AM Comments January 31 2025
Good morning. Happy Friday. Traders that have been on the 'buy' side of the ledger recently are heading for the exits to end the week, as President Donald Trump doubled (tripled?) down on his threats to impose broad-based, sweeping, tariffs of 25% on goods coming from Canada and Mexico after the markets had closed late yesterday afternoon. The news led corn futures to a gap-lower open at 7pm central time last night, while the $ index and soybean oil futures have seen a strong move to the upside since the announcement; otherwise though, most markets are taking the news in stride as the only new development was talk that a decision had not yet been made on whether oil imports from the two countries would be included in the measures. Corn futures this morning are trading 6-10 cents lower, soybean futures are trading 6-7 cents lower, and the Chicago wheat market is down 10-12 cents. Products are mixed, soybean meal is down $4-5/ton, and soybean oil is up 40-50 points. Outside markets are also mixed; crude oil futures are up around 10 cents/bbl, the Dow Jones index is up 130 points and the US$ index is up 50-60 points. The S&P500 is up 30 points and the NASDAQ is up 160 points. Also of note, coffee futures have made new contract highs again this morning for the sixth consecutive session but are currently trading lower, and cotton futures have made new contract lows this morning for the second consecutive session, and are also currently trading lower.
Today's Reports: Monthly PCE Price Index; CFTC Commitment of Traders
- The Buenos Aires Grain Exchange, in their weekly crop report, showed corn conditions in the poor category increased 2% on the week to 22%, while the excellent category saw an equal 2% decline. For soybeans, the excellent conditions also fell 2%, but there was no change in the poor category. There were no production estimate changes made to either crop.
- The USDA is expected to release their bi-annual cattle report this afternoon, which contains inventory numbers and values of all cattle and calves, as opposed to the regular cattle on feed report; the report is expected to show the US cattle herd as of January 1 at 86.526 mil head, which would be down 0.7% from last year and the lowest figure since 1951.
- Then next week on Monday, the USDA is scheduled to release its monthly fats and oils report and also the grain crushings report, which come out simultaneously and show domestic corn and soybean crush/grind data; the reports are expected to show soybean crush in December at a record 217.6 mil bu's, while soybean stocks are seen at 1.734 bil lbs, which would be the tightest since records began in 2015. There were no estimates available this morning for the corn grind report.
- Spokespeople from Brazilian logistics firm Rumo said late yesterday that the fire that broke out at a grain facility in Rondonopolis had been controlled and that normal operations have resumed. According to a few local sources on social media, the facility is the most important link between farmers in the country and the Santos port.
- Barge shipments down the Mississippi river in the week ending January 25th totaled 653k tons, which was up 52.6% from the week prior. Corn shipments at 305k tons were up 64% on the week, and soybean shipments at 330k tons were up 47% on the week. STL barge rates were unchanged from last week at $14.76/short ton.
- Aside from tariff related talk and jitters, the financial world will have its focus on this morning's PCE inflation update to end the week, which is the Fed's preferred inflation gauge; economists see the rate holding steady in December at 2.8%, which remains just above the long-standing target of 2%.
- Not a lot of weather updates for Argentina or Brazil in the short term; satellite data showed a dry 24 hours across the whole of the Argy ag belt on Thursday, while Brazil continued to see/light scattered precip. Forecast-wise, more of the same is expected into next week, but models continue to advertise a pattern shift beyond mid-month that would bring more normal rains to Argentina and bring more dry days to Brazil, which as discussed all week, would be of benefit to both.
- For the US, a low pressure system will continue providing precip to the eastern half of the Midwest and northeast through the day today and into tonight, with models continuing to see a shift over to ice/snow for parts of the northeast later this evening. The PNW will also see the return of heavy rain/snow through the day today, with precip remaining active through the weekend and into next week.
- On the temperature side, the bulk of the country will continue to see well above average high temps through the weekend and into next week, before models are in good agreement on colder Canadian air working into the upper US by early next week and then generally lingering for several days into next weekend. How far south this cold air can drop will be watched for, while the eastern part of the US looks to stay mostly above average into February 15th.
- Good luck with Trump's tariff salvos over the next 72 hours. As we've said all week, it is simply tough to predict how the trade is going to react to weekend headlines when markets reopen Sunday evening, and it will be even tougher to predict what those headlines might entail. Have a good weekend!