May 14 – Stocks are looking to start the day slightly in the green, with the Nasdaq and S&P 500 both trading at two-month plus highs while the Dow Jones looks to recover some of yesterday’s losses. The recent relative calm on Wall Street appears set to stick around for another day, with the VIX still hovering just above the 18 level to start the day, a strong departure from the dramatically high levels of the roughly six weeks prior. The dollar is adding to yesterday's losses, up from overnight lows but still in the red around the 100.7 level at the time of writing. Treasuries are off slightly this morning after rising yesterday, with 10-year yields near 4.49% and 2-year yields at 4.01%. Crude oil is taking a breather after sharp early week gains, with nearby WTI sitting around $63.25/barrel, while the ags are largely mixed across the board.
Average 30-year mortgage rates ticked slightly higher on the week ending May 9th, rising to 6.86% after back-to-back weeks of minor declines from the recent two-month high of 6.90% in mid-April. Overall mortgage application volumes rose by 1.1% week-on-week, down from the sharp 11% gain in the week prior but still marking the first two week stretch of gains since late February/early March. This was driven by a 2.3% rise in applications to buy a new home coupled with a 0.4% decline in refinancing applications. As global trade tensions and economic uncertainty appear to be finally moving in a more positive direction, it will be interesting to keep an eye on these types of readings to get a sense of consumers’ willingness to make major financial decisions in the current environment. The market will also get a fresh look at the sentiment of U.S. consumers with the University of Michigan’s May Survey of Consumers due out on Friday.
The U.S. is lifting long-standing sanctions on Syria, another major takeaway coming from yesterday’s meetings in Riyadh, Saudi Arabia. Following the announcement, President Trump met with new Syrian president Ahmed al-Sharaa, encouraging him to normalize relations with Israel. After ousting their long-serving dictator Bashar al-Assad in December, Syria has been attempting to reshape their image and rebuild relations with the world. With Russia and Iran being among the primary backers of the al-Assad regime, it appears the U.S. is attempting to take advantage of this “fresh start” in order to improve their positioning in the region. President Trump is now in Qatar, with expectations of more investments to be announced after yesterday’s pledge from Saudi Arabia.
The Wheat Quality Council’s 2025 crop tour is underway, with participants making their way across northern Kansas and portions of southern Nebraska on day one yesterday before traveling through southwest and south-central Kansas today and finally wrapping up with central/eastern Kansas before concluding the tour in Manhattan tomorrow. Day one saw much variability, with the northern stretches of the tour in notably worse condition than the south due to lingering drought, though southern stretches were largely in good shape. Reports of disease issues, notably wheat streak mosaic, were fairly common yesterday, though it’s worth keeping in mind these reports typically garner outsized attention. Still, it will be interesting to see how widespread the issues are as the tour progresses today and tomorrow.
Yields were estimated at 50.5 bushels per acre, up from 49.9 on day one last year and sharply above the 5-year average of 45.1 bushels per acre. In fact, this was the highest day one estimate for this tour since 2021. This coincides well with Kansas’ winter wheat condition index sitting at its highest level for the comparable week since the same year, as shown in the chart below. With Kansas being the nation’s top winter wheat producer, much attention in the wheat market has been paid to the improvement in moisture conditions this spring, helping drive KC wheat futures to repeatedly grind out fresh contract lows in recent weeks as managed money continues to add to heavy short positions. July KC wheat does appear to have found some support at the mentally significant $5.00 level, bouncing back nicely yesterday after touching it briefly, though starting today slightly in the red.
