PM Comments January 23 2025
Good afternoon. Higher trade was again seen in corn and soybean prices on Thursday, though markets closed well off the highs made earlier in the day by the end of the session. Funds seem determined to continue adding to their net-long positions in both markets, but otherwise, there was once again not a lot of fresh fundamental news that didn't include Trump policy or South American crop production.
CH closed Thursday at 4.89 3/4, up 5 1/2 cents. CK was up 5 and 1/4 at 4.99 1/4. Both had outside days higher; high for CH was 4.94 1/2. SH closed at 10.65 1/2, up 9 1/2 cents. SK was up 9 1/2 also at 10.77 3/4. Outside days higher in the beans also; high for SH was 10.76 1/4. WH closed unchanged on the day at 5.54. Products were mixed, March soybean meal closed at 315.30, down 50 cents/ton, and March soybean oil closed at 45.04, up 62 points. Livestock markets were higher, February live cattle closed at 201.10, up $1.05, March feeders closed at 274.07, u $1.00, and February hogs closed at 82.12, up 65 cents. New contracts highs again for both fat cattle and feeders. Outside markets are trading mixed, crude oil futures are down around $1.20/bbl, the Dow Jones index is up 380 points and the US$ index is down 5-10 points. The S&P500 is up 30 points and the NASDAQ is up 20 points. Inside day as of this writing for the NASDAQ.
Spreads were mixed today, corn spreads were down a penny to up a penny, and soybean spreads were down a quarter of a cent to 3 cents stronger. CH/CK closed a quarter cent stronger at -9 1/2, and SH/SK closed at -12 1/4, unchanged on the session. WH/WK matched its contract low made two weeks ago at -14 today.
Will again start this afternoon's comments with Trump talk, as that seems to continue dominating the bulk of ag market headlines these days. Today, the President virtually addressed roughly 3,000 attendees at the World Economic Summit in Switzerland, speaking on a number of topics ranging from interest rates to trade to global energy prices. Of note in Trump's remarks were calls to Saudi Arabia and OPEC to lower the cost of oil, demands that global interest rates be lowered, and an assertation that the US would be the "world capital of artificial intelligence and crypto." Trump also took continued shots at both Canada and the EU, as harshly criticized each of them for allowing trade surpluses to exist with the US. Crude oil futures saw a noticeable sell-off while Trump was speaking, but market reaction otherwise was mostly non-existent.
Other political news on Thursday included the Senate confirmation hearing for Trump's Ag Secretary nominee Brooke Rollins; traders going into the hearing were interested to hear what her stance on biofuels and ethanol would, as in the past Rollins has been linked to groups opposing the expansion of the US ethanol industry. Though Rollins did admit she was a proponent of fossil fuels, she followed up by saying that she would be a "secretary for all of agriculture" and "a champion for all fuels." Other key points from the hearing included an addressing of current animal disease outbreaks, including bird flu, and also plans for direct farmer payments should another trade war be started due to the implementation of tariffs. Soybean oil futures saw steady gains throughout most of the morning hours, but it is unclear at this point whether the buying was linked to comments from Rollins.
Weekly ethanol production data for the week ending January 17th was largely in-line with previous weeks on the production side, but saw a jump on the stocks side to the highest level since last April. Daily production for the week averaged 1.099 mil bbls/day, which was just fractionally above last week but up 4.3% from the same week last year. Stocks for the week were seen at 25.874 mil bbls, up 3.5% from the previous week's reading and up 0.7% from the same week last year. We estimate corn use for ethanol in the week at 108.6 mil bu's, while cumulative use has reached 2133.7 bil bbls; the USDA's full-marketing year forecast is seen at 5.500 bil bu's. Petroleum data out of the EIA report showed crude oil stocks in the week were down 1.017 mil bbls at 411.663 mil; gasoline stocks in the week were up 2.332 mil bbls at 245.898 mil bbls, and distillate stocks were down 3.07 mil bbls at 128.945 mil. Implied gasoline demand in the week was estimated at 8.086 mil bbls/day, compared to 8.325 mil last week and 7.880 mil last year.
Not a lot to speak of weather-wise for the Midwest on Thursday, as forecasts have been largely unchanged over the past 24 hours. The northern tier of the country and areas around the Great Lakes and further into the northeast see continued snowfall chances into the first part of next week, while parts of Nevada and southern California are also expected to see snow at elevation. Gulf moisture returns to the southeast Sunday/Monday, but as temps continue to warm, the threat of snow is low as the moisture is expected to come as rainfall. Models continue to be in fair agreement on an expected warm up into the opening days of February, while cold air looks to be confined to Canada/Alaska.
It continues to appear more likely by the day that most of Argentina's growing areas will see some sort of beneficial moisture over the next 5-7 days, with a return to dry conditions still expected thereafter. Forecast for Brazil shows a few days of drier conditions in the north and north-central parts of the country over the next 72 hours, but regular rains after, with the two week map showing 2-4" of accumulation for nearly the whole of the country, with some local areas expected to see totals greater than this. A drier pattern will be desired by the Brazilian farmer into the first weeks of February in order to see a timely advance of the soybean harvest and also a subsequent timely advance of safrinha corn planting.