AM Comments May 2 2025

Posted on May 02 at 06:50

Good morning. Happy Friday. Markets are quietly higher in light volume at the CBOT to start Friday trade this morning, and are being helped by a sharply lower dollar index and also further optimism surrounding potential progress on some sort of trade deal with China. It's anyone's guess today as to whether any announcements with them or any other countries will be seen over the weekend, which means headline risk over the next 72 hours stays elevated. That said, we would remind our readers that it is the beginning of May and there is a long growing season ahead, which means there are any number of factors ranging from weather to politics that could significantly alter the market landscape over the next 4 months. Stay aware of potentially changing fundamentals, and have a plan in place should the market move sharply one way or the other. Corn futures to start Friday are unchanged to a penny higher, soybean futures are 2-3 cents higher, and the Chicago wheat market is up 6-8 cents. Products are mixed, soybean meal is up $2-3/ton, and soybean oil is down 40-50 points. Outside markets are mixed as well, with crude oil futures down 50-60 cents/bbl, the Dow Jones index up 170 points, and the US$ index down 50-60 points; the S&P500 is up 20 points and the NASDAQ is up 50 points. Gold futures continue to chop, and are up around $50/oz this morning after gapping higher on the open last night.

 

Today's Reports: Monthly Nonfarm Payrolls; Monthly Unemployment; CFTC Commitment of Traders

 

  • Friday's delivery slate stayed active according to the CME Group; there were another 200 contracts of KC wheat assigned for delivery last night, along with 165 contracts of soybean oil, 80 contracts of Chicago wheat, 28 contracts of corn, 11 contracts of soybean meal, 8 contracts of rice, and 3 contracts of soybeans.

 

  • The USDA's ag attaché to Canada on Thursday said they see the country's wheat production figure in the coming season at 35.7 mmt's, which would be up from last year's 35.0 mmt's. The group said the increase was made based on higher planted area figures that StatisticsCanada showed in March.

 

  • According to a monthly report from the United Nations' Food and Agriculture Organization (FAO), global grain stocks at the end of the 2024/25 season are now seen at 868.2 mmt's, which is down from their previous estimate of 873.3 mmt's, and if accurate, would be a new three-year low. Total world grain trade is still seen at 478.6 mmt's, which is little changed from last month and still the lowest level since 2019/20.

 

  • FAO in their monthly report also showed global food prices rising to a two-year high as stocks continue to dwindle, with their raw commodity cost index increasing to 128.3 on the month. While this is up around 1% from last month, the figure still remains well below the recent peak made in 2022. Said a spokesperson for the group, "Currency fluctuations influenced price movements in world markets, while tariff policy adjustments raised market uncertainty." Also cited were increases in the costs of grains, meat and dairy.

 

  • In the southeast Asian palmoil world, data from India shows imports of the product in the month of April were down nearly 25% from the month prior at 322k mt's; this compares to the average monthly import rate in 2024 of roughly 750k mt's/month, and is the result of the ongoing price disparity between palmoil and rival soybean oil. On the other side of the fence, data out of Malaysia shows exports in the month at 1.12 mmt's, which is up more than 5% from March.

 

  • Thursday's drought monitor update showed 20% of the US corn area in D1-D4 drought conditions, which is down 6% on the week and compares to 19% in the same week last year. 15% of the US soybean area is in the same condition, which is also down 6% from the week prior and compares to 16% in the same week last year.

 

  • According to a weekly report from the USDA, barge shipments down the Mississippi River in the week ending April 26th totaled 670k tons, which up from 469k tons the week prior; corn shipments at 448k tons were up 43% on the week, and soybean shipments at 203k tons were up 65% on the week. STL barge freight rates were up 8 cents on the week to $14.00/short ton.

 

  • Sources from Beijing have acknowledged that the US side has repeatedly reached out to have conversation on trade, but re-emphasized that the only way to begin meaningful negotiations would be to lift unilateral tariffs currently imposed by the Trump admin. They further added that symbolic gestures or pressure tactics would not yield desired results. Other news on the front for Friday includes a Trump announcement that the de minimis exemptions for low-value shipments coming from China would be ended.

 

  • Otherwise and without any further updates on that situation, the financial world for Friday will have its sights set on this morning's monthly nonfarm payrolls report, which is expected to show a noticeable downtick in job growth during the month of April to just 130k, which would compare to the 228k figure seen in March. Unemployment, however, is seen holding steady on the month at 4.2%, after ticking up in March from a 4.1% reading in February and a 4.0% reading in January.

 

  • Weather forecasts for the Midwest going into the weekend remain largely the same as they have all week, with good agreement on continued wet weather in the southern Plains and mid-south, while the northern and northwestern Corn Belt see several days of drier conditions that should allow for good advancements in planting and fieldwork. The EU model this morning through Sunday night shows rainfall of a half inch to 2" possible for most of the mid-south, with an additional 2-3" then possible the rest of the week; the biggest totals will likely be near TX/OK/AR/LA.

 

  • Looking out into the middle of May, models continue to show dry biases in the week two period (May 10th-16th) for a majority of the Midwest and Corn Belt, as high pressure ridging settles in to the upper US and limits moisture flow to areas in the southeast and the southwest. Extended forecasts into the end of May have tried to amplify this ridge even further in recent runs, which will need monitoring as we get into mid-month.

 

  • As far as temperatures go, the continued presence of cut-off low pressure systems in the southern Plains and south-central US will keep temps in these areas cooler than normal, while the rest of the country sees mostly above average air temps over the next 10-15 days following another brief cold spell this weekend. We would remind on this front that as we get into May and June and the early part of summer, below average temps in the southern Corn Belt could still mean highs in the 70's/80's and doesn't necessarily mean cold.

 

  • Have a great weekend! Stay safe to those in the fields over the next few days!