PM Comments May 22 2025
Good afternoon. Selling in the soybean oil market as the result of bearish developments on the 45Z tax credit was unable to spill over into the beans themselves on Thursday, as the market closed higher for the fourth consecutive day this week and is back near the recent highs made last week. Grain markets meanwhile closed mixed to lower, with old crop corn being higher on continued good export news and the wheat market likely seeing some profit taking.
CN closed Thursday at 4.63, up 2 cents. CZ was down 2 and 1/4 at 4.53 and 1/4. SN closed at 10.67 and 1.2, up 4 and 3/4. SX finished at 10.55 and 1/4, up 3 cents. Outside day higher for the SN. WN closed at 5.44 and 1/2, down 4 and 3/4. Products were mixed, July soybean meal closed at 298.50, up $4.40/ton, and July soybean oil closed at 49.11, down 72 points. The low for July bean oil today was 47.95. Livestock markets were mixed, June live cattle futures closed at 215.62, up $1.47, August feeders closed at 299.77, up $3.35, and June hogs closed at 98.70, down 82 cents. Outside markets are mixed, crude oil futures are down 30-40 cents/bbl, the Dow Jones index is up 160 points, and the US$ index is up 40-50 points; the S&P500 is up 25 points, and the NASDAQ is up 150 points.
Spreads finished Thursday mixed, corn spreads were down a penny and 3/4 to up 4 and 1/4, and soybean spreads were down 3/4 of a cent to up 2 and 1/2 cents. CN/CU closed at 22, up 3 and 3/4, and SN/SQ closed at 5, up a penny and 1/4.
Biofuels once again dominated headlines in the ag space on Thursday, as the House passage of President Trump's tax bill brought with it significant changes to the 45Z tax credit that bio and renewable fuel industries were not thrilled with. In an all-night session to try and push the bill through, the GOP-majority House of Representatives made several amendments that eventually stuck, with one being the removal of the ability to transfer credits for 45Z and also 45Q, which is the carbon sequestration credit, beyond 2027. While our understanding of this is not crystal clear, the change is a problem because small producers who don't have the tax liability will also then not be able to monetize the credit, and also because the ability to sell credits previously attracted outside investment, which will likely no longer be the case should the credit not be able to be bought/sold. Previous legislation would've enabled the credits to be traded similar to how RIN's (production credit) are now, and would've created a similar market. It was also reported that the indirect land use change provisions that had been in the original text had also been removed, which would be a negative to producers of domestic feedstocks.
Other news out of the White House today as it pertains to ag was the release of the Make America Healthy Again report by a commission led by Health Secretary RFK Jr. The report's main points were that processed food, chemicals, stress, and over-prescriptions of drugs and vaccines were the main factors behind chronic illness in American children. The report didn't call for any specific regulatory changes or regulations on certain products, which was the fear of a lot of farm groups before the report was released. The director of the American Soybean Association offered criticism of the report, saying that it was "drafted entirely behind closed doors" and that it inaccurately portrayed seed oils and pesticides.
This morning's weekly export sales report for the week ending May 15th showed another steady week of corn sales, while new crop wheat sales beat expectations for the second consecutive week. Starting with old crop numbers, corn sales in the week totaled 1.191 mmt's, with featured buyers being Japan (370,900 mt's) and Mexico (219,300 mt's); unknown destinations assigned out/rolled/canceled 91,200 mt's in the week. Soybean sales totaled 308k mt's, with the featured buyer being Mexico at 134,100 mt's. And wheat sales totaled (13k) mt's, with unknown destinations canceling or rolling 37,900 mt's. On the new crop side, corn sales in the week totaled 218k mt's, with Colombia taking 100k mt's of the total, while soybean sales totaled just 15k mt's to Costa Rica. New crop wheat sales totaled 882k mt's, with the featured buyers being the Philippines (137k mt's) and Japan (102,400 mt's); unknown destinations bought 153,300 mt's in the week.
Weather forecasts are honing in on an area between southeast Kansas and southwest Missouri where rainfall of up to 5" is possible over the weekend and into next week, while the rest of the mid-south and southeast is also expected to see additional rains over the next few days. The Corn Belt, however, sees a drier outlook through the weekend and into next week, with this pattern possibly then extending into the first days of June. Week two forecasts are largely keeping with this same pattern, but as we've said all week, our confidence in any forecast beyond 4 or 5 days is minimal. Temperatures will stay on the cool side for the eastern US into next week, while the west stays well above average into June. The 10-15 day outlook has been relatively unchanged all week in offering continued warmth west, while warmth also returns to the north and northeast and the southeast stays average to maybe slightly below average.