PM Comments May 13 2025
Good afternoon. As was anticipated, today's price action was back on the choppy side, with a morning sell-off in the soybean market giving way higher to prices by the noon hour. Corn futures ended up finishing the day lower, but were some 6 cents off the lows in the old crop as buying emerged here also throughout the late morning hours.
CN closed at 4.42 and 1/2 on Tuesday, down 5 and 1/2 cents. CZ was down 4 and 1/2 cents at 4.41. New lows for the move for CN. SN finished at 10.72 and 1/2, up a penny and 1/4. SX closed at 10.59 and 1/2, up 2 cents. Both took out yesterday's highs. WN was up 2 cents also at 5.17 and 1/4. New contract low here at 5.06 and 1/4. Products were sharply mixed, July soybean meal closed at 293.30, down $4.80/ton, and July soybean oil closed at 51.48, up 1.56 cents/lb. Outside day lower for meal, while bean oil traded to its highest level in the July contract since October of 2023. Livestock markets were mixed, June live cattle closed at 216.32, down 50 cents, August feeders closed at 306.00, down 37 cents, and June hogs closed at 99.50, up $1.20. Inside days for the cattle markets and an outside day for hogs. Outside markets are also trading mixed to sharply mixed, crude oil futures are up $1.60-1.70/bbl, the Dow Jones index is down 270 points, and the US$ index is down 70-80 points; the S&P500 is up 40 points and the NASDAQ is up 310 points. Inside day for the $ index. Also an inside day for gold futures, which are up $25-30/oz.
Spreads were mixed/lower, corn spreads were up a penny and 1/4 to down 3 cents, and soybean spreads were down 3/4 of a cent to up 3 cents. CK/CN closed at -6 and 1/2, up a penny and 1/4, and SK/SN closed at -5 and 1/4, unchanged. CN/CU closed at 14 and 3/4, down 3/4 of a cent, and SN/SQ closed at 2 and 1/4, down 3/4 of a cent. New low for the move for CN/CU at 10, and also new contract lows in the CU/CZ at -13 and 1/4.
What a difference a day makes, as the seemingly non-stop information flow from Monday all but dried up for trading on Tuesday. USDA did not announce any daily sales flashes this morning for the first time since the middle of last week, which was somewhat disappointing to those who had expected to see some sort of buying interest on behalf of China as a sign of progress on the trade front. We've talked about this before, but it just simply doesn't make sense from a business standpoint for China to be buying US beans currently; if there were to be purchases made, they would likely be in a new crop position and would then be subject to debate on what happens should the current tariff situation not get resolved. Nearby, our data shows beans out of Argentina are some 90+ cents cheaper than those out of the US Gulf, and beans out of Brazil are about 60 cents cheaper.
We briefly talked about it this morning, but the policy news out of the Republican tax bill proposal regarding the 45Z tax credit was the main headline maker throughout the day on Tuesday, and drove spot soybean oil prices to gains of more than 3% and to their highest level since late 2023. Most in the industry found the extension through 2031 to be surprising, and were also caught a bit off guard at the verbiage outlining only feedstocks from the US, Canada and Mexico would be able to qualify. Also notable in the proposal is verbiage regarding a tax credit for transportation fuels made from animal manure, which was previously absent, and also text that indirect land use would be excluded when evaluating greenhouse gas emissions. The bill was to be discussed at a House Ways and Means committee meeting this afternoon, but we have heard no further detail from said meeting as of this writing.
There wasn't a ton of market-moving news out of President Trump's first day of visits to the Middle East on Tuesday, where he met with Saudi Crown Prince Mohammed bin Salman. Of note from the meeting was a pledge by the Saudis to increase investment in the US, but perhaps the biggest development was an announcement by Trump that he would be ending sanctions on Syria that had been in place since the late 70's, and would also be meeting with the country's new president Ahmed al-Sharaa on Thursday. Al-Sharaa was formally the leader of a terrorist group linked to al-Qaeda before he was named head of the new interim government in January. Otherwise a lot of the rhetoric from Trump's first day in the region focused on business deals and investments, and less on diplomacy and foreign policy.
The mid-day GFS weather run trended slightly wetter for the northwestern Corn Belt, which will be beneficial as this remains one of the drier spots in terms of soil moisture throughout the Midwest. This area is also expected to sill see significant temperature swings over the next week as ridging moves out, with highs in the upper 90's early this week giving way to highs in the 50's and possible snow chances by next week. Forecasts are also still calling for an additional low pressure system to hit the upper Midwest again next week, which will hopefully help boost moisture levels in N IL/S WI. Generally speaking and amid improved rainfall over the next two weeks, the forecast lacks any real threats and should produce relatively high crop condition ratings when they begin being released in the next couple weeks.
There also aren't a lot of huge concerns regarding global weather, as heat looks to linger throughout China's growing regions but will be accompanied by better rains in the days ahead, while Europe sees a mostly mixed bag of rain and sunshine throughout most of its ag areas. The Russian wheat belt doesn't see a lot of concern currently either, as rains here are also expected to be above average over the next 10 days. And though fading in importance, Argentina is expected to see good late-season rains over the next week to two weeks, while all but far southern Brazil sees mostly dry conditions.