PM Comments May 12 2025
Good afternoon. Monday saw two-sided trade across the ag space to start the new week, as a combination of good news with China and bullish data from the USDA produced a pop across the soy complex, while the wheat market sagged on larger-than-expected supply figures and corn was stuck in the middle. With initial supply and demand estimates for the 2025/26 season now out in the open, it becomes all about weather at this point as the bulk of the US growing season lies dead ahead.
CN closed USDA Monday at 4.48, down a penny and 3/4. CZ was up 3 and 1/2 cents at 4.45 and 1/2. Outside day lower for CN. SN closed at 10.71 and 1/4, up 19 and 1/2 cents. SX was up 27 cents at 10.57 and 1/2. Both traded to their highest levels since February. WN finished the day at 5.15 and 1/4, down 6 and 1/2 cents. New contract low at 5.14. Products were higher, July soybean meal closed at 298.10, up $4.0/ton, and July soybean oil closed at 49.92, up 1.35 cents/lb. Outside day higher for meal. Livestock markets started the week higher, June live cattle closed at 216.82, up $2.15, August feeders closed at 306.37, up $6.07, and June hogs closed at 98.30, up 72 cents. All three had gap-higher opens, and both cattle markets again made new contract highs. Outside markets have spent most of the day trading higher, crude oil futures are up around $1/bbl, the Dow Jones index is up 1,200 points, and the US$ index is up 140 points; the S&P500 is up 190 points and the NASDAQ is up 800 points. All three major stock indices gapped higher last night and also made new highs for the move today. Gold futures are down around $100/oz.
Spreads ended the day mixed, corn spreads were down 5 and 1/4 cents to up up 2 and 1/4, and soybean spreads were down 7 and 1/2 cents to up 6 cents. CK/CN closed at -7 and 3/4, up a half cent, and SK/SN closed at -5 and 1/4, up 2 and 1/2 cents. CN/CU closed at 15 and 1/4, down 5 and 1/4, and SN/SQ closed at 3, down a penny and a half. New lows for the move in CN/CU at 14. CU/CZ closed at -12 and 3/4, unchanged on the day.
To start with this morning, USDA extended their streak of daily sales flashes to three going back to last week, as private exporters once again announced sales of 120,000 mt's of soybeans for delivery to Mexico; like the corn sales announced last week, the delivery windows were split, with 24,000 mt's of the total being for delivery during the 2024/25 marketing year, and the other 96,000 mt's being for delivery during the 2025/26 marketing year. USDA then also released weekly export inspection data this morning for the week ending May 8th, which was rather ho-hum and didn't offer a lot to either the bulls or the bears. Corn inspections in the week totaled 1.224 mmt's compared to 1.617 mmt's last week, soybean inspections totaled 426k mt's compared to 334k mt's last week, and wheat inspections totaled 405k mt's compared to 412k last week. For the year, corn inspections are now running 29% ahead of last year, soybean inspections are running 11% ahead of last year, and wheat inspections are running 15% ahead of last year.
Of little importance was the export data though to the broader market action this morning, as the USDA's next data drop of the day, the May WASDE report, was the session's big talking point beyond mid-morning. The report was always going to be highly discussed following its release regardless of what numbers were actually printed, as there always exists someone with a contrary opinion somewhere to what the government thinks is going to be the supply and demand situation for corn and soybeans several months ahead of time.
Diving into the new crop numbers (2025/26), USDA gave positive surprises on ending stocks figures for both corn and soybeans, pegging new crop corn carryout at 1.800 bil bu and new crop soybean carryout at 295 mil bu; the corn figure would be up from this year but still well below the 2.0 bil bu that was generally expected, while the soybean figure would be down from this year and similar to levels seen in 2021/22/23. Not going to discuss a bunch on the production side, as the USDA used March acreage figures and trendline yields to get to a corn production figure of 15.820 bil bu and a soybean production figure of 4.340 bil bu; other notable balance sheet adjustments though from old crop to new crop included a 75 mil bu bump in corn exports, as well as a 75 mil bu bump in crush on the soybean side. To the corn exports, it is interesting that USDA sees sales exceeding what was generally considered to be a fairly good year of exports this year by a decent margin, and to the crush, it is interesting that USDA sees such a notable jump with there still be nothing on paper in terms of volume mandates or policy. We understand the increase in capacity year/year, but without tax incentives, we assume not all of this capacity will be utilized. Also of note is increased estimates for corn feed and residual use, though we can't really make a good case against this due to increased production. Our last point of note on the new crop side was the average farm prices, which were shown at $4.20 for corn (-15 cents from last year) and at $10.25 for soybeans (+30 cents from last year).
For the 2024/25 crop, USDA raised corn exports 50 mil bu and also raised soybean exports 25 mil bu, which were each trimmed directly from their respective ending stocks figures, which also then subsequently led to smaller carry-in numbers for the new crop. Aside from this though, there was expectedly not a lot new on the old crop side. Looking at wheat data in the report, most of the bearish sentiment came via production, as the all-wheat figure was seen down from last year but well above the average trade guess at 1.921 bil bu. New crop carryout was seen at 923 mil bu as a result, which was also bigger than what the trade had expected. There weren't a lot of changes year-to-year on the balance sheet, with exports being just 20 mil bu lower and total use being down just 18 mil bu.
Lastly on world side of the USDA's report, world corn ending stocks were seen at 277.8 mmt's compared to 287.3 mmt's this year, while soybean stocks were seen at 124.3 mmt's compared to 123.2 mmt's and wheat stocks were seen at 265.7 mmt's compared to 265.2 last year. For corn, production is expected to be higher year/year in Brazil, Argentina, and Ukraine, while soybean production is expected to be higher in Brazil but lower in Argentina. USDA also adjusted Brazil's old crop corn figure higher by 4 mmt's to 130.0 mmt's, and added 1.1 mmt's of production to their old crop EU wheat production estimate. Also of note on the old crop side, USDA lowered export forecasts for corn and beans from both of Argentina and Brazil, and also lowered wheat export forecasts from Argentina, Australia and Russia.
Otherwise, prior to the USDA data being released this morning, market chatter was all about China, as the weekend talks between Beijing and Washington that went better than many had expected had most everyone trying to figure out what would happen next during the first few hours of the day today. And to that end, we unfortunately have little insight as of this writing this afternoon. While we see the 90-day pause certainly as a step in the right direction, 90 days is not an overly lengthy amount of time to more or less do an entire reset on the trading situation between any two countries, let alone the world's two biggest economies. However, Treasury Secretary Bessent indicated in comments over the weekend and also again on Monday that the two sides at least seemed to have a desire to work towards a longer term deal; said Bessent, "The consensus from both delegations this weekend is neither side wants a decoupling. We want more balanced trade, and I think that both sides are committed to achieving that." Furthermore, Chinese vice Premier He Lifeng told reports that the talks were "candid, in-depth, and constructive," while also adding that "the meeting achieved substantial progress and reached important consensus." Bessent also mentioned on Monday that there currently was not a subsequent meeting scheduled but that the sides were ready to continue negotiating; President Trump meanwhile told reporters that he could "maybe" speak with Chinese President Xi by the end of this week, but this seems to just be hearsay at this point.
Briefly touching on some of the other ongoing geopolitical flashpoints around the world, military officials from India and Pakistan met by phone during the day on Monday and agreed to consider immediately reducing the number of troops on both sides of the border and forward fighting areas, as the ceasefire brokered by the US on Saturday appears to be on shaky ground but holding. Elsewhere in the Middle East, President Trump said progress was being made with Iran and that they were "acting intelligently"; the President has planned visits in the region this week to Saudi Arabia, Qatar, and the UAE, but is not planning to visit either Israel or Iran. And lastly, the President also made remarks to reporters on Monday that he had thought about "flying over for the Ukraine meeting" adding that there was still a possibility that could occur if he felt that there was a chance something could actually happen. There have been no new details on that front throughout the day today, with there seemingly still being an open invite from President Zelensky to President Putin to meet in Turkey on Thursday.
US forecasts through the week this week show a cut-off low pressure system continuing to spin through the eastern US the first half of this week, before a stronger low pressure system works its way through the mid-section of the country Thursday/Friday and into the weekend. This system is expected to provide 1-2" of rainfall to parts of the Dakota's/Minnesota by the end of the week, but the models are in slight disagreement on exact locations; the EU sees the rains reaching further into the Dakota's, while the GFS keeps the moisture more east towards Minnesota. Like we talked about this morning, notable in this forecast is a pocket of dryness in Iowa/Illinois/Missouri, which the forecasts see missing out on a majority of this precip into next week. Further out, week two forecasts this afternoon have stuck with their wetter solution for most of the Corn Belt again, but as was the case last week, these rains will need to be pulled into the near-term forecast. Temperature-wise, the coming low pressure system mid/late-week will also bring cooler air temps with it, which has caused the models to forecast mostly below average temperature anomalies for th western 2/3's of the US in the 5-10 day period. 10-15 day maps show ridging returning to the west though, with temperatures rebounding to above average levels. As is common most of the time during the month of May, our confidence in any forecast beyond a week is minimal.
Do not take today's USDA numbers as gospel; while there is a chance they are accurate, there is also a chance they aren't as there exists a plethora of variables that could alter these outlooks between now and fall.