instead was threatening an additional 50% tariff on goods from China in response to their additional measures announced late last week. Further comments out of the White House mentioned that negotiations with other countries were happening immediately and ongoing, making it appear that China remains the underlying bottom line in Trump's bigger trade war. In other news, it was also rumored that Venezuela's offer to reduce tariffs to 0 mentioned this morning was seen as a meaningless gesture by members of the Trump administration, with it being non-tariff trade barriers that they say have caused trade discrepancies between the two countries. Lastly, at least for the time being, there were also reports this morning that Trump had had a productive phone conversation with Japanese Prime Minister Ishiba on trade and tariffs, and that the two planned to have further in-person discussions at some point in the future.
Otherwise, there wasn't an abundance of new ag-specific news on Monday, and what there was was small potatoes in terms of market importance compared to everything else that was going on. In the US, weekly export inspection data was within trade expectations for all three of corn, beans, and wheat; corn inspections at 1.583 mmt's were again above most recent years for the week, while bean inspections totaled 804k mt's and wheat inspections totaled 335k mt's. Planting speed is not a huge concern in the first week of April, but it is likely that this afternoon's first progress report of the year won't show any too quick of pace, with historic flooding through the southern Corn Belt producing significant delays in parts of the country that usually get off to an earlier start due to warmer weather. Winter wheat conditions, according to a survey of Reuters analysts, are expected to be shown at 47% in the g/ex category, which would be down from 56% last year's first reading, but still above both 2023 and 2022.
Further south in Brazil, private group AgRural said in comments that recent rains had been notably beneficial to areas in the country's center-south and west-central regions, which should help stabilize conditions following mostly hot/dry weather in the month of March. Despite this, it is our opinion that what's left of the net-long fund position in corn is probably the result of ongoing dryness concern here through April, with the balance sheet tight enough that even a small loss of production will likely cause a market reaction. We said it all March but farmers here will still need additional rains to ensure good safrinha yields, and with extended forecasts turning back wetter into mid-month, this risk is declining. Meanwhile in Argentina, local rains and cooler temps will keep stress low enough to be of little, with the overall pattern continuing to aid harvest activity.
The GFS forecast for the US at mid-day trended drier in the east over the next week, but was otherwise little changed from the weekend runs. As we mentioned earlier, flooding in the southern Midwest means several days of drier weather are needed here, but week two forecasts are again showing above average chances at moisture in this same area April 15th through the 21st. Areas in the north and the northwest do not see the same precip chances though in the week two period, which combined with the return of above average temps, should allow for an early season planting window to open up in this part of the Corn Belt. Models are in good agreement on well below average temps hanging around in the eastern US through the end of this week, with warmth then seen returning to most all of the country into next week as the western ridge works its way to the east.
If today's outside market action is any indicator, this is likely to be one of the more volatile weeks in recent memory in the overall commodity space; we would advise not chasing the market too far in either direction, and being patient with the panic-trading that's likely going to continue going on over the next several days.