AM Comments July 23 2025
Good morning. Higher trade is being seen to start Wednesday morning at the CBOT, with the soy complex leading the mid-week recovery bounce. After two days of selling to start the week, a surprise trade deal announcement with Japan overnight has allowed a bit of a dead-cat-bounce to occur and is keeping sellers on the sidelines at least early on this morning. The announcement has raised hopes that other trade deals are possibly imminent ahead of Trump's August 1 deadline, but even should this occur, it likely does little to alter to pre-existing market trends as US production remains, by far, the number one fundamental driver of price into late summer. Corn futures this morning are trading 1-2 cents higher, soybean futures are trading 6-8 cents higher, and the Chicago wheat market is trading 2-3 cents lower. Products are higher, soybean meal is up $2-3/ton, and soybean oil is up 30-40 points. Outside markets are mixed this morning, crude oil futures are down 40-50 cents/bbl, the Dow Jones index is up 220 points, and the US$ index is up 5 points; the S&P500 is up 20 points and the NASDAQ is up 40 points.
Today's Reports: EIA Weekly Ethanol Production/Energy Stocks
- This morning's weekly ethanol update from the EIA is expected to show daily average production in the week ending July 18th in a range of 1.080-1.097 mil bbls, while stocks in the week are seen in a range of 23.00-23.735 mil bbls.
- The US Wheat Quality Council's annual crop tour this week showed wheat yield potential in North Dakota at around 54.5 bu/acre, which would be just below last year's 55.7 bu figure and compares to the USDA's estimate of 59 bu. The group will release results from the whole tour later this week on Thursday.
- Staying on the crop tour theme, a field survey carried out by Argus Media last week in France showed good wheat yield potential in the country, with scouts estimating yields at around 7.44 tons/hectare, which would be up a little over 3% from the recent average. The group added that they see production reaching 33.4 MMTs this year, compared to 25.6 MMTs last year.
- In a Truth Social post late in the day on Tuesday, President Trump announced that the US had reached a trade agreement with Japan that would see the Asian nation invest upwards of $550 bil in America in exchange for tariffs on Japanese goods being lowered from 25% to 15%. Trump mentioned in the post that Japan would be "opening their country to trade including cars, trucks, rice, and certain other agricultural products, and other things." US rice imports to Japan had been a major sticking point according to sources familiar in previous negotiations.
- The news also rose markets in Europe, as traders there saw the news as reason to be optimistic that the EU could cut a similar deal with Trump ahead of next week's deadline. Trump said that representatives from the bloc were due in Washington for talks later today, while Treasury Secretary Bessent also added that lower level US and Chinese officials would be meeting in Stockholm next week.
- In 2024, two way trade between the US and Japan reached roughly $230 billion USD, with Japan having a trade surplus of nearly $70 billion. Data shows Japan is the US's fifth largest trading partner in terms of quantity of goods. Auto stocks were particularly pleased with the overnight announcement, showing sharp pre-market gains this morning; Japan's auto sector accounts for more than a quarter of all product exports to the US annually.
- President Trump, in a separate post, also indicated that the US had reached a trade deal with the Philippines following what he described as a "beautiful visit" by President Ferdinand Marcos Jr to the White House on Tuesday. The post says the deal includes a 19% tariff rate on goods coming into the US, while US goods to the Philippines would have a tariff rate of 0%, but offered little else in terms of details.
- Weekly customs data from the EU showed soft wheat exports in the current marketing year at 0.51 mil tons, which is down more than 1 mil tons from the same week last year. Data also shows soybean imports in the season at 0.52 mil tons, which is down 0.25 mil tons from the same period last year. Customs data remains incomplete due to ongoing technical errors, with data for several countries incomplete for the last 2-3 years.
- Still not a lot new weather-wise again for Wednesday, as models continue to see widely scattered thunderstorm activity through the northern Corn Belt the rest of the week and into the weekend. Temperatures, meanwhile, will begin generally warming across most of the Midwest today/tomorrow, and look to stay well above average into next week. The heat will potentially add crop stress to local areas that have been short-changed on moisture recently.
- The EU model's week two forecast shifted notably wetter overnight in the central Plains and northern US, but trended drier in the eastern US and southeast. The GFS model also added moisture in the west, but continues to be more scattered with its output than the EU forecast is. Extended temperature outlooks trended cooler again overnight, with models in decent agreement on cooler weather returning towards the end of next week.