PM Comments May 27 2025
Good afternoon. Quiet start to the holiday-shortened week in the ag markets on Tuesday, as the grain markets spent the day being led lower by wheat, while the soy complex traded marginally higher for most of the day on a morning bean oil rally that mostly faded by the closing bell. On the other hand, stock index futures saw strength all day to start the new week, as positive rhetoric surrounding trade with Europe lifted sentiment here.
CN closed Tuesday at 4.59 and 1/2, unchanged on the day. CZ was down 4 and 1/4 at 4.46 and 1/2. Inside day for CN. SN finished at 10.62 and 1/2, up 2 and 1/4. SX was up 1/4 of a cent at 10.50 and 3/4. Inside day for both old and new crop here. WN closed at 5.28 and 1/2, down 14 cents. Products were quietly higher, July soybean meal closed at 296.30, up 10 cents/ton, and July soybean oil closed at 49.57, up 22 points. Livestock markets started the week mixed, June live cattle closed at 215.12, down 67 cents, August feeders closed at 298.15, down $2.22, and June hogs closed at 99.10, up 80 cents. Cattle markets had outside days lower and the hog market had an outside day higher. Outside markets are trading mixed, crude oil futures are down 50-60 cents/bbl, the Dow Jones index is up 720 points, and the US$ index is up 45 points; the S&P500 is up 120 points and the NASDAQ is up 480 points. New lows for the move for the $ index. Gold futures have had an inside day and are down $60-70/oz.
Spreads were mixed on Tuesday, corn spreads ended the day down a penny and a quarter to up 4 and 1/4, and soybean spreads finished the day down 3 cents to up 2 cents. CN/CU closed at 25 and 3/4, up 4 cents, and SN/SQ closed at 4 and 1/2, up 1/4 of a cent.
Much of the news cycle to start the week on Tuesday was dominated by weekend headlines, with most in the ag markets awaiting the initial release of the USDA's weekly corn condition ratings later this afternoon. While cooler weather throughout a lot of the Corn Belt the past couple weeks has led to some scattered discussions of poor-looking crops, it is still expected that the timely planting pace and good moisture so far in the season will see conditions start near the higher end of the recent years' range. Geographically, it will likely be the same areas in the southern Midwest that have seen planting delays through April and May that will start out with the worst conditions, as the abundance of moisture here has made stands a little sloppier than desired. For this reason, we're particularly interested in the ratings for states like Illinois and Missouri, where the question will be how much do good conditions in the central and northern parts of these states offset the wet conditions in the south.
Other news for Tuesday included the weekly export inspections report for the week ending May 22nd, which showed yet another strong week of corn and wheat loadings, while the loadout of soybeans continues to be slow. USDA data showed corn inspections in the week at 1.396 mmt's, which was down 19% from last week, while soybean inspections were seen down 11% at 195k mt's and wheat inspections were seen up 33% on the week at 562k mt's. Both the corn and the soybean number were at the lower end of trader expectations, while the wheat figure was above the upper end. Cumulative marketing year inspections for corn are running 29% ahead of last year, soybeans are running 11% ahead of last year, and wheat inspections are running 16% ahead of last year.
We also mentioned bean oil back in the news this morning, though as the was the case last week, all of the headlines are entirely rumor-based, and we've still yet to see any actual clarification on any of the outstanding items of the RVO, SRE's, or anything else having to do with 45Z. It was rumored last week that we'd be getting a renewable volume obligation, then it was rumored that the EPA would be making an announcement on the backlogged small refinery exemptions that have been in limbo since the Biden admin, then it was rumored that both of these things could come out over the long holiday weekend; as of this writing Tuesday afternoon, there is still no announcement on any of the matters, which led soybean oil to once again retrace most of it's overnight trading range by the close this afternoon, much like was the case several times last week. As long as policy headlines remain present in this market, we would advise extreme caution over chasing a position in either direction until more concrete info is known.
The other weekend headline maker in the commodity space that garnered most of the outside market attention to start the week was the report of a delay in Trump's tariffs threats to the EU by eight days to June 9th. Trump last week said that he would implementing new 50% trade measures on Europe due to the lack of progress made in ongoing talks. Whether you agree or disagree with his policies, its tough to argue against the results; the threats prompted weekend discussions between Trump and Commission President Ursula von der Leyen, which apparently showed enough signs of progress in Trump's eyes to walk back the threat, giving them until June 9th to negotiate some sort of deal. He further added in a Truth Social post this morning that EU leaders had already reached out to schedule meeting dates, which he said he hoped would come to fruition. It is unclear today just how realistic a trade deal between the two is between now and June 9th, with much of the rhetoric on potential deals in recent weeks surrounding India, Japan and China.
A lack of overall momentum in the upper atmosphere will likely continue to give forecast models fits over the next week, with the pattern largely seen remaining similar to how last week ended. The bulk of the Corn Belt, especially areas to the north and northwest, we just limited precip over the next 5 days, while the mid-south and southeast hold in a wetter pattern. Rainfall totals between now and Saturday morning are estimated by the EU model in a range 1-3" generally speaking for an area from E Texas through the southeast and into North Carolina and the Virginia's. On the temperature side, things this week will continue to be cooler than average in the east, while the west stays warm for what looks like most of the next 5 days. The 5-10 day map then shows a bit of a pattern shift emerging as the Western US ridge is pushed north and east into Canada, causing a warm-up in temps for the central US while the West Coast sees more average to slightly below average temps. Our confidence in the forecast into next week remains low, but week two models are then showing above average precip chances for the norther US June 4th-10th, while temperatures look to be above average for most all of the country, with the warmest air seen in the east.
On the global weather front, longer term patterns talked about in recent weeks largely remain in place, but both the models and China's state meteorologists see improved rains coming in the weeks ahead. The moisture will be a bit of a double-edged sword though, as too much rain will cause delays in wheat harvest that is just getting started or will be getting started over the next couple weeks. In Europe, the Black Sea region/western Russia saw good rains over the weekend but continue to have longer term moisture deficits in areas, while parts of western Europe continue to see a good mix of rain and sunshine that has been good for early season crop development. Lastly, India's monsoon season appears to have started about a week early this year, as rains began falling in the country's south on the earliest date since 2009 this year. The added moisture is raising crop prospects in the country, and is also leading to some predictions of an early harvest due to planting that likely begins in mid-June instead of the usual late-June timeframe.