5.2.25 Tredas Weekly Recap

Weekly Action:

July25 Corn down 8.5 to $4.6875

July25 Beans up 8.5 at $10.5825

July25 KC Wheat down 9 to $5.4175

July25 Cotton down 39 at 68.41

July25 Chi SRW down 1.75 to $5.43

June25 Hogs down $0.60 at $99.45

June25 Fats up $3.125 to $211.425

Aug25 Feeders up $2.35 to $296.90

 Dec25 Corn down 5.25 at $4.4975

Nov25 Beans down 3.75 at $10.305

July26 KC Wheat down 10.25 to $6.1125

Grains:

Markets started off the week lower, before chopping sideways to end the week. Favorable weather and planting pace pressured the markets. Now trade will turn its focus to the May 12th WASDE which will be the first time they put a yield on the 2025 crops. Also, trade is expecting lower demand in the export category due to tariffs/trade war. The USDA Ag Forum used 181bu yield back in February, which would put the carryout closer to 2.2B with a 14% stocks to use ratio. For reference the 2024 corn crop is 1,465B and 9.6% stox/use.

In an effort to understand trends and history, we went back and looked at the last 15 years of May’s projected yield compared to the final Jan yield. Of those years, 6 of the 15 yields increased by an average of 2.4%, while 9 of 15 years they decreased by an average 5.8%.  2012 was the largest outlier with a 25% decrease in yield.  If we remove 2012, the average yield decreased by only 3.3%. If we have an average increase in yield of 2.4%, we’d take yield to 185bu/acre, have a carryout of 2,536B and have a 16% stox/use ratio. An average decrease, including 2012, at 5.8% would decrease yield by roughly 10bu to a 170.5 bu/acre yield, bringing carryout to 1,400B and 9% stox/use. Excluding 2012, decreasing yield would be 3.3%, and that would take yield to 175bu/acre with carryout at roughly 1,638B and a 10.8% stox/use ratio.

Now what do we do with information? This data highlights the potential volatility and weather premium that could be added, and even if we have a 10bpa decrease, we are still close to where we sit today from a stocks to use standpoint. It should be noted that the world totals, as well as all major exporters of corn, are projected to increase production as well. Weather will be the driving factor moving forward, followed closely by trade deals.

Having a plan for potential upcoming rallies, and knowing your next steps are extremely important, as the seasonal marketing timeframe will taper off in ~75 days.

Weather:

Currently, corn production areas are suffering a drought in 20% of total area, compared to 19% at this time last year. From this pattern, Nebraska is suffering a drought in 80% of our corn/soybean growing area, the highest in the nation, followed by SoDak at 43%. Iowa and Illinois clocked in at 8% drought conditions.

The precipitation forecast for the next 7 days has Kansas, Oklahoma, Texas, Illinois and Indiana in the 1-3in range, while temperatures remain either side of normal for this time of year. The two maps below are the 7-14 day maps, according to BAMWX – which appear the next 30-day pattern will set up being warmer and drier. Top map showing precipitation as % of normal, and bottom is temperature.

Economy:

The current trade conflict dominates headlines as we still await news regarding trade deals with India and Japan. China is squarely in the crosshairs of trade war escalation. In 2024 the US exported $143.5 billion of goods to China, including $34B worth of soybeans, corn and pork. Some portion of these tariffs on China will get passed back to the American consumer, which has the potential to raise inflation, then interest rates. China also holds $759 billion in U.S Treasury bonds, and if China were to dump these on the global market and buy gold, it would reduce price of our bonds, thus another potential increase in interest rates. Nonetheless, President Trump has set a hard stance on wanting interest rates to decrease. Conflicting reports of making progress with China are coming from the US, and the opposite narrative is coming from China. Trump and Xi have yet to step to the negotiation table together.

Something That Probably Means Nothing:

The first weekend of May brings the oldest major sporting event which has been running since 1875, the Kentucky Derby. Mint Julep is the signature drink for the Derby, having been served there since the first race in 1875. It is estimated that 125,000 Mint Juleps will be sold at the race this year. For context, those 125,000 Mint Juleps equate to 10,000 bottles of Kentucky bourbon, 2,250 pounds of fresh mint and 475,000 pounds of ice. For all of you horse betters out there, Journalism is the current favorite at 3-1 odds. Grande is a long shot at 20-1, in case the underdog is more your speed.

Quote of the Week:

"You must expect great things of yourself before you can do them." - Michael Jordan 

Have a great weekend!