PM Comments May 2 2025
Good afternoon. Happy Friday. Further optimism surrounding US-China trade talks helped lift the majority of the ag space to higher closes on Friday, with the exceptions being old crop corn and soybean oil. As the old saying goes, where there's smoke, there's fire, and though it still appears no direct communications have to this point occurred between Washington and Beijing, the ongoing headlines and chatter would suggest some sort of talks are likely imminent. Otherwise, it is the May WASDE report a week from Monday that would seem to offer the next fundamental inflection point for the market, as we'll get our first look at the new 2025/26 balance sheets.
CK ended the week at 4.61 and 1/4, down 3 cents. CN was down 3 and 1/4 at 4.69. SK closed at 10.48 and 3/4, up 8 and 1/2 cents. SN finished at 10.58, up 7 and 3/4. WN was up 12 cents at 5.43. Products were mixed, July soybean meal closed at 296.90, up $2.60/ton, and July soybean oil closed at 49.43, down 27 points. Inside day for bean oil. Livestock markets finished the week in the green, June live cattle closed at 211.10, up $1.45, August feeders closed at 296.90, up $2.45, and June hogs closed at 99.35, up $1.17. New contract highs for both cattle markets. Outside markets are trading sharply mixed, with crude oil futures down 60-70 cents/bbl, the Dow Jones index up 560 points, and the US$ index down 30 points; the S&P500 is up 90 points and the NASDAQ is up 320 points. Gold futures have had an inside day so far and are up around $15/oz.
Spreads had a mixed close to the week, with corn spreads up a half cent to down 6 and 1/4, and soybean spreads up 2 cents to down 3/4 of a cent. CK/CN closed at -7 and 3/4, up 1/4 of a cent, and SK/SN closed at -9 and 1/4, up 3/4 of a cent. WK/WN filled its chart gap from yesterday and closed at -16 and 1/2, down 3/4 of a cent.
For the week: May corn was down 17 and 1/2 cents; July corn was down 16 and 1/2 cents; May soybeans were down a penny; July soybeans were down a penny and 1/4; July Chicago wheat was down 2 cents; July soybean meal was up $1.60/ton; and July soybean oil was down 0.38 cents/lb.
China's Commerce Ministry on Friday warned the US not to engage in "extortion and coercion" while adding it was evaluating whether to engage in talks with Washington regarding current tariffs and trade between the two countries. Further comments from the ministry seemed to reiterate what has been China's stance throughout this entire ordeal, which is that it won't be bullied and if the US wants to talk, dropping current unilateral tariffs would be a good place to start. Other news regarding the topic on Friday included a Wall Street Journal article that reported that China was also weighing whether to make an offer to the US regarding fentanyl, which has also been a grip of Trump's. There were also unfounded rumors that some on the US side thought any negotiations should start with China adhering to wheat purchase agreements made under Phase One, to which the market reacted kindly to. We have no way of knowing if this is just news chasing the market action of the day or an actual story, but would think the arguably undervalued wheat futures market would have plenty to gain should such an agreement be made.
News out of the White House not regarding China to end the week included a new 2026 budget proposal by the Trump administration earlier in the day today which would see cuts of billions of dollars in federal spending on renewable energy and EV projects, as well as other programs related to climate change. As it pertains more directly to agriculture, the proposed budget would also see more than $4.5 bil in cuts from the USDA, with the bulk of this being related to conservation programs, rural development programs, and research grants according to sources familiar with the matter. The proposal would also eliminate three other food programs that send US commodities to other countries as aid. Among other items of note in the budget are a 55% cut in the EPA's budget, and also cuts of $1.3 bil worth of grants to NOAA for projects that focus on "climate-dominated research".
Otherwise, the only other real item of note in the space for Friday was the CFTC's weekly Commitment of Traders report, which showed a heavy week of fund selling across both the corn and the wheat markets. In the week ending April 29th, managed money traders were sellers of a combined 41,476 contracts of corn futures/options, sellers of a combined 31,485 combined contracts of Chicago wheat futures/options, and buyers of a combined 7,135 contracts of soybean futures/options. This makes them now as of Tuesday net-long 71,329 contracts of corn, net-long 38,202 contracts of soybeans, and net-short 121,415 contracts of Chicago wheat. Of note, this is the largest the fund's net-short position in Chicago wheat has been since May of 2023; the funds all-time record Chicago wheat short was made in 2017 at 162,327 contracts. In soy products for the week, funds were sellers of 24,716 contracts of meal, and were buyers of 12,488 contracts of oil; this makes them now net-short 98,277 contracts in the meal, and net-long 63,387 contracts in the oil.
There was again not a lot of change to the overall forecast for the Midwest on Friday, with models remaining in good agreement on the gradual emergence of a high pressure ridge over the northern US into the first part of next week. The ridge will cause drier than normal conditions throughout the northern part of the Corn Belt, while cut-off lows spinning in the southern part of the country underneath this ridge will provide cooler temps and precip to these areas. Because these systems are "cut-offs" and not attached to the jet stream, they are extremely hard to predict in terms of how much precip they will put down and in what areas. This will likely be the biggest feature to keep an eye on next week, as the southern Corn Belt could use a slight dry out to get crops planted. Otherwise, temperatures will be warmest in the western US next week, and will gradually work their way east by the end of next week and into mid-May. The temperature outlook for the Corn Belt is cooler at mid-day today than was seen yesterday.
Have a great weekend! Like we mentioned this morning, headline risk through the next couple days stays elevated, with any additional comments from Washington or Beijing over the next 48-72 hours likely determining how markets open up for trade Sunday evening.