PM Comments April 23 2025
Good afternoon. Wednesday saw another choppy day of trade at the CBOT, with the soybean market again managing to close higher and the grain markets again finishing in the red. Trump and China were again the main topic of discussion for the most part, with positive rhetoric also leading to a second day of higher trade in the equity markets.
CK closed Wednesday at 4.72, down 3 and 3/4. CN was down 4 cents at 4.79 and 1/4. SK finished the day at 10.40 and 1/4, up and 5 and 1/4. SN closed at 10.50 and 1/4, up 4 and 1/4. WK was down 7 and 1/4 at 5.28 and 1/4. Products were mixed, May soybean meal closed at 290.80, down $1.10/ton, and May soybean oil closed at 47.91, up 0.33 cents/lb. Inside day for soybean oil. Livestock markets were mixed, June live cattle closed at 208.10, up $1.82, May feeders closed at 288.35, up $1.42, and June hogs closed at 100.15, down 12 cents. Live cattle gapped higher this morning and made new contract highs, and hogs also made new highs for the move this morning before closing lower. Outside markets are mixed, crude oil futures are down $1.20-1.30/bbl, the Dow Jones index is up 420 points, and the US$ index is up 90-100 points; the S&P500 is up 80 points and the NASDAQ is up 420 points also. Outside day lower for crude oil, while all three of the major stock indices and the $ index had gap-higher opens last night. Gold futures gapped lower and are down $110-120/oz.
Spreads closed Wednesday mixed, corn spreads were up 3/4 of a cent to down a penny and a half and soybean spreads were up a half cent to up 4 and 1/4 cents. CK/CN closed at -7 and 1/4, up 1/4 of a cent, and SK/SN closed at -10, up a penny. CU/CZ made new contract lows at -9 and 1/4.
Soybeans were lifted to another high close on Wednesday on reports in a Wall Street Journal article that the Trump administration would consider lowering tariffs on goods from China in order to get trade discussions going. Sources also indicated that China later responded by saying they were open to resuming trade talks if tariffs were in fact reduced. Treasury Secretary Bessent also spoke on the matter, again repeating that the situation could not go on as is and that both sides were aware that current tariff levels were unsustainable. He added that should any talks between the two occur, they would have to begin at levels much lower than Trump and President Xi, but he didn't have any sort of timeframe for when those talks may begin. Bessent declined to comment on the Wall St Journal article other than to say that he would be surprised if there were any sort of mutual tariff reductions. President Trump, when asked about the situation, again reiterated his stance that China, as well as the EU, were ripping off the US and that he was going to get a fair trade deal with China.
This morning's weekly ethanol report from the EIA showed a surprising drop in stocks on the week, while production came in at a three-week high and at the upper end of what the trade was looking for at 1.033 mil bbls; this was up 2% from last week and up 5% from last year. The stocks figure came in at 25.481 mil bbls, down 5% on the week and at the lowest level since early January. We estimate corn usage in the week at 102.1 mil bu, which brings cumulative marketing year corn use to 3.499 bil bu. Like we mentioned this morning, the seasonal trend would favor another few weeks of lower production figures as plants take time for maintenance, but then would show production again ramping back up as the summer driving season comes into full swing. On the petroleum side of the EIA report, crude oil stocks came in 0.244 mil bbls higher on the week at 443.104 mil bbls, gasoline stocks were down 4.476 mil bbls at 229.543 mil bbls, and distillate stocks were down 2.353 mil bbls at 106.878 mil bbls. Implied gasoline demand was estimated at 9.414 mil bbls/day, compared to 8.462 mil the week prior and 8.423 mil in the same week last year.
Otherwise, it continues to largely be more of the same on the news front. We've mentioned it a few times in passing this week, but the markets simply need some sort of fundamental flashpoint to cause reason to move in one direction or the other with the continued political uncertainty that has been seen for the better part of the time since Trump took office in January. If the US crop gets planted in a timely manor and soil moisture levels are replenished, that direction likely becomes to the downside; if that isn't the case, and there are delays and questions to not only acres, but yields too, then the funds will likely rush right back into their long positions and drive the market higher. What we do know is that from a demand standpoint, its tough to get a lot better for corn than where things have been the last few months both domestically and on the export market.
Not a lot new this afternoon on the weather front, with models continuing to offer boosts in soil moisture for the Plains and western Corn Belt beginning this evening and lasting through the end of the week. These storms will then work their way north and east over the weekend, providing somewhat scattered precip and thunderstorm activity to the rest of the Midwest Saturday and Sunday. The GFS continues to be on the lower end of amounts compared to the EU model, with its mid-day run today showing 0.5-1.5" in the west, while the east sees a lesser 0.1-0.5". Week two forecasts are again showing a drier trend emerging into the first week of May for most of the Midwest, while the Gulf Coast into Texas and also most of the East Coast and northeast stay in a wetter bias. Temperature outlooks remain warm, with models in good agreement on average to above average daytime highs for most all of the country, and especially for areas west of the Rockies. Generally speaking, the biggest area of concern as it pertains to planting is in the southern and southeastern Midwest, where too much rain has caused fieldwork delays since the middle of March.
Global weather also didn't see a lot of changes to the forecast on Wednesday, with the majority of both Ukraine and China's growing regions remaining on the dry side for at least the next week, while central and southern Europe look to continue receiving average to slightly above average rainfall. In South America, Brazil looks to continue seeing normal rainfall through the end of the month when the dry season is expected to begin, while Argentina's forecast continues to call for a warm and dry pattern over the next 7-10 days.