PM Comments May 28 2025
Good afternoon. Mostly lower trade was seen in the ag markets on Wednesday, with spot corn futures leading the downside charge on a percentage basis and the entire soy complex not too far behind. Wheat futures ended up finishing in the green on apparently more concern over early-season crop conditions than there was in the corn market, but otherwise, it was a rather ugly Wednesday at the CBOT.
CN finished the day at 4.51, down 8 and 1/2 cents. CZ was down 3 cents at 4.43 and 1/2. SN closed at 10.48 and 1/2, down 14 cents. SX was down 13 and 1/4 at 10.37 and 1/2. WN finished at 5.30 and 1/4, up a penny and 3/4. Products were lower, July soybean meal closed at 293.70, down $2.60/ton, and July soybean oil closed at 48.93, down 64 points. Inside day for meal. Livestock markets were mixed on Wednesday, June live cattle closed at 213.92, down $1.20, August feeders closed at 295.62, down $2.52, and June hogs closed at 100.27, up $1.17. Inside days for both of the cattle markets. Outside markets have had a quiet day, crude oil futures are up 60-80 cents/bbl, the Dow Jones index is down 220 points, and the US$ index is up 40 points; the S&P500 is down 10 points and the NASDAQ is up 30 points.
Spreads were mostly lower on Wednesday, with corn spreads finishing the day unchanged to 5 and 1/2 cents lower, while soybean spreads were up a quarter to down 4 cents. CN/CU closed at 21 and 1/4, down 4 and 1/2 cents, and SN/SQ closed at 3 and 1/4, down a penny and 1/4.
This week's half way point turned out to be a rather ugly one in the ag space on Wednesday, with a lack of new news producing a rather sharp sell-off across the corn and soybean markets. Yesterday afternoon's lower-than-expected corn crop condition ratings were quickly pushed aside this morning, as there is little correlation between what is generally considered to be a beauty contest in this part of the season and final yields later this fall. Most in the trade also had the opinion that the lack of heat was generally to blame for the poor ratings, not a lack of soil moisture, which should be conducive to a recovery in conditions should normal summer heat return in June or July. Other rumored reasons for the selling in the corn market included speculation that there were possible cancelations out of the Gulf in favor of cheaper South American supplies, but we were unable to find confirmation of this at mid-day. Also adding to the pressure was talk of further increasing corn yields in Brazil possibly cutting more into the US export program this fall; we are skeptical though that this is a main reason for the day's selling, as increasing South American crop sizes have been a known market feature for some time now and don't seem to warrant as sharp a one day sell-off as was seen today.
Otherwise, it was a quiet day on the news front with there being little new of note regarding trade deals or the tax bill that is currently awaiting Senate approval that has important legislation regarding US biofuel policy in it. Aside from crop sizes, which are almost entirely a product of weather at this point, it is these other topics that will continue to have the most impact on longer term ag pricing, which means they will continue to stay at the forefront of market discussions for the foreseeable future.
Minutes from the Federal Reserve's most recent FOMC meeting a couple weeks ago showed nearly every official present expressed some degree of concern regarding inflation being more persistent than previously expected due to tariffs and other economic uncertainty, but really didn't show anything new again as the rhetoric remained similar to what has been seen throughout most of Trump's second term. Notable is that Trump's announced pause in some of his larger tariffs, including those on China, were not announced until after this meeting, which could've had an impact on some committee members' opinions. Other notable points from the report included a note that increased bond market volatility was worth watching, and also that a change in the US dollar's safe-haven status and rising treasury bond yields could have long-lasting impacts on the US economy. The Fed will next meet on June 17th-18th, when policymakers will update outlooks on expected interest rate moves through the end of the year; at the March meeting, the average consensus amongst members was for 2 cuts by the start of 2026.
Will keep weather comments short this afternoon as there continues to be not a lot of change from previous days this week. The bulk of the Midwest/Corn Belt expects to see continued cool/dry conditions through the rest of this week and into the weekend, with rain/storms expected to surround the area to the west, the south and the east. Into next week, models see good rains for the northwest and north-central US, but the central Midwest seems to hold in this drier pattern for most of the next 7-10 days. Week two forecasts continue to show a return to wetter than average conditions for the eastern 2/3's of the US, but this moisture needs to get pulled into the shorter term forecast before any confidence is had in it.