May 13 – The Nasdaq is leading the way higher at mid-day, up 1.5% as it pushes to its highest level since late February. The S&P 500 is up more modestly while the Dow Jones continues to hang slightly in the red, dragged down by UnitedHealth Group (-16%) following the company’s CEO unexpectedly stepping down and forward outlooks being pulled. The VIX continues to show a growing sense of relative calm on Wall Street, dipping to a low of 17.65 this morning and hovering around the 18 level at the time of writing. The dollar has continued to slide gradually through the session, now hovering just above the 101.1 level. Treasuries are pushing higher at mid-day, with 10-year yields now trading above the 4.49% level while 2-year yields reach 4.01%. Crude oil is continuing to rally, with nearby WTI surpassing yesterday’s high as it trades near $63.70 to mark a fresh two-and-a-half week high. The ags are mixed at mid-day, with the wheat complex now in the green, while the cattle complex loses steam from morning highs.
Saudi Arabia has pledged a $600 billion investment in the U.S. at today’s meetings in Riyadh, a follow-up on their initial offer made in January shortly after President Trump took office. The commitment reportedly includes $142 billion in defense sales, in what would reportedly be the largest arms deal between the two nations. Other details have thus far been scarce, though the deal will reportedly include increased cooperation across energy, mining, space exploration, and other sectors. We’ll likely find out more as the day’s festivities conclude.
Expiration of the 45Z tax credit would be extended by four years through the end of 2031 under draft language released yesterday by lawmakers ahead of today’s Ways and Means Committee meeting. Biofuel producers have long been waiting for clarity on the 45Z and other tax credits, and this move could represent a first step in the right direction as it garners much needed lawmaker attention. Renewable Fuels Association President Geoff Cooper was quoted as saying “these tax policies can help support expanded production of American energy, accelerate technology innovation, and boost rural economies by creating manufacturing jobs and opening new markets for America’s farmers.” Perhaps the biggest news from the proposed bill’s language is the restriction of the credit only for producers of fuel made with feedstock from the U.S., Canada, or Mexico. The biggest impact here would be the restriction of using cheap, imported used cooking oil from China or elsewhere, though we would also hope to eventually see measures taken to prevent these flows simply coming in through Canada or Mexico first.
USDA appears optimistic that domestic biofuel producers will receive the needed government support in the year ahead, with their 2025/26 U.S. soy crush estimate coming in at what would be an all-time high of 2.490 billion bushels. With a second consecutive year of record South American soybean production expected, finding additional demand outlets for U.S. soybeans will be critical to support prices. Corn used to produce ethanol and by-products was pegged at 5.500 billion bushels in 2025/26, even with the current marketing year. If realized, this would be tied for the second-highest annual usage of all-time, trailing only the 2017/18 marketing year. While it’s good to hear some progress on the tax credit front, the market is also waiting for the EPA to announce 2026 renewable volume obligations (RVOs). EPA head Lee Zeldin said last week that an announcement would be coming “soon,” and rumors in the market have continued to circulate since, with expectations of hearing something either this week or next. Obviously, this announcement will have major implications for shaping domestic demand expectations in the year ahead.
Small business optimism fell in April, though by less than expected, with NFIB’s Small Business Optimism Index declining by 1.6 points down to 95.8 on this morning’s release. While this is the most pessimistic reading since October 2024, it was still well above analyst estimates of a sharper decline to 94.7 and a smaller month-on-month drop than that seen in March. Additionally, the Uncertainty Index continued to fall from the all-time high set back in February, dipping 4 points month-on-month to 92. On a more negative note, the percentage of small business owners anticipating an improvement in business conditions fell by a further 6 points to only 15%, with tariffs cited as the top concern.
