PM Comments June 3 2025
Good afternoon. Turn-around-Tuesday in the ag markets today, with corn making new lows for the move this morning before closing in the green while soybeans got back most of what was lost yesterday. The news front continues to be relatively quiet for the most part, but the presence of a new high pressure ridge in the extended forecast for mid/late June was the main reason for the day's buying.
CN closed Tuesday at 4.38 and 1/2, up 1/4 of a cent. CZ was up 2 and 3/4 at 4.38 and 1/2. New lows for the move in both. SN closed at 10.40 and 3/4, up 7 and 1/4. SX finished at 10.21 and 1/2, up 4 and 1/2. WN closed at 5.36, down 3 cents. Products closed in the green, July soybean meal closed at 294.50, up 60 cents/ton, and July soybean oil closed at 46.81, up 53 points. New lows for the move in bean oil before reversing and closing higher. Livestock markets closed lower, August live cattle closed at 209.75, down $1.25, August feeders closed at 301.22, down 52 cents, and July hogs closed at 104.57, down 40 cents. Outside days lower for live cattle and hogs. Outside markets are trading in the green, crude oil futures are up around $1/bbl, the Dow Jones index is up 210 points, and the US$ index is up 50-60 points; the S&P500 is up 30 points and the NASDAQ is up 150 points. Inside day for crude oil.
Spreads were mixed/mostly higher, corn spreads finished the day up a half cent to down 2 and 1/2 cents, and soybean spreads were up 2 and 3/4 to down a half cent. CN/CU closed at 15, down 2 and 1/2 cents, and SN/SQ closed at 6 and 1/2, up 1/4 of a cent.
As has been the case more often than not in the past few weeks, a lot of the news for Tuesday happened in the overnight, with there being little of note to come out during the day trading session. The morning hours were spent discussing yesterday afternoon's crop progress report, which is common place on most summer Tuesdays. The numbers though did not offer a lot new to speak of, as the slower planting areas in the south have been well known for some time and conditions of both the corn and soybean crops are relatively normal and don't offer a ton of correlation to final yields in any case. Otherwise, headlines throughout the day were limited mostly to social media rumors that President Trump and President Xi were set for a Friday phone call, though confirmation of this has been hard to find as of this writing. Until there is confirmation that the two leaders have had discussions, the market will likely have some measure of skepticism present in the meantime. Other news regarding the situation from Tuesday included a reported meeting between Chinese Foreign Minister Wang Yi and the US ambassador to China David Perdue in which Yi said the US should be the ones to create the necessary conditions to get talks back on track.
Aside from that ongoing situation, it was weather that dominated the rest of headlines and was given as reason for the day's up move. We first off would question the validity of this to some degree, as it would appear that a lack of any other specific reason for prices being higher led some analysts to blame the action on a high pressure ridge that is two weeks out at best. For one, it is our opinion that a little more heat and sunshine (resulting in more GDD's) would actually be net-positive for crops at this point, as a cool and wet spring has been to blame for the relatively benign looking crops seen throughout a lot of Midwest fields. Secondly, as we've repeatedly harped on since April, our confidence in any forecast beyond five or so days remains on the low side due to a lack of momentum in the upper atmosphere and the inability for model runs to maintain much consistency in their outlooks in the extended periods. Remember at the beginning of May, extended range forecasts also called for ridging to develop over much of the central US by the opening days of June, which has not been the case. For these reasons, we would advise a measure of caution over getting too aggressively bullish at this point, and would like to see the forecast develop for another week or so before reassessing the situation.
As far as more specific forecast details go, the mid-day GFS model run moved some of the precip for the rest of this week further south and west than was seen in the overnight run, but otherwise was unchanged in the bigger picture. The forecast still shows a trio of storm systems expected to work across the country by the end of next week, wit the heaviest precip accumulations seeming to be in the southern/southwestern Midwest, where too much rain has been seen throughout most of spring. The bulk of Iowa/northern Illinois/southern Wisconsin and then over into Indiana/Ohio/Michigan expects to see less than an inch of total rainfall between now and early next week, which will need monitored a bit as there are already dry pockets through parts of this region.
Looking then to the week two period, forecasts have seen some notable output divergence over the last 24 hours on both the precip and temperature side. Starting with the precip, the CPC's outlook lines up similarly with the European model as both are forecasting wetter than average conditions throughout the southeast and also in the north along the Canadian border, while showing just average to slightly below average precip chances throughout the central Midwest. The GFS model though, shows the wet conditions in the south east reaching further north, with nearly all of the eastern 2/3's of the country seeing above average precip chances. On the temperature side, the GFS model's week two forecast has the west staying notably warmer than the east, though both sides of the country are expected to be above average, while the EU model sees pockets of similarly warm air on both the west and east coasts, while the Central Plains see temps are that are just slightly above average.