AM Comments May 7 2025

Posted on May 07 at 07:08

Good morning. Mid-week buying has emerged at the Board of Trade to start Wednesday, with the ag space seeing higher values so far this morning on news that the US and China would hold trade talks this weekend. This, coupled with relatively oversold conditions in the markets following several days of selling the last few weeks, has produced a pop this morning. Key for today will be whether any additional details on the meeting are received between now and Saturday, while position squaring ahead of Monday's May WASDE report will also continue to linger in the background. Otherwise and until a deal is signed, we don't see this morning's action as much more than a dead-cat-bounce - especially in corn - with the overall supply and demand outlook little changed from where it was yesterday; choppy, back-and-forth trade will remain the theme in the short term. Corn futures to start Wednesday are trading 4-7 cents higher, soybean futures are trading 12-13 cents higher, and the Chicago wheat market is up 3-4 cents. Products are higher, soybean meal is up $1-2/ton, and soybean oil is up 50-60 points. Outside markets are also higher, crude oil futures are up around 50 cents/bbl, the Dow Jones index is up 250 points, and the US$ index is up 20 points; the S&P500 is up 30 points and the NASDAQ is up 100 points. Gold futures started the night session higher but are now down $20-30/oz.

 

Today's Reports: EIA Weekly Ethanol Production/Energy Stocks; FOMC Interest Rate Decision

 

• The CME Group overnight assigned 209 contracts of Chicago wheat for delivery, 13 contracts of corn, 4 contracts of rice and just 2 contracts of soybeans; there were no assignments of soybean meal or soybean oil.

 

• This morning's weekly ethanol production report from the EIA for the week ending May 2nd is expected to show production in the week between 1.026-1.047 mil bbls, while stocks are seen between 24.9-25.6 mil bbls.

 

• Export data from the US Census Bureau, released yesterday for the month of March, showed corn exports in the month at 289 mil bu, which was up 22% from Feb and up 25% from March of last year; soybean exports were seen at 129 mil bu, which was similarly up 14% from Feb and up 15% from last year, while wheat exports were seen 66 mil bu, which was up just fractionally from Feb but down 14% from last year.

 

• Other items of note in the export data included ethanol exports for March at 196 mil gallons, soybean oil exports at 344 mil lbs, and soybean meal exports at 1.756 mil tons; all three of these figures were up on both the month and the year. The only other commodity that saw a smaller March export figure this year than last year was beef, which when rounded actually totaled the same number but was otherwise 0.1% lower.

 

• Speaking at a biofuels conference in Chicago on Tuesday, an adviser for consultancy firm FGS Global told attendees to not count on a return of the biodiesel blenders tax credit that many have been calling for since its expiration in December. The speaker, Anthony Reed, who has 20 years of previous experience working on extensions of the credit, said lawmakers have made it "abundantly clear" that they have no plans to bring it back. As a reminder, the BTC (blender's tax credit) and the RVO (renewable volume obligation) are two separate issues, though both affect US biofuel/renewable fuel production.

 

• A private crop tour hosted by the Oklahoma Wheat Commission earlier this week estimated the state's winter wheat crop at 101.2 mil bu, with an average yield of 35.9 bu/acre; the resulting crop would be down about 7% from last year, while the USDA in their March acreage estimate said planted acres in the state would be down about 5% from last year.

 

• The President of Brazilian Ag consultancy AgroConsult told attendees at an event on Tuesday that he expects Brazilian soybean planted area next year to increase by around 500k hectares to 48.3 mil hectares. He added though that while still expanding, the rate of expansion is expected to be down significantly from previous years where increases of around 2 mil hectares were common.

 

• Speaking at a Senate hearing on Tuesday, US Ag Secretary Brooke Rollins defended the current downsizing operation going on at the USDA, but said the agency has no plans to close any of its 4,500 offices that serve farmers. News sources late last week reported that more than 15,000 staff members had agreed to financial incentive programs offered by the Trump admin, with the bulk of these coming from conservation and natural resources.

 

• Other news from Tuesday involving Ag Secretary Rollins included reports that she plans to make visits to Japan, India, and Vietnam in the coming weeks. She also told reporters she'd be in England and Italy prior to the others. Said Rollins, "I'm reflective of a larger cabinet effort on behalf of this President to get out into the world to expand the markets."

 

• Circling back to the big headline maker overnight, US and Chinese officials have agreed to a three-day meeting in Geneva, Switzerland May 9th-12th for high level talks aimed at de-escalating the ongoing trade war between the two countries. Treasury Secretary Scott Bessent and Trade Representative Jameson Greer will be present from the US side, and will meet with China's economic tsar He Lifeng according to sources familiar.

 

• Other news of note from overnight includes reports that India early Wednesday morning launched missile strikes on nine Pakistani locations it claimed were terrorist cells, though Pakistani spokespeople denied the areas had any military links. The attacks come just weeks after Islamist militants killed 26 tourists in Indian Kashmir, and Pakistan has vowed retaliation "at a time, place, and manner of its choosing."

 

• Lastly for Wednesday, the CME's FedWatch tool this morning is showing a near certainty that interest rates will be left unchanged when this week's FOMC meeting concludes this afternoon. Amid ongoing calls by Trump for the Fed to trim interest rates, it will be interesting to see what sort of rhetoric comes from the two sides following this afternoon's 1pm central time announcement.

 

• Weather focus in the overnight hours shifted to the extended forecast, as week two precip maps took a wetter shift in the Midwest overnight, and now show the ridging that will be present over the next 10-15 days subsiding into the end of the month. Model runs that are more than a week out are obviously far from guarantees, but the pattern shift is notable and will need monitoring over the next 10+ days. There was no update in the short term forecast, with high pressure ridging across the north-central US remaining the dominant feature through the rest of this week and into next.