AM Comments February 6 2025
Good morning. Choppy trade looks to continue at the CBOT to start Thursday, as yesterday's downside leader (the soy complex) is now today's leader to the upside, at least in the overnight session. Markets seem to be getting more comfortable with the current set up of Trump's second trade war, at least for the time being, but overnight headline risk will continue to exist in the form of comments out of China. Otherwise, ag traders will begin shifting their focus in the short term to the USDA's February WASDE report, which is set for Tuesday next week. Corn futures this morning are trading unchanged to a half cent higher, soybean futures are trading 5-6 cents higher, and the Chicago wheat market is trading 2-3 cents higher. Products are higher, soybean meal is up around $1/ton, and soybean oil is up 5-10 points. Outside markets are also mostly higher, crude oil futures are up around 30-40 cents/bbl, the Dow Jones index is up 40 points and the US$ index is up 40-50 points. The S&P500 and the NASDAQ are both near unchanged. Coffee futures are higher, and again made new contract highs last night for now the eleventh consecutive session. Gold futures are lower.
Today's Reports: Weekly Export Sales; Weekly Jobless Claims
- This morning's weekly export sales report for the week ending January 30th is expected to show corn sales in a range of 850k-1.5 mil mt's, soybean sales in a range of 300k-1.1 mil mt's, and wheat sales in a range of 200k-550k mt's. 2025/26 wheat and soybean sales are seen between 0-50k mt's, and new crop corn sales are seen between 0 and 100k mt's.
- Census export data, released yesterday by the US Commerce Department, showed the US exported 214 mil bu's of corn in the month of December, exported 293 mil bu's of soybeans in the month, and exported 61 mil bu's of wheat. Compared to December of 2023, corn exports were up 15%, soybean exports were up 68%, and wheat exports were up 11%. Of note, the US also exported 280 mil lbs of soybean oil. which was an increase of 2,084% from December 2023. Meal exports at 1.548 mil tons were up 6%.
- The USDA on Wednesday announced that a bird flu strain (D1.1) had been detected in dairy cattle for the first time on January 31st in Nevada. Two farms were subsequently put under quarantine, with officials saying the detections were made under the USDA's new national milk testing strategy which started in December. All previous detections in dairy cattle had been the B3.13 strain.
- International firm Rabobank, on Wednesday, joined the growing list of private ag companies who see Brazil's soybean production in the current season topping the 170 mmt mark; the group raised their production estimate to 170.0 mmt's, and also estimated exports at 103 mil tons and crush at 56.5 mil tons, both of which would be up from last year. Corn production was seen at 126 mil tons, but officials did warn that this number could be effected by delays in planting.
- Financial markets on Thursday will be relatively quiet from a data standpoint, with reports mostly limited to private earnings numbers. The Bank of England lowered interest rates by a quarter percentage point earlier this morning in a move similar to their European counterparts last week, but otherwise, trader focus is already largely on tomorrow's jobs report. In somewhat related news, Thursday also marks the final day for Federal employees to accept Trump's buyout offer.
- Heaviest rains in southern/southeastern Argentina moved more off-shore over the last 24 hours, but ag areas here still picked up good rains yesterday according to satellite data. Since the first of February, there are areas south of Buenos Aires who have picked up more than 5" of rain, which is likely 'crop saving' in some cases. A more general 1-2" has impacted a wider area, with forecasts continuing to show precip working its way further north by the end of next week.
- Forecasts overnight trended drier in the short term for southern Argentina, but convective thunderstorm activity could still possibly allow for additional localized precip in the short-term. Not a lot of change otherwise though, as like we said, the week two forecast continues to show better rain chances through Paraguay and northern Argentina, while Brazil sees a drier trend emerging that will aid in both soybean harvest and safrinha corn planting. We continue reiterating that the next three weeks of weather will go a long way in determining medium-term price direction at the CBOT.
- US weather looks to remain active across the Midwest, as models are in good agreement on several systems working their way west to east over the next 5-10 days. We've talked about the sharp temperature gradient that currently exists all week, and this has been the number one reason for the active weather of late, and also why that pattern looks to continue into next week. And because of that, most all of these systems will be similar to yesterday's in that exactly who receives rain vs ice vs snow is going to be extremely hard to forecast.
- Further out, week two precip maps also continue to be in fair agreement on both the eastern half of the US and also the PNW continuing to be well wetter than average, while dryness remains confined to a small pocket in the southwest near the Mexico border. Week two temp maps have diverged a bit the last 24 hours, with the EU's AI output showing a much warmer forecast for February 15th-20th than either the GFS or EU ensemble, who are keeping cool air in place for most of the northern 2/3's of the US. This will be monitored going through next week.