PM Comments January 24 2025
Good afternoon. Happy Friday. Sellers were active from the word go this morning in the corn and soybean markets, driving values to lower closes on the last trading day of the week. With the Chinese out on holiday for most of next week for their Lunar New Year holiday and political news out of Argentina leaning bearish via a potential new influx of supply on tax measures, traders saw plenty of reason to bank profits on long positions going home for the week on Friday. Furthermore, this will also be the first weekend of Trump's second Presidency, meaning headline risk exists from errant social media posts between now and the open Sunday evening.
CH ended the week at 4.86 1/2, down 3 and 1/4. CK was down 2 and 3/4 at 4.96 1/2. Inside days for both. SH was down 9 and 3/4 at 10.55 3/4. SK closed at 10.68 1/4, down 9 and 1/2. WH finished at 5.44, down 10 cents. Products are mixed, March soybean meal closed at 304.90, down $10.40/ton, and March soybean oil closed at 45.22, up 18 points. Meal has an open chart gap from the open last night, while oil had an inside day. Cattle markets again closed higher for the third consecutive session; February live cattle closed at 204.77, up $3.67 and March feeders closed at 276.57, up $2.50. February hogs closed at 82.30, up 17 cents. New contract highs once again in both live cattle and feeders. Outside markets are lower, crude oil futures are down 20-30 cents/bbl, the Dow Jones index is down 175 points and the US$ index is down 60-65 points. The S&P500 is down 20 points and the NASDAQ is down 140 points. Inside day for the Dow.
Spreads ended the week mixed/lower; corn spreads were down a half cent to up a half cent and soybean spreads were down a quarter of a cent to down 5 and 1/4 cents. CH/CK closed at -10, down a half cent, and SH/SK closed at - 12 1/2, down 1/4 of a cent. WH/WK made new contract lows at -15, and closed at -14 3/4.
For the week: March corn was up 2 and 1/4 cents; May corn was up 3 1/2 cents; March soybeans were up 21 and 3/4 cents; May soybeans were p 23 and 1/2 cents; March Chicago wheat was up 5 and 1/4 cents.
Friday was a fairly active data day to end the week, as regular weekly export sales were delayed to this morning and the trade also saw monthly cattle on feed data and weekly commitment of traders data released. Starting with the weekly export sales report, data for the week ending January 16th showed corn and soybean sales that were at the upper end of trade expectations, while wheat sales were below the lower end. For the week, corn sales totaled 1.661 mmt's; featured buyers were Korea (462,100 mt's), Taiwan (277,500 mt's), Japan (249,500 mt's), and Mexico (237,600 mt's), and unknown destinations assigned out/canceled/rolled 111,300 mt's. Current sales are running 29% ahead of last year. Soybean sales for the week totaled 1.492 mmt's; featured buyers were China (888,600 mt's), Japan (120,700 mt's), and Mexico (119,900 mt's), and unknown destinations were buyers of 112,400 mt's. Current sales are running 11% ahead of last year. And lastly, wheat sales for the week totaled just 165k mt's; featured buyers were Mexico (57,500 mt's) and Japan (49,200 mt's). Current sales pace is up 7% from last year.
The USDA's first cattle on feed report of 2025 showed a January 1 feedlot herd that was down slightly from both last year trade expectations at 11.823 mil head. Placements in the month of December totaled 1.642 mil head, while marketings in the month were seen at 1.742 mil head. The placement figure was lower than the trade had anticipated, but otherwise the report came in mostly as the trade had expected. Also of note in the report, the feedlot breakdown, which accompanies the report quarterly, showed that heifers account for 38.7% of feedlots, which is down from last year's 39.7% but still high historically speaking. Looking at the big picture, the data likely means little to a market that is currently trading at all-time highs.
And lastly on the data list, was CFTC commitment of traders data. The report showed a four-week low in the size of corn buying by the funds, but that they continued adding to the position nonetheless. Data shows managed money traders bought a combined 19,449 contracts of futures/options in the week, making them now net-long 311,678 contracts. In soybeans, funds bought a combined 5,497 contracts of futures/options, which similarly to corn was a new five-week low; this makes them now net-long 40,330 contracts. And in Chicago wheat, managed money traders bought a combined 2,601 contracts of futures/options, which makes them now net-short 91,792 contracts. Funds had a similarly quiet week in the soy products, buying just 2,286 contracts of soybean meal and 16,654 contracts of soybean oil; this makes them now net-short 61,235 contracts of meal and net-long 24,214 contracts of soybean oil.
Otherwise, it seems likely that the themes that dominated this week presumably remain in the headlines next week; Argentine weather will remain a story in the short-term, though we would see production losses of 1-2 mmt's in corn or soybeans as mostly priced in at this point. And on top of this, the downright massive crop out of Brazil will cover a portion of these losses. Political headlines will also not be going away, as Donald Trump is only getting started with his agenda and there remains a looming February 1 deadline for potential new tariffs on Canada/Mexico. At this point, it is anyone's guess as to what the fallout from this would be, or whether February 1st will actually produce any new legislation. Throw in a new Ag Secretary, a new EPA head, the involvement of the world's richest man and arguably most polarizing figure, and a 'thorough' review of basically any policy enacted in the last four years, and you have situation this fraught with potential risk points. For this reason, we would offer a reminder to keep 'risk management' at the forefront as we work through the next several weeks of trading.
Snows across Nevada/Utah/Colorado and also across the northern Plains and upper Midwest look to be the main weather features for the US over the weekend, as the majority of the Corn Belt expects dry conditions into next week. A low pressure system also looks to work up out of the Gulf again, providing 0.5-1" of rainfall for parts of E Texas, Louisiana and Mississippi. Cool air will linger through parts of the Plains and areas east of the Rocky's for another roughly 48 hours, before things warm up significantly next week. Parts of the Dakota's/Minnesota/Iowa expect to see highs in the upper 40's/lower 50's beginning on Monday, with similar conditions expected through the remainder of the week. Week-two precip maps which get through the first week of February, show average to above average precip chances for nearly all of the country besides the far southwest, with the wettest conditions expected near the Delta in the Gulf and also in parts of central California.
How rainfall develops in Argentina and southern Brazil over the next 72 hours will be key to price direction next week, as models continue to show precip chances for both areas over the next 5-7 days. A return to a drier pattern is still expected thereafter, which like we said yesterday, means the development of this rainfall is critical. Northern Brazil will see rains that are slightly more scattered than what has been observed in recent weeks, but the bulk of the area still expects to continue receiving at least some type of moisture into the first week of February.
Have a good weekend!