AM Comments February 5 2025
Good morning. Ag markets at the CBOT are mixed to start Wednesday trade, with the grains trading slightly higher and the soy complex trading mixed to slightly lower. Talks between President Trump and Chinese President Xi Jinping that were scheduled for yesterday afternoon to discuss trade and tariffs ended up not happening, with Trump saying that he was in no hurry to speak to the Asian country's leader. Otherwise, new news was largely limited overnight; rains have continued falling in southern Argentina, and further lower trade in the $ index looks to, at least on the margin, continue supporting grain prices in the short term. Corn futures this morning are trading 2-4 cents higher, soybean futures are trading around a penny lower, and the Chicago wheat market is trading 4-6 cents higher. Products are mixed, soybean meal is up around 50 cents/ton, and soybean oil is down 40-50 points. Outside markets are mostly lower, crude oil futures are down 70-80 cents/bbl, the Dow Jones index is down 50 points and the US$ index is also down 50 points. The S&P500 is down 30 points and the NASDAQ is down 160 points. New contract highs again for gold overnight but not for coffee, though coffee is trading slightly higher this morning.
Today's Reports: Monthly ADP Employment; Monthly Trade Balance; EIA Weekly Ethanol Production/Energy Stocks
- This morning's weekly ethanol production report for the week ending January 31st is expected to show average daily production in the week in a range of 1.015-1.073 mil bbls, while stocks are seen in a range of 25.500-26.185 mil bbls. On average, the production estimate would be up from last week while stocks would be lower.
- Customs data from the European Commission shows EU soft wheat exports as of February 2nd at 12.5 mmt's, which is down nearly 40% from the same period last year. Barley exports are down 27% from last year at 2.59 mmt's, and corn imports are up 5% from last year at 11.9 mmt's. The commission continues to mention that data is incomplete going back to the start of 2023/24 due to technical issues.
- According to multiple sources familiar with the matter, Chinese wheat buyers have delayed taking delivery of nearly 600,000 mt's of mostly Australian wheat shipments due to ample domestic supply and falling prices. They add that state buyer COFCO is footing the bill for these delays, and would take any gain or loss realized from the resale of the grain likely into somewhere in southeast Asia.
- Ukraine's Ag Minister, Vitaliy Koval, in a statement posted to the ministry's website yesterday said that his country was seeking to open an agricultural hub in Egypt's Suez Canal Economic Zone in order to better process and facilitate grain received from Ukraine. The hub would allow Ukraine to export flour, pasta, and other products into countries that have free trade agreements with Egypt, most notably in Africa.
- Rains continued falling in southern and southeast Argentina over the last 24 hours according to satellite data, with totals ranging from 0.5-1.5" generally; the area receiving rain remains small, but is an area that is heavy in crop production. Further north in Brazil, rainfall was mostly confined to the western half and south-central part of the country on Tuesday, with similar totals to those in Argentina.
- Forecasts through the rest of this week and into next week continue to show further thunderstorm activity along a frontal boundary in southern Argentina, while rains look to continue to dissipate as the days go on in Brazil. Short term, Brazil rainfall looks to continue favoring areas in the west and northwest with the east seeing a drier pattern likely expanding by mid-month as the rains move further south into northern Argentina and Paraguay.
- In the US, weather focus will be in the Midwest over the next 24-48 hours as a storm system moving north and east will provide wind and rains to a bulk of the eastern US through the day Wednesday and into Thursday; this system will also see a shift to ice/freezing rain later this afternoon on the backside, with parts of IL/IN//OH and then further into the northeast the most likely to be affected by these conditions. As we've mentioned before with these transition events, the models will have a hard time picking up on exactly where this shift from rain to ice occurs.
- There continues to be very little updates to the week two precip forecasts, as the ensembles remain in good agreement on continued wet conditions in the east and also in the northwest, while the southwestern part of the country along the border with Mexico looks to remain in a below average precip pattern. Should these forecasts verify, soil moisture improvements appear likely for the southern Corn Belt over the next few weeks.
- Not a lot new on the temperature front either, as models are marginally colder for more of the central US next week but still see a return to a warmer than average bias for most of the country beyond February 15th. The sharp gradient between cold Arctic air in Canada and warmer air in the southern US will keep weather along this boundary active in the short term.