AM Comments May 21 2025
Good morning. Ag markets are coming out of the overnight trade higher for the third consecutive morning this week, though it seems to be the soy complex pacing the gains to start Wednesday as opposed to the previous two days which saw the grains generally leading. We don't see anything specifically new that has caused the flip in leadership, but would assume the buying in the beans is related to crop concerns due to flooding in Argentina and also positive sentiment surrounding Trump's tax bill as it pertains to the biofuel sector, with bean oil also up a good bit this morning. On the other hand, ongoing cool temps and good rains through most of the Midwest should keep the top-side at least somewhat contained short term, which puts our initial upside objectives for this rally at 4.60 on old crop corn and 10.70 on old crop soybeans. Corn futures to start Wednesday morning are trading 1-2 cents higher, soybean futures are trading 6-7 cents higher, and the Chicago wheat market is up 3-4 cents. Products are higher, soybean meal is up around 50 cents/ton, and soybean oil is up 40-50 points. Outside markets are mixed/mostly lower, crude oil futures are up 40-50 cents/bbl, the Dow Jones index is down 330 points, and the US$ index is down 40 points; the S&P500 is down 40 points also and the NASDAQ is down 140 points.
Today's Reports: EIA Weekly Ethanol Production/Energy Stocks
- Though the data slate for Wednesday again looks to be on the sparse side, this morning's EIA weekly ethanol report for the week ending May 16th is expected to show production in the week in a range of 983k - 1.045 mil bbls, while stocks are seen between 24.85 - 25.645 mil bbls. On average, the production figure would be up from last week, while stocks would be lower.
- Argentina's Economy Minister, Luis Caputo, said on Tuesday that the deadline for an export tax cut on wheat and barely shipments would be extended until March 31st of next year, but that the extension would not apply to shipments of corn, soybeans, sunflower, or any derivatives of these products. The extension was originally supposed to expire for all crops in June 30th.
- Earlier this week, the governor of Russia's largest producing region declared a state of emergency for farming citing spring frosts and a current hot/dry forecast into the summer months that will likely hinder production. Rostov became the third area to declare such an emergency, which allows farmers to claim compensation. In 2024, a similar situation caused insurance payments to grow by more than 75% from the year prior.
- Weekly customs data from the EU showed soft wheat exports in the week ending May 18th at just 18.45 mmt's, which compares to 27.89 mmt's through the same day last year. That said, line-up figures would suggest that somewhere around 22 mmt's of soft what have been shipped so far, as ongoing technical issues have caused export data to remain incomplete for several countries.
- A meat industry group in Brazil confirmed that several countries are now rejecting chicken shipments from Brazil following the recent outbreak of bird flu in the country. The rejection terms vary based on each individual country's vet protocols, but sources say the bans have generally been from 2-4 weeks. The industry group argued that the outbreak was contained and that it shouldn't warrant a nationwide suspension of exports.
- Crude oil futures saw strength overnight from a CNN news report that US intelligence agencies had intel that suggested Israel was preparing a strike on Iran's nuclear facilities. The news comes just days after President Trump touted progress with Tehran on a deal to curb the country's nuclear activities.
- President Trump's tax bill will again come under the gun later tonight after the markets close, as the House Rules Committee has scheduled a midnight central time hearing to debate the bill. Internal divisions amongst Republicans regarding cuts to Medicaid and tax cuts in high-cost coastal areas have been the main hang ups, with Trump pushing members of his Republican party to come together to get the bill through.
- Satellite data shows rains through the day on Tuesday and overnight into Wednesday continued to dot the eastern US, with anywhere from a tenth or two to 2" seen in area stretching from the Dakota's to the Carolina's. The heaviest rains in the last 24 hours appear to have been focused in the TN/KY region, which is also where the bulk of the Storm Prediction Center's preliminary storm reports for Tuesday were focused. There were 385 total unfiltered reports on Tuesday, with 371 of these being wind/hail and the other 14 being tornado reports.
- For Wednesday, simulated radar images show additional rains and storms impacting the upper and eastern parts of the Midwest, while areas to the south and west will be drier through the day before storms are seen popping tonight/tomorrow morning through parts of MO/TN/KY. Heaviest totals through the day today are expected in the northeast in parts of OH/PA/W NY. The last couple days of the week then see limited precip potential for most of the Midwest before rains are expected to return to the south/southeast early next week.
- There continues to be fluctuation on the week two precip forecasts, with this morning's model runs now back to showing drier conditions than were seen in yesterday's runs for most of the Corn Belt. There has been consistency on above average precip potential for the south and the southeast into the first week of June, but otherwise, the models have had a hard time agreeing on a solution for the Midwest beyond the next week or so. Temperature forecasts in the week two period trended warmer overnight in the north, but still show average to slightly below average air temps through the mid-south and Gulf Coast area.