Markets are trading higher this morning with beans catching the best bid on news that the U.S. and China had agreed to roll back tariffs for a 90-day period. Outside markets are reacting as well with equity and energy markets sharply higher while U.S. bonds are trading lower.
The USDA will be out at 11 with the May supply and demand estimates, which will feature their first balance sheets for the 2025/26 marketing year.
Friday’s CFTC report showed that for the week ending 5/6, managed funds were net sellers of 57k corn to drop the net long to 14k, net sellers of 16k beans to drop the net long to 22k, and net buyers of 8k wheat to reduce the net short to 114k. The selling in corn was much greater than expected while the wheat and bean positions were in line with expectations.
Managed funds on Friday were estimated as net buyers of 3k corn with the net position estimated as long 6k, net buyers of 6k beans with the net long estimated at 30k, and net sellers of 4k wheat with the net short now estimated at 122k.
The U.S. and China agreed to lower tariffs on Chinese imports to 30% from 145% and China agreed to lower import tariffs on U.S. goods to 10% from 125%. The lower rates are expected to be effective for 90 days.
The U.S.$ is trading at its highest level since early April following the news regarding trade.
The U.S. Sec. of Agriculture said she would suspend imports of live cattle, horses, and bison through the southern U.S. border to prevent the northern spread of the New World screwworm.
Japan’s Prim Minister said that increasing corn imports from the U.S. would be among options in trade negotiations with the U.S., but also said they would never sacrifice their agriculture industry to win lower auto tariffs.
China is hosting bilateral trade talks with Latin American trade partners Brazil, Colombia, and Chile this week.
Chinese buyers reportedly bought 400-500 tmt of Australian and Canadian wheat over the last few weeks as the Chinese wheat crop deals with heat stress.
APK-Inform revised their 2025 Ukraine soybean crop higher to 6.11 mmt from 5.9 mmt previously.
Corn posted a higher high, higher low, and higher close on Friday, but prices did pull back from intraday highs with prices remaining near the bottom of its recent range today. The market is starting to correct from oversold with room to bounce more as that happens. Support for July is 4.40 and resistance 4.60.
Beans posted a higher high, higher low, and higher close on Friday with the market potentially breaking out of its recent range to the upside this morning. The market is overbought after recent gains. Support is 10.60 and resistance 10.80.
Corn is likely to be trading near recent lows as we head into the May crop report this morning. U.S. exports have been strong enough to revise demand higher, but we also know the USDA will be using a big planted area and likely a trend yield of 181 bpa, which will produce comfortable balance sheets for 2025/26. With that said, we’ve taken a lot of risk premium out of the corn market as the crop has been planted with focus expected to shift to U.S. summer weather. With a lot of dry areas across the Midwest, prices should be well-supported until better rains materialize.
Beans are surging this morning on the U.S./China trade talks. While that is certainly an encouraging development, we still have the USDA report this morning that is expected to show large U.S. supplies of old crop beans, record global supplies of old crop beans, and a 2025/26 global balance sheet that will likely show another record carryout. Weather will need to cooperate for that to happen, but regardless of trade developments, the supply and demand outlook for beans is concerning. Make sure sales are caught up and consider adding puts to protect downside risk on unsold bushels.
Corn up 3-5
Beans up 15-20