Trade is showing more interest in the lack of new crop export demand we are seeing for corn and new crop soybeans. Cumulative new crop soybean sales total just 966,000 metric tons, well below last year’s nearly 3 million mt of sales at this point. What is most concerning is there are no sales listed to China. Soybean bulls claim China and other importers are just being patient in extending coverage and our sales are going to be backloaded. While this is possible, the larger South American soybean crop is also weighing on U.S. sales. A slow-down in global oilseed trade is negative for sales as well.

U.S. corn sales are better with 48.4 mmt of commitments on the books. This is a year-to-year increase of 19 percent, but is still short of where the USDA is projecting sales to be. Cumulative sales were up 35 percent on the year which verifies the slowing demand. Importers are waiting for the safrinha harvest to begin in Brazil before extending coverage as the price of that corn will likely fall below the U.S. once it starts.

One of the greatest disputes when it comes to Chinese trade is on used cooking oil. The U.S. soybean crush industry expanded its capacity in anticipation of higher biodiesel production, but the use of cheaper alternative products such as used cooking oil are restricting soy oil demand. This is the leading reason why officials are asking for restrictions on cheap cooking oil imports from other sources, mainly China. China is being accused of shipping the United States blended oil that only contains a small portion of actual used product. Demand for biodiesel on a whole is below production which is further stressing the industry and soy complex values.

Even though U.S. cattle numbers are historically low, we have started to see higher beef production totals. This is a result of heavier cattle weights than a year ago, with the current carcass weight averaging 890 pounds. This is up a large 33 pounds from last year and adds the equivalent of 20,000 head of cattle per week to beef production.

There are several reasons for the elevated cattle weights, and cheaper feed grains are a primary one. This is not only elevating corn in rations but allowing livestock producers to hold animals longer. Minimal winter stress and favorable pasture conditions are elevating cattle weights this spring as well. We are also seeing more steers and fewer cows in slaughter runs and steers tend to dress higher than cows.

A developing story in the U.S. livestock industry is starting to get national attention. This is the cross breeding we are starting to see in some U.S. dairy herds. The dairy industry has seen its ups and downs recently and is causing some farms to start cross breeding their herds with beef breeds. This will give them the option of raising the calf as either dairy or beef. This cross breeding is not totally uncommon, but given the volatility in livestock markets, farmers are looking at any way of expanding their revenue.

The outside markets are offering little support to the commodities as the odds of interest rate cuts this year are fading fast. A recent comment from The Federal Reserve indicated there is little chance of a rate cut this year at all, compared to earlier thoughts we could see up to three reductions. While the U.S. inflation is slowing, it remains at an elevated level.

Some economists do not feel the Federal Reserve has fully grasped how today’s consumer spending has changed and a higher inflation rate than its 2 percent target may be here to stay. This is mainly from consumers opting to spend money in the current market rather than build some type of savings account. We are also seeing consumers shift their spending habits to continue to allow for expenditures such as dining out, which is positive for commodities, but distorts overall inflation indicators.

Census crush data for the month of April was slightly better than expected. Soybean crush for the month totaled 177.7 million bu, just above the average trade estimate for 175.5 mbu of usage. This was still well below the 204 mbu that was crushed in March and the 187 mbu of demand in April 2023. 

Corn usage for ethanol manufacturing data was also released with less friendly numbers. Corn usage for ethanol manufacturing totaled 417 mbu in April, below the 433 mbu that was expected. This was 12 percent less demand than in March but 1 percent more than in April 2023. Dried distiller grain production came in at 1.76 million tons for April, down 9 percent from March but up 8 percent from last April.

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