AM Comments January 22 2025
Good morning. Mid-week trade has started with a bit of turn-around-Wednesday action this morning, as markets are correcting a bit of the gains seen yesterday. With spot corn futures at their highest level since May, the question now becomes how far this rally can go with the even $5 level squarely in focus. Similarly for soybeans, prices are within spitting distance of $11 for the first time since late September, meaning here too the upside likely becomes a little more labored from here. That being said, until more is known about crop sizes in South America and what Trump is going to do with tariffs, we would expect support levels to stay relatively strong over the near term in corn and bean markets. Corn futures this morning are trading 1-2 cents lower, soybean futures are trading 2-3 cents lower, and the Chicago wheat market is trading 2-3 cents higher. Products are mixed, soybean meal is up around $1.50/ton, and soybean oil is down 40-50 points. Outside markets are mixed, crude oil futures are up 10-15 cents/bbl, the Dow Jones index is up 140 points, and the US$ index is down 15 points. The S&P500 is up 30 points and the NASDAQ is up 200 points.
Today's Reports: API Energy Stocks
- "Tariffs" were once again the number one overnight headline to start Wednesday, as President Trump has now vowed to also hit Europe with new tariffs to go along with Canada and Mexico, while also mentioning that his administration was discussing a 10% measure on Chinese imports. As we mentioned yesterday, this is an evolving topic and is subject to change near-daily.
- Russian Ag consultant SovEcon on Tuesday left its estimate of the 2025 Russian wheat crop unchanged at 78.7 mmt's, but added that weather risks currently exist and could see that number lowered going forward; the estimate remains the lowest since the 2021 season.
- China's state news agency on Tuesday reported that the country had issued a 'rural revitalization plan' for the next three years, which aims to promote ag modernization and strengthen food security, among other goals. One of the more notable points in the plan includes a pilot program for villagers to contract their land for another 30 years once the current round of contracts expires.
- According to Egypt's Vice Chairman of the General Authority for Supply Commodities (GASC), new state grain buyer Mostakbal Misr purchased roughly 1.1 mmt's of grain in its first month since taking over, with most of this being sourced from private sellers in Russia. USDA currently estimates total Egyptian wheat imports in the season at 12.5 mmt's.
- Reuters this morning is reporting that two sources have indicated China has halted soybean import shipments from five Brazilian companies, citing recent phytosanitary requirement failures. The sources mention the Brazil units of ADM, Cargill, Olam, C. Vale, and Texa Roxa as the companies in question.
- Tech markets, as well as the NASDAQ, are seeing good gains to start mid-week trading as Trump yesterday announced a private sector investment of up to $500 billion to fund infrastructure for AI; the President said OpenAI, SoftBank and Oracle were planning a joint venture called Stargate, which is expected to build data centers and create more than 100,000 new jobs.
- Yesterday's winter storm through the southern part of the US and along the Gulf Coast provided record setting snowfall to parts of LA/MS/AL/GA/FL where upwards of 10-12" fell in places; a more general 4-6" was seen further north, while areas around the Great Lakes also saw heavy snows on the downwind side. Otherwise, light snows dotted the northern Prairies and parts of the southern Plains while the bulk of the Midwest was mostly dry.
- For the rest of this week, models see upper atmosphere flow continuing to push light/scattered systems across the Canadian Prairie and into the upper Midwest/northeast, while the southeast gets a chance to dry out for a few days before activity here again picks up going into next week. Models are also seeing rain potential in the southwest early next week, which would be some of the best moisture seen here in several months.
- Week-two precip maps trended marginally wetter overnight in the southeast, but were otherwise mostly unchanged from yesterday. On the temp side, the central part of the country is still expected to see a slight warm up going into next week, while 10-15 day maps also keep cold air confined further to the north in Canada.
- South America was largely dry on Tuesday, save for areas of far northern and northwest Brazil; the rains were mostly too far north to impact the country's ag areas, which was welcome by producers who are looking to get a start on harvest. Remember, safrinha corn is planted on the same area as soybeans, meaning a delay in the harvest of those beans could be price positive for corn if it also leads to delayed plantings. Argentine growing areas saw little/no rain over the last 24 hours.
- Overnight forecast changes here were minimal, as models continue to see better rain chances for northern Argentina/southern Brazil over the next 5-7 days, before things are seen again trending drier for Argentina in the week-two period. On the temp side, severe warmth continues to be limited to just a small area surrounding Uruguay, while temperatures elsewhere are seen average to slightly above average.