AM Comments May 14 2025

Posted on May 14 at 07:21

Good morning. Ag markets at the CBOT spent the first half of Tuesday evening's trading session in the green before selling emerged around 2am central time to drive values back closer to unchanged, where they currently reside this morning. The ongoing mix of potential trade deals with China, biofuel policy speculation, and US growing season weather has produced a difficult trading environment, which means short term price direction could potentially stay on the technical side. Whether managed money traders have interest in building a net-short corn position into summer is also a major question mark at this point, as they have almost entirely liquidated their winter longs and are now sitting near neutral. Corn futures this morning are trading 1-2 cents lower, soybean futures are trading either side of unchanged, and the Chicago wheat market is trading 4-5 cents lower. Products are mixed, soybean meal is up around $1/ton, and soybean oil is down around 20 points. Outside markets are mixed, crude oil futures are down 70-80 cents/bbl, the Dow Jones index is up 50 points, and the US$ index is down 30-40 points; the S&P500 is up 15 points and the NASDAQ is up 75 points. Gold futures are quietly lower and, along with most of the outside markets, have had a small overnight trading range.

 

Today's Reports: EIA Weekly Ethanol Production/Energy Stocks

 

• Another active morning of deliveries from the CME Group this morning, as there were another 317 contracts of soybean oil assigned, along with 109 contracts of rice, 53 contracts of soybean meal, 18 contracts of Chicago wheat, 16 contracts of corn, and 2 contracts of soybeans.

 

• This morning's weekly ethanol production report from the EIA for the week ending May 9th is expected to show production in the week in a range of 1.00-1.02 mil bbls/day, while stocks are seen between 24.691-25.391 mil bbls. At the low end, this would be the second lowest production figure of this marketing year.

 

• Scouts from the Wheat Quality Council on Tuesday toured 196 wheat fields in the state of KS, and estimated the state's yield based on this data at 50.5 bu/acre on the first day of their annual crop tour. The figure compares to 49.9 bu/acre on day one last year, and the five-year average for that route of 45.1 bu/acre. The group will releases results for the entire state on Thursday later this week.

 

• AgResource Co. President Dan Basse, speaking to Reuters reporters on the sidelines of a grain conference in Switzerland this week, said US soybean exports could drop by as much as 20% compared to current USDA estimates released on Monday if no trade deal is signed with China by the time harvest rolls around this fall. Basse said exports could fall to 1.5 bil bu vs the current estimate of 1.865 bil bu, while futures prices could drop to $9. Basse also added that his upside objective should a deal be agreed to was $13.

 

• After signing a series of trade agreements with China earlier this week, Brazilian President Lula da Silva told reporters earlier today that he was "not concerned" about potential retaliation from the US for building closer ties with the Asian country, adding that "There is no concern on Brazil's side with the US posture." The agreements between the two, among other things, included deals on mining, transportation infrastructure, and ports, as well as purchases of jets made by Embraer SA.

 

• Also among the various agreements was a deal regarding Brazilian corn ethanol DDG's, which China agreed to open its market to. The US in recent years has accounted for almost all of China's DDG imports, but the volume accounts for less than 5% of all US DDG exports annually, as China in 2017 implemented steep anti-dumping duties on the product. Also of note, US DDG exports in 2024 to all other countries besides China hit record levels.

 

• Other news out of Brazil from Tuesday includes reports that SLC Agricola SA, one of the largest producers in the country, intends to increase planted area on their farms next year by nearly 14%. The company said in an earnings call that the increases would primarily be the result of new farm acquisitions made in Q1. SLC plants soybeans, corn and cotton, as well as a few other smaller ag products on its farms.

 

• News related to the palm oil markets in southeast Asia overnight included reports that Indonesia would be expectedly raising its export duty on crude palm oil from 7.5% to 10% starting this weekend, and also reports that veg oil stocks in India had reached multi-year lows in the month of April as prices that were premium to soybean oil continued to limit imports. The price situation has reversed recently, with palm oil priced back below soybean oil, which sources say should boost imports and subsequently stocks in future months.

 

• Despite monthly inflation data on Tuesday that came in significantly better than economists had anticipated, stock index futures had a quiet day of trading and are in a mostly similar mood it seems to start Wednesday's trade. The annual reading of 2.3% was the lowest in over a year, and comes as traders had anticipated the effects of Trump's trade war would begin to show up in monthly data points.

 

• Not a ton new on the weather front again this morning, as the eastern corn Belt picked up slightly better than expected precip totals through the day on Tuesday. Main forecast feature the rest of this week continues to be the low pressure system that will provide rainfall and a cooling of temps for the northwestern Midwest starting this afternoon/this evening and working north and east through the end of the week.

 

• Other news for Tuesday includes President Trump being in Saudi Arabia today to start a four-day swing through the Middle East, and also trade-related headlines from overnight that the low value "de minimis" tariff on Chinese shipments had been reduced from 120% to 54% starting tomorrow, in a further sign of softening relations between Washington and Beijing.

 

• Midwest weather looks to remain in a bit of transitionary period for another day or two this week, as central US ridging begins to subside and give way to a low pressure system that will work across the mid-section of the US Thursday/Friday. The EU model this morning has parts of the Dakota's and MN picking up anywhere from 1-3" by Sunday morning from this system, with some local areas possibly receiving even more than that. The EU model this morning has moved the heaviest of this precip slightly further west into the Dakota's, but still sees 2-4" possible by early Saturday morning.

 

• Then for next week, models see another low pressure system working out of the western US, but this one is expected to take a path slightly more south and is expected to provide precip to the drier parts of W IA, N IL, and S WI Tuesday/Wednesday/Thursday. Key will be how this system evolves through the end of this week and weekend, with the moisture being needed amid temperatures the back of this week that will be well above average. Like we said yesterday, we're not sounding the panic alarm on dryness just yet, but there are areas in the Corn Belt already seeing significant soil moisture deficits.

 

• Extended guidance from the model runs this morning for the week two period took a notably drier shift, which will bear monitoring into the end of the month. Models kept wet conditions for the northeastern US, but shifted back drier for the Midwest and generally most of the western 2/3's of the US. Temperature outlooks beyond this week did not see a lot of overnight change, and continue to show cooler air through the northern US and Canada into next week, while the 10-15 day outlook shows above average warmth in the west and average to below average temps in the east.