PM Comments February 6 2025
Good afternoon. Chop chop chop at the CBOT again on Thursday, as price action in the ag space continues to be rather two-sided. Markets started the morning session trading in the red, before buying emerged in wheat futures to pull all three crops higher into the close.
CH closed at 4.95 1/4, up 2 cents. CK was up 2 3/4 at 5.07 1/2. SH finished at 10.60 1/2, up 3 1/2. SK was up 3 1/2 also at 10.75 3/4. WH closed at 5.87 3/4, up 15 1/2 cents. Outside day higher for wheat. Products were mixed, March soybean meal closed at 306.40, down $1.90/ton, and March soybean oil closed at 45.40, up 31 points. Livestock markets were also mixed, April live cattle closed at 196.77, down $4.52, April feeders closed at 265.00, down $5.47, and April hogs closed at 91.75, up 20 cents. Outside markets are mixed, crude oil futures are down 30-50 cents/bbl, the Dow Jones index is down 140 points, and the US$ index is up 10 points. The S&P500 is up 20 points and the NASDAQ is up 110 points. New contract highs for the eleventh consecutive session in coffee.
Spreads were mixed, corn spreads finished the day down a penny and a quarter to up a penny and 3/4, while soybean spreads were unchanged to a quarter cent higher. CH/CK closed at -12 1/4, down 3/4 of a cent, and SH/SK closed at -15 1/4, unchanged on the day. New contract low for CH/CK at -12 1/2.
Today's trading seemed as though the news was reacting to the market instead of the other way around, with ag wires all seemingly fishing for answers to the morning rally and nobody having a good, specific reason. There were several reasons talked about for the bump in wheat futures throughout the day, but we would view most of them as either old news or things that aren't necessarily bullish to flat price. Traders were again talking about the presentation by Trump next week of a possible solution to the war in Ukraine, but we would see a return to more normal grain flows out of both them and Russia as long term bearish, with both production and exports likely increasing out of both countries. Other reasons mentioned were possible cold weather returning to Russian growing regions by the end of the month, and also comments from Canada's Natural Resources Minister to reporters in Washington DC regarding trade and tariffs. Traders also mentioned hawkish comments from US Trade Representative nominee Jamieson Greer, who is in favor of universal tariffs and also mentioned a return to the Phase 1 trade deal with China in comments during his Senate confirmation hearing. As it pertains to Phase 1, we see it unlikely that China would agree to large US ag purchases when prices in their domestic markets are already at multi-year lows. They didn't end up buying the products they had agreed to the last time when fundamentals would argue they actually needed them, which makes it unlikely they would make the purchases this time around when they don't actually need them. US-China trade relations will remain a market factor.
Weekly export sales this morning were within trade expectations for all three of corn, beans, and wheat, though corn and wheat were at the upper end of guesses while soybeans were at the lower end. Corn sales in the week ended January 30th were seen at 1.477 mmt's; featured buyers for the week were Mexico (251,700 mt's), Japan (214,000 mt's), and Korea (210,000 mt's). Unknown destinations assigned out/rolled/canceled 169k mt's in the week. Soybean sales were seen at 388k mt's; featured buyers in the week were China (208,700 mt's), the Netherlands (125,200 mt's), and Egypt (107,900 mt's). Unknown buyers assigned out/rolled/canceled 262,800 mt's in the week. And wheat sales in the week totaled 439k mt's; featured buyer was Mexico (122,000 mt's), and unknown destinations were buyers of 111,000 mt's. Current corn sales on the books are up 28% from last year, soybean sales are up 12% from last year and wheat sales are up 8% from last year.
South American weather forecasts remained unchanged at mid-day on Thursday, and continue to offer better rains for northern Argentina beyond the end of next week, while Brazil gradually shifts to a drier pattern in the east and east-central growing regions over the next week to 10 days. The bulk of Argentina will be dry in the meantime, but recent rainfall in southern growing areas has alleviated some of the stress the last week to 10 days. How much soybean harvest progress/corn planting progress is able to be accomplished in Brazil in the next 20 days remains the million dollar question in terms of flat price direction into spring.
Not a lot new in the mid-day US forecasts either, as models continue to show several systems providing precip to the eastern US over the course of the next 10 days. Due to the ongoing sharp temperature differences, it will continue to be difficult to predict exactly where these systems transition from rain to ice to snow. The GFS sees a band of snowfall possible for the northern tier of the country Saturday into Sunday, with the heaviest amounts in the northwest and also the northeast. Then into next week, another band of snowfall is predicted for the southern Midwest, stretching from Kansas to the east coast. These systems will need monitoring going into the weekend. Beyond here, week two precip maps continue to offer wet conditions for most of the country besides parts of the far south and southwest. Temperature forecasts are in better agreement on cold air hanging around for most of the country into the week of February 16th, while warmth is confined to the southwest corner of the country and areas generally west of the Rockies.