We are seeing a shift in the U.S. cash market to being more flat-price driven than futures driven. Farmers across the Corn Belt are showing little interest in marketing right now as futures are below breakeven. Buyers are now being forced to push basis for movement, creating more attractive flat price markets.

This is especially the case for the Eastern Corn Belt where basis values against July contracts are positive on both corn and soybeans. Cash bids of 50 over on corn futures and 40 over on soybean futures are not uncommon in the Eastern market, but bids are now firming in the West as well. More commercial terminals also report being out of marketable bushels which is uncommon for this time of year, and further supporting basis values.

The greatest hindrance for commodity futures right now is the lack of risk premium. Even with several areas of less than perfect crop production already noted, we do not see much urgency from end users and importers in extending coverage. Typically, when there are concerns over commodity supplies, we see more buying activity in the futures market.

One reason for the lack of risk buying in today’s market is that at this time it is difficult to say total production will be less than expected, even with indications it will be. Today’s trade wants proof stocks to use will tighten before buying. This is especially in corn where a considerable increase in production is expected, and a crop loss can be more easily absorbed. Another reason is uncertain demand, especially with record crops out of South America and ongoing U.S. trade war developments.

Renewable and bio diesel fuel production for the 1st quarter of 2025 was down from the same period in 2024. According to data from the U.S. Energy Information Administration, renewable diel production averaged 170,000 barrels for the 1st quarter of 2025, a 12 percent decline from 2024. Biodiesel production averaged 70,000 barrels per day for the quarter, a 30 percent decline from 2024. Renewable diesel fuel can be used straight, while biodiesel needs to be blended with petroleum products, normally at a 20 percent rate. Low margins are a primary reason for this decline, but so was uncertainty surrounding future bending credits that continues today.

The global group Organization for Economic Cooperation and Development (OECD) has updated its world economic growth forecast. The OECD now sees the global economy expanding by 2.9 percent in 2025 and 2026, down from the 3.3 percent growth in 2024. In March, the group had forecast economic growth of 3.1 percent for 2025 and 3 percent for 2026, but this has been impacted by the U.S. trade war. The U.S. economy is now forecast to expand 1.6 percent for this year and 1.5 percent for 2026, well below the 2.2 percent forecast in March. 

Ukraine officials released their 2025 crop production estimate. Ukraine is expecting a total grain crop of 50.1 million metric tons, a 10 percent reduction from 2024. Corn production is forecast at 26 mmt and wheat from 20 to 22 mmt. A lack of inputs, weather, and a loss of land to Russia are main factors for the reduction. Analysts are also forecasting a 5 percent reduction to Ukraine’s oilseed production.

The Census U.S. export data for April was released with positive numbers. Corn exports in April totaled 289.36 million bu, a 21 percent increase from last year and the 2nd largest monthly volume on record. Soybean exports totaled 80 mbu, a 23 percent increase from April 2024. Soymeal exports were a record 1.35 million tons, and soy oil was a 16-year high at 159,050 tons. Wheat exports in April were a 4-year high at 80.7 mbu.

Beef exports for April totaled 273.2 million pounds, a five-year low and a 7.3 percent decline from March. Pork exports were a three-year low at 582.9 million pounds, 9.1 percent less than March’s total.

The U.S. export/import market has quieted recently but remains rather consistent. We remain in a hand-to-mouth market environment where buyers are not extending coverage past a few months, and in some cases, a few weeks. Uncertain trade relations is a primary cause of this market environment, but there are other factors, including fluctuations in currency values, elevated interest rates, and uncertain consumer demand around the world.

A more consistent supply of commodities is also reducing the need to extend coverage much beyond the spot market. Between the United States, South America, and other major grain and oilseed producers, the global supply is being nearly perpetually refilled. This shift to a global market and improved farming practices are also lowering risk of widespread production losses.

It was not surprising that the Federal Reserve opted to leave interest rates unchanged in its last meeting. The Reserve voted unanimously to hold rates from 4.25 percent to 4.5 percent. The reasons were uncertainty surrounding tariff impacts and indications for a tightening labor market. The Reserve is also showing more concern over a stagnating economy. We are still expected to see 50 basis points cut from rates prior to the end of the year, which is optimistic, but the number of members who support a cut is decreasing. The Fed also stated it is showing more concern over the U.S. economy heading into 2026.

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.