AM Comments May 12 2025

Posted on May 12 at 07:17

Good morning. Ag markets are trading higher to sharply higher to start Monday morning, as weekend headlines regarding substantial progress during talks between the US and the Chinese have caused another round of speculative short covering to start the new week. The buying to this point has been most prevalent throughout the soy complex, with bean oil up more than 3% and the beans themselves breaking out to the upside from the trading range they've been in since the middle of April; grain markets are higher as well but seem to be more just along for the ride. Equity markets have also taken kindly to the news both in the US and globally, with stocks from London to Hong Kong trading higher on the thawing of tensions between the world's two largest economies. Key for Monday, aside from what the USDA has to say regarding new crop corn and soybean balance sheets at 11am central time this morning, will be whether the bulls can sustain this overnight rally throughout the session amid a fairly robust data slate today. Corn futures this morning are trading 1-3 cents higher, soybean futures are trading 18-19 cents higher, and the Chicago wheat market is trading either side of unchanged. Products are higher, soybean meal is up around $3/ton, and soybean oil is up 1.80-1.90 cents/lb. Outside markets are also higher, crude oil futures are up $2.20-2.40/bbl, the Dow Jones index is up 1,000 points, and the US$ index is up 130 points; the S&P500 is up 180 points and the NASDAQ is up 800 points. All three of the stock indices saw gap-higher opens to start last night. Gold futures inversely gapped lower, and are currently down around $115/oz.

 

Today's Reports: Weekly Export Inspections; USDA May WASDE; Weekly Crop Progress

 

• The CME Group for Monday morning assigned 15 contracts of mini Chicago wheat for delivery, along with 12 contracts of rice, 12 contracts of corn, 5 contracts of full-size Chicago wheat, 1 contract of soybean oil, 1 contract of oats, and 1 contract of soybeans.

 

• Headline news from over the weekend came out of Geneva, Switzerland, where talks between trade officials from the US and China went better than anticipated and produced a 90-day de-escalation of the trade war that has riled global markets in recent months; China agreed to lower its tariffs from 125% to 10%, while the US agreed to lower its measures from 145% to 30%. There are not a lot of details as to next steps at this time, but the sides have agreed to continue working towards a longer-term solution and more balanced trade.

 

• CFTC commitment of traders data from Friday afternoon showed funds were big sellers again in the week; data showed managed money traders were sellers of 57,436 contracts of corn (now net-long 13,893 contracts), sellers of 16,332 contracts of soybeans (now net-long 21,870), and were buyers of 7,681 contracts of Chicago wheat (now net-short 113,734 contracts). Funds have shed more than 350k contracts worth of length since the start of February, when there net-long reached 364,217 contracts.

 

• In soy products, managed money traders sold 5,230 contracts of soybean meal and also sold 6,650 contracts of soybean oil; this makes them now net-short 103,457 contracts of soybean meal and net-long 56,738 contracts of soybean oil. This is a new all-time record short position in meal. This is also the first week of net-selling in soybean oil since the last week of March.

 

• For this morning's May WASDE report, corn production is expected near 15.8 bil bu with an avg yield of 181.1 bu/acre; ending stocks are seen at 2.020 bil bu. For soybeans, production is expected near 4.3 bil bu with an avg yield of 52.5 bu/acre; ending stocks here are seen at 362 mil bu. Lastly for wheat, total production is seen at 1.885 bil bu, while ending stocks are estimated at 863 mil bu.

 

• Cash connected sources say Chinese buyers in recent weeks have bought 400k-500k tons of wheat from Australia and Canada as production concerns due to hot weather so far in the season continue to rise. The purchases typically wouldn't be notable, but are currently as China's wheat imports in the current marketing year are just a fraction of what they were to this point in the 2024 season.

 

• Private ag consultancy APK-Inform said over the weekend that they had lowered their estimate of Ukraine's total grain production by nearly 4% to 55.3 mmt's, though they did not give a reason for the cuts. Corn production specifically was trimmed more than 7% to 27 mmt's, though Ag Ministry data currently predicts planted area will be up more than 2% from last year to 2.9 mil hectares.

 

• According to the USDA, federally inspected pork production in the week ending May 10th was seen at 529 mil lbs, which was down 2% from last week; beef production in the same week was seen at 489 mil lbs, just a fraction of a percent lower than last week. YTD pork production is now down 1.8% from last year, while YTD beef production is down 2.6%.

 

• Other White House news from over the weekend not involving China included comments from President Trump that he would be signing an executive order sometime this morning that would cut prescription drug prices to levels that were similar to those paid in other "high-income" countries, which he said would amount to savings of somewhere between 30%-80%.

 

• It isn't entirely clear at this point whether the two men will actually meet face-to-face later this week, but Ukrainian President Zelensky and Russian President Putin over the weekend appeared to indicate that they planned to hold talks in Turkey on Thursday. Leaders from the EU, meeting in Kyiv over the weekend, had demanded a 30-day ceasefire beginning today, to which Putin responded with a request to hold actual conversations. In a post on X, Zelensky said, "I will be waiting for Putin in Turkey on Thursday. Personally."

 

• Other news on the war front to start the week includes a Saturday ceasefire agreement between India and Pakistan that was brokered by Trump and the US; military leaders from the two sides are expected to speak by phone later this evening, but the meeting has already been delayed from noon local time for currently unknown reasons. India accused Pakistan of violating the agreement after explosions were heard shortly after it was announced, but Pakistan has denied the accusations.

 

• Dry weather conditions continued to dominate the Midwest over the weekend, with near complete dryness seen everywhere north of the OH River generally speaking. Further to the south and east, satellite data shows rainfall over the past 72 hours totaled anywhere from 1-5", with their being several pockets throughout the southeast that saw totals at the upper end of that range.

 

• Models are showing additional moisture potential throughout the southeast and up into the Eastern Midwest early this week, while high pressure otherwise continues to provide another several days of warm/dry weather to the rest of the Corn Belt. Things look to change then the back half of this week and into the weekend, as ridging that has been present will be replaced by a trough of low pressure that will drop temps and bring 1-3" of rain to the northwestern Corn Belt according to the EU model.

 

• Week two forecasts are then still showing above average precip potential through generally the eastern 2/3's of the country, but notable in the forecast is a lack of moisture for a pocket of IA/IL/MO over the next 10 days, which will need monitoring. 5-10 day temperature forecasts show a pocket of cooler air moving back into the north-central US, while 10-15 day maps maintain heat in the southwest, but normal to maybe just slightly above normal air temps elsewhere.