PM Comments April 14 2025
Good afternoon. Ag markets in Chicago started the new week mixed/lower, as improving forecasts in Europe and the Black Sea region helped to pressure the wheat market, which led to spill-over selling into the rest of the space amid a general lack of fresh headlines. Overall volume also saw a notable decline on Monday from last week, as the ongoing tariff unknowns paired with a shortened trading week due to the Good Friday holiday have caused the new money that was actively coming into the space previously to at least momentarily slow a bit.
CK closed Monday at 4.85, down 5 and 1/4. CN was down down 4 and 1/4 at 4.92 and 3/4. SK finished at 10.41 and 3/4, down a penny. SN was down 2 and 3/4 at 10.50 and 1/4. Inside days for both corn contracts, while the beans took out last week's highs before closing back below them. Of note, new crop November futures actually closed 3 cents higher on the day, and also closed their open chart gap left from a couple weeks ago. WK closed at 5.47 and 1/2, down 8 and 1/4. Inside day for WK also. Products were lower, May soybean meal closed at 297.10, down $2.50/ton, and May soybean oil closed at 46.32, down 1.03 cents/lb. Again, inside days for both products also. Livestock markets started the week on a positive note, with June live cattle finishing the day $2.27 higher at 199.07, May feeders were up $2.25 at 280.95, and June hogs closed at 95.12, up $1.80. All three gapped higher on the open this morning. Outside markets are trading mixed, crude oil futures are up 10-20 cents/bbl, the Dow Jones index is up 280 points, and the US$ index is down 30-40 points. The S&P500 is up 40 points, and the NASDAQ is up 100 points; gold futures have had an inside day, and are $15-20/oz lower. Inside day for the $ index also.
Spreads ended Monday mixed/lower, corn spreads were up a quarter cent to down 4 and 3/4, and soybean spreads were up a penny and 3/4 to down 5 and 3/4. CK/CN closed at -7 and 1/2, down 3/4 of a cent, and SK/SN closed at -8 and 1/2, up a penny and 3/4.
To start the week, USDA this morning announced another daily sales flash, with private exports having reported that Japan bought 120,000 mt's of US corn for delivery during the 2024/25 marketing year.
Tariffs and the broader macro economic situation have continued to dominate the news cycle into another week, while chatter is picking up surrounding Midwest planting progress that is expected to start occurring in the coming days. Over the weekend, President Trump yet again added more confusion to the situation by announcing a pause in duties on some electronics and chip/semiconductor materials, only to later that say nobody was getting off the hook in regards to trade surpluses and that the measures could be replaced by different ones over the course of the next month. Chinese officials nonetheless called the move a "small step", which the markets took as a positive. Like we mentioned last week, we have no way of knowing what the next headline on the situation might be, which makes positioning for the next move nearly impossible. Sources indicate the rumors of 50+ countries reaching out to negotiate are accurate, which does nothing but add to the uncertainty; who are these countries? Will Trump strike deals with them? Will the deals be blanket deals or involve specific goods and/or dollar amounts? The questions are endless.
Other macro/financial news on Monday included comments from Federal Reserve Governor Christopher Waller at a conference in St. Louis, who said he views the effects of Trump's new trade war as "transitionary" despite the thought that it could cause a spike in inflation in the short term. Waller added that possible outcomes along with rising inflation could be a slowdown of economic growth and a bump in unemployment, which he said could possibly lead to further interest rate cuts. The CME's FedWatch tool, which we often refer to as a way to gauge the likelihood of future policy decisions, today shows a more than 80% chance that rates will remain unchanged at next month's FOMC meeting, but also shows a more than 60% chance at a quarter-point rate cut in June and a nearly 50% chance at another quarter-point rate cut in July.
Back to the ag side of things, we briefly mentioned chatter surrounding planting progress, which has picked up over the weekend and into the first part of this week. The forecast for a bulk of the Midwest looks warm and dry for the most part over the next few days, which according to local sources, will lead wheels to begin turning shortly if they didn't start today. That said, we would assume a fairly large jump in planting progress from today's figures to next week's figures, as numbers released this afternoon still show a fairly slow to start to the 2025 season. USDA pegged corn planting as of Sunday the 13th at 4% complete, which is 1% behind the five-year average, and pegged soybean planting at 2% complete, which matches the five-year average. Otherwise, weekly export inspection data was the only other real market-specific point of interest on Monday, which we covered in our mid-day comments and continued to show further strong loadings of corn in the week ended April 10th and also a good week of wheat loadings. Both the weekly export inspections report and weekly export sales report at the end of the week on Thursday's have continued to show strong demand for US corn, which seems to be a product of further price competitiveness due to a delayed crop in South America and also a record US harvest last fall.
We eluded to a bit of the forecast news coming out of the weekend earlier, but models are showing a mostly dry several days through the Corn Belt this week, before rains/storms are then seen returning to the area by the end of the week and into the weekend. Notable in the forecast are significant model differences in precip amounts/locations in the hard red winter wheat belt, with the European model largely keeping precip south and east of Kansas, while the GFS sees better rains throughout most of this state, which in the western portion, has been more or less the epicenter of US drought this year. These rains are desperately needed, which means how the forecast here progresses this week will be closely monitored. As it pertains to the Midwest, precip from this system as of today looks to favor the western half, with the majority of states like Minnesota, Iowa, Missouri, and Illinois expected to receive 0.5-1", while eastern states like Indiana and Ohio and Kentucky are expected to receive a lesser 0.1-0.5". Then into next week, week two maps have again stayed wet in today's mid-day runs, especially in the mid-south/Delta area, which has already had flooding issues this spring. Temperatures for most of the Corn Belt look to continue trending upwards through this week and into next, with models in fair agreement on a return to warmer than average conditions for generally the eastern half of the US over the next 5-10 days.
Mid-day forecasts for South America tried to add some light precip for southeast Argentina in the 5-day period, but otherwise remain similar to what was seen coming out of the weekend. A bulk of the country's growing regions will remain largely dry through this week, which will help harvest progress, while inversely, rains in Brazil are seen returning to most all of the main growing areas through the week this week, which will be nearly perfect for the reproducing safrinha corn crop. Temperatures have also backed off a bit through most of Brazil for this week, which will further help to alleviate any stress that may have been caused by warm/dry weather over the past week to 10 days.