PM Comments February 12 2025
Good afternoon. Mid-week trade at the CBOT was sharply mixed on Wednesday, as the corn market traded higher and recovered most of what it lost on Tuesday, while soybean futures sold off and tested their 100-day moving average for the first time since January 16th/17th. Wheat was caught in the middle, and was surprisingly quiet despite newswires reporting that talks to end the Russia-Ukraine war were seemingly underway.
CH closed Wednesday at 4.90 1/4, up 6 and 1/4. CK finished at 5.04, up 6 cents. SH was down 15 and 3/4 at 10.27 3/4. SK closed at 10.45 3/4, down 14 and 1/2. WH closed at 5.74 1/4, down 2 and 3/4. Products were lower, March soybean meal closed at 294.10, down $2.50/ton, and March soybean oil closed at 45.66, down 47 points. This the sixth consecutive lower close in meal. Livestock markets were once again mixed, April live cattle closed at 195.72, down 27 cents, March feeders closed at 264.97, up 20 cents, and April hogs closed at 94.32, up $1.35. Inside day for both cattle markets, while hogs had a gap higher open this morning and made new contract highs at 94.75 in the April. Outside markets ended the day mostly lower, crude oil futures were down $1.80-1.90/bbl, the Dow Jones index was down 250 points, and the US$ index was near unchanged. The S&P500 was down 20 points and the NASDAQ was up 20 points. Inside day for coffee and no new contract highs for the first time in 15 sessions.
Spreads ended Wednesday mixed, corn spreads were unchanged to up 3 and 1/2 cents, and soybean spreads were down a half cent to down 4 and 1/4. CH/CK closed at -13 3/4, up 1/4 of a cent, and SH/SK closed at -18, down a penny and a quarter. New contract lows for CH/CK at -14 1/4, and new contract low for SH/SK at -18. Also new contract low at -16 3/4 for SK/SN.
Private exporters this morning announced a pair of daily flash sales; first, exporters reported 130,320 mt's of corn for delivery to unknown destinations during the 2024/25 marketing year. Exporters also reported 120,000 mt's of soybeans for delivery to unknown destinations during the 2024/25 marketing year. Of note, this is the first soybean flash sale since January 22nd.
President Trump posted to social media this morning that he had had a "lengthy and highly productive" phone call with Russian President Putin, and that the two had discussed a number of topics including the Middle East and AI, as well as obviously Ukraine. He added that he had instructed several members of his cabinet, including the Secretary of State, the head of the CIA, and the National Security Advisor, to lead negotiations with Putin's team, which was also agreed to by the two during the phone call. That grain markets didn't respond to the news hardly at all was somewhat surprising to traders, and led to the question of was this potentially already priced in. One market that did react to the news was crude oil, as spot futures quickly sold off 40-50 cents/bbl on the headlines. We would think an end to the war would be bearish corn and wheat prices as more supply would be able to hit the world market from a number of different standpoints, but should the market have priced this in between now and when Trump was elected last fall, there could be some measure of 'sell the rumor, buy the fact' trade go on. The next step in the process appears to be a meeting between the previously mentioned Secretary of State Marco Rubio, Vice President JD Vance, and Ukrainian President Volodymyr Zelensky, which sources are saying is being planned for Friday.
Lower trade in the soy complex was attributed to Chinese purchases of soybeans out of Argentina, which is not typical business. Rumors have it that the business - 5-7 cargoes - could be on the behalf of state buyer Sinograin, who is possibly testing the storability of the beans for their reserves amid a looming trade war with the US. Interestingly, our numbers would show these purchases were roughly 40 cents more expensive than beans out of Brazil, but still 25-30 cents cheaper than beans out of the US. Remember, China prefers US beans over those from Brazil for their state reserves due to the lower oil content which allows them to store better.
Ethanol production data this morning released by the EIA for the week ending February 7th showed daily production at a nine-week low of 1.082 mil bbls, which was down 2.7% compared to the week prior but still up 4.7% from the same week last year. Stocks in the week were seen at 25.692 mil bbls, which was down the same 2.7% from last week's marketing year high, but up 3.7% from last year. We estimate corn grind in the week at 106.9 mil bu's, while cumulative use in the marketing year has reached 2.451 bil bu's; this figure compares to 2.355 bil bu's through the same week last year, and the USDA's full marketing year forecast of 5.500 bil bu's. Petroleum stocks data from the EIA showed crude oil stocks in the week rose 4.07 mil bbls to 427.86 mil bbls, gasoline stocks fell 3.035 mil bbls to 248.053 mil bbls, and distillate stocks were up 135k bbls to 118.615 mil bbls. Implied gasoline demand was estimated in the week at 8.576 mil bbls/day, compared to 8.328 mil the week prior and 8.168 mil in the same week last year.
There remains little new to talk about in regards to weather in South America, as models remain in good agreement on a more active weather pattern for the northern 2/3's of Argentina into the back half of the month, while the eastern half of Brazil continues to see a drier trend. The added moisture also looks to produce a break from the heat, as temperature forecasts are trending cooler across northern Argentina and Paraguay and into Brazil. It will be an ongoing debate in regards to exactly how much yield loss has occurred via excessive heat and dryness through January, but like we mentioned earlier this week, the shifting weather pattern will greatly benefit later planted corn and soybean crops in Argentina.
Round 2 of the several winter storm systems for the eastern part of the US is working its way north and east through the Midwest today, with the heavier snowfall amounts generally seen further north than was forecast yesterday and overnight. Heaviest totals through parts of Iowa and northern Illinois and into Wisconsin were in the 4-6" ballpark, while a wider chunk of the area had received a more general 1-3" through mid-afternoon on Wednesday. As this system exits the northeast tomorrow, the next system will be making its way through the western part of the country, and is expected to additional rain/snowfall to the eastern US by Friday night into Saturday. This active pattern is seen continuing through next week, but then week two forecasts are still offering a shift to drier conditions for most of the country into the end of the month. Accompanying the continued precip next week will be another blast of cold air from the north, as temps as far south as Kansas and Missouri could be some 20+ degrees F below normal.