PM Comments May 5 2025
Good afternoon. Ag markets had a rather ugly start to the week on Monday, as the Cinco de Mayo holiday brought plenty of red to the trading screen but lacked the green portion that makes up the two-part color scheme typically associated with the Latin American holiday.
CN (note the change to July) closed at 4.54 and 1/4, on Monday, down 14 and 3/4; low was 4.53 and 1/4. CZ was down 7 and 1/4 at 4.43. SN finished at 10.45 and 1/2, down 12 and 1/2 cents. SX was down 8 and 1/4 at 10.22 and 1/4. WN closed at 5.31 and 1/4, down 11 and 3/4. Products were lower, July soybean meal closed at 295.50, down $1.40/ton, and July soybean oil closed at 48.73, down 70 points. Inside day for July meal. Livestock markets were mixed to start the week, June live cattle closed at 213.65, up $2.55, August feeders were up $2.00 at 298.90, and June hogs closed at 99.00, down 35 cents. New contract highs for June live cattle at 214.10 and new contract highs at 299.17 for August feeders. Outside markets finished the day lower, crude oil futures ended down around $1/bbl, the Dow Jones index was down 100 points, and the US$ index was down 20-25 points; the S&P500 was down 40 points and the NASDAQ was down 160 points. Crude oil gapped to new lows for the move, and the S&P and the NASDAQ both had inside days; also an inside day for the $ index. Gold futures finished $90-100/oz higher.
Spreads were mixed/mostly lower, corn spreads closed Monday unchanged to 7 and 3/4 cents lower, and soybean spreads were up a penny and 3/4 to down 4 and 1/4 cents. CK/CN closed unchanged on the day at -7 and 3/4, and SK/SN closed at -7 and 1/2, up a penny and 3/4. CN/CU continued to bleed lower and finished another 7 and 1/2 cents lower today; also new contract lows in the CU/CZ at -11 and 1/4.
Corn futures led to the downside on a percentage basis on Monday, with the selling pushing values in the July contract below the 200-day moving average for the first time since early April before also leaving them within spitting distance of the recent low for the move near 4.50. As was noted in today’s closes, new crop values held up notably better than old crop values on the fact there is a long growing season still ahead, but the story seemed to remain in the front months, where unrelenting liquidation selling on the part of the fund and spec communities remained the theme of the day. With the export picture staying strong and the farmer more sold than he’s been at this point in recent years, we don’t see a lot of reason to justify a further slide to lower levels, but should July close below the 4.50 area, this likely opens the door to a re-test of the string of reaction lows made last winter, first near 4.45, and then at roughly 4.35, then 4.25, then the contract low at 4.21 and 3/4.
In the case of soybeans, selling was more even across crop years, though the old crop was also down slightly more than the new crop. Despite the lower closes though, July contract values remain in the 10.40 to 10.60 range that has generally encompassed trading over the last three weeks. It seems the ongoing rhetoric with China has paralyzed the market, with the big South American crop now priced in and traders curious as to what potential exports in the coming new crop year will look like for the US should the tariffs last all summer and into fall. Remember that exports in the 2024/25 season have been relatively normal due to the front loading of purchases in the first part of the marketing year before Trump took office, but the trade war will have far bigger impacts on figures for the 2025/26 season. Aside from the obvious variable of US crop size this fall, it is the answer to this export question that likely has the biggest impact on price direction over the next few months.
On the news front for Monday was regular weekly export inspection data for the week ending May 1st, which showed corn loadings in the week at 1.608 mmt's, soybean loadings at 324k mt's, and wheat loadings at 310k mt's; the corn and soybean sales were within trade expectations, while the wheat figure was below the lower end of guesses. Year-to-date corn inspections for the current marketing year are up 29% from 2023/24, soybean inspections are up 11%, and wheat inspections are up 14%. In other news, crude oil futures continued to slide on the OPEC+ production increase news from last week, while the US stock index markets had mostly quiet days on not a lot of new headlines out of Trump or his administration. The President did host reporters in the Oval Office to announce Washington D.C.'s hosting of the 2027 NFL draft, where he also answered questions regarding the usual topics of China, Russia, and other things, but he didn't say a lot new with regards to any of them. The lack of headlines is not likely to be long-lived though, as Trump is set to meet Canadian PM Mark Carney at the White House tomorrow, which we assume will produce some sort of notable rhetoric at the very least following a prolonged period of back-and-forth hostilities between the two countries since Trump re-took office in January.
Weather-wise, the map below shows weekend rainfall across the US according to satellite data, which was plentiful across the mid-south and eastern Midwest as a slow-moving cut-off low pressure system worked through the area. The dry areas on this map in the northern/northwestern Corn Belt are also notable though, as forecasts show more of these conditions over the next two weeks as high pressure ridging moves in and pushes any precip to the south. This should allow producers in these areas to all but complete planting operations according to local sources, while it will also be important to monitor where the exact dry line is in the southern Corn Belt so producers here can get a chance at catching up. Along with dryer conditions, ridging will also bring about a warm-up over the next two weeks, with models in fair agreement that the bulk of the Corn Belt will see summer-like warmth beginning next week and lasting into the back half of May. Lower pressure to the south will keep temperatures here below average into next week, but these areas are also seen warming up in the week two period.