One of the greatest hindrances for the commodity market at the present time is a lack of urgency. This is in both the domestic and export markets. On the domestic side, enough processors have taken downtime for maintenance that we have not seen the competition for bushels we normally do in the spring season.

On the global side, record large crops from South America, currency volatility, and uncertain tariff rates have all combined to reduce importer desire to extend future coverage, as determining a final price ahead of delivery is becoming more difficult to predict. All commodity buyers are showing more concern over consumer demand, and until those numbers improve, all buying interest may be subdued.

This lack of urgency is being most noted in the U.S. soy complex. The United States currently has 508,000 metric tons of new crop soybean sales on the books. Last year the U.S. had forward sold 861,000 mt of soybeans, and the prior year sales totaled 1.84 million mt by this time. One of the big differences is the lack of forward contracting by China. China currently has no new crop soybeans bought from the U.S. China also has just 132,000 mt of old crop soybean purchases left to ship.

Strong domestic demand has quieted some fears of slowing U.S. exports. The U.S. soybean grind in the month of March was a record 206.5 million bu according to Census data. This compares to 190 mbu in February and 204 mbu in March 2024. Soy oil reserves were a little higher than expected at 2.08 billion pounds versus the average trade guess for 1.95 billion pounds. End of March meal stocks were 378,851 metric tons, a five-month low.

Census also reported a March corn grind for ethanol of 454 mbu. This was up 8 percent from February, but a 2 percent decline from March 2024. Dried distiller grain production in March was 1.81 million mt, a 7 percent increase from last month, and 7 percent less than in March 2024.

While the U.S. has not confirmed any new trade deals as a result of recent tariffs, several other countries have improved relations. One of the most noted recently is Brazil solidifying trade relations with China, the European Union, and South Korea. The United Kingdom and India announced they have come to terms on a free-trade agreement that will remove nearly all tariffs between the two parties. As these trade deals start to take place, they will start to lessen U.S. influence on global commodity values.

Depressed commodity prices have started to attract export buyers. The U.S. remains the primary corn source for global importers as not only do we have the largest supply, but we remain price competitive. This may change once the safrinha crop from Brazil becomes available, but that’s not for another several weeks. Brazil’s domestic corn demand is growing which will further restrict the country’s exportable stocks.

Domestic corn and soybean demand remains high as well, but we are seeing some signs of slowing consumption. Soy crush remains high, but margins have weakened and are now holding near $1.30 per bushel. This is not low enough to impact current crush rates, but uncertainty over future biofuel demand and a lack of clarity on 45Z credits are clouding future demand.

The ethanol industry has also seen diminished returns to just 5 cents per gallon, half recent margin. Depressed margins are causing plants to take extended periods of downtime for maintenance, dropping corn demand below the rate needed to meet the current yearly USDA estimate.

Two conflicting long-range weather outlooks have been released. One is the El Nino outlook that shows indicators have now turned neutral. It is believed this will remain steady through the U.S. growing season and into the fall, reducing weather-related crop stress.

NOAA has released its 90-day outlook and is calling for elevated temperatures and reduced precipitation for much of the Midwest, including the Corn Belt. This does not necessarily mean a drought though, which is limiting risk buying in the commodity market. Trade also views current weather as mostly favorable, even with reports of drought in the west and saturated fields in parts of the eastern U.S. 

Trade volume on the CME was up in April, which generated the choppy, volatile trade we have seen. The average daily trade volume on the CME was 35.9 million contracts, a 36 percent increase from a year ago. Ag contracts saw a trade volume increase of 16 percent in April, and option trade increased by 31 percent to 399,000 contracts per day. Corn volume was up 18 percent from last April at 514,000 contracts. Soybean volume was up 20 percent at 366,000 contracts. Daily wheat trading volume was 229,000 contracts, a 26 percent increase from a year ago.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and is believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor is it intended to be relied upon for specific trading in commodities herein named.