BQC Afternoon Comments April 16.2025

Geopolitics: Japan is one of the first countries to come to the White House and negotiate tariffs as Japanese officials attend a meeting with President Trump and US trade representatives. The baseline 10% tariff and 25% on all automobiles has been implemented already. An additional 24% reciprocal tariff may also be added in early July. The US has a very large military presence in Japan and Japan does help pay to keep those locations operational. Trump mentioned the cost of military support is also on the negotiating table. Japan is the 2nd largest US corn importer behind Mexico. 
Macroeconomics: The Fed Chair Jerome Powell spoke to the country at the Economic Club of Chicago this afternoon. After the newest economic developments, Mr. Powell now has to balance between controlling inflation and supporting the growth of the US economy. Today he believes the US will see higher inflation and lower growth in the coming days/weeks. Investors on wall street are cautious, gold hitting new highs over $3350. The old phrase “Sell in May and walk away” is floating around earlier than expected. This has been the most concerned Powell has sounded in recent speeches, but most of the discuss was less about what Jerome and the Fed know and more about what they do not know. The market would feel much better if they knew the bus driver could see clearly the road ahead.
Ag Fundamentals: Markets will have a normal close tomorrow and settle at 1:20 pm CST. Ag markets will remain closed through Good Friday and will reopen at 7:00pm Sunday evening. Ethanol production fell to a 7-month low last week. The US produced 1.012 million barrels per day and stocks fell 220 million barrels week-over-week. Spot ethanol operating margins also fell to the lowest levels since the tail end of 2022. CBOT brokers believe the managed money has purchased over 1800 corn contracts, around 2500 corn contract and d just under 1000 wheat contracts this week. Last week the largest increase to managed money positions was in soybean oil and canola length. 2-4 inches of rain is expected to drizzle over the southern Midwest and delta regions.Missouri is expected to receive the most rain as their planting season is just begun. As long as farmers catch a good window between rains, confidence is still high that all 95.33 million acres of corn will be planted.