PM Comments February 13 2025
Good afternoon. More mixed/choppy price action at the CBOT on Thursday, as corn and soybean markets again probed both sides of unchanged throughout the day before closing marginally higher. In a news conference with reporters, President Trump announced reciprocal tariffs that have been talked about all week, but added that they likely wouldn't go into effect until April.
CH closed Thursday at 4.93 1/2, up 3 and 1/4. CK was up 2 cents at 5.06. SH closed at 10.30, up 2 and 1/4. SK finished at 10.47, up a penny and 1/4. WH closed at 5.77 3/4, up 3 and 1/2 cents. Products were mixed, March soybean meal closed at 292.70, down $1.40/ton, and March soybean oil closed at 46.25, up 59 points. This the seventh consecutive lower close for March meal. Livestock markets were again mixed, April live cattle closed at 196.52, up 80 cents, March feeders closed at 267.97, up $3.00, and April hogs closed at 93.10, down $1.22. Hogs filled the gap made on yesterday's open. Outside markets are mixed, crude oil futures are trading either side of unchanged, the Dow Jones index is up 375 points and the US$ index is down 80 points. The S&P500 is up 60 points and the NASDAQ is up 270 points. New lows for the move in crude oil, new contract highs again in coffee, and gold futures are up around $30/oz, but did not make new contract highs.
Spreads were mostly higher, corn spreads were up a quarter of a cent to up 4 cents, and soybean spreads were up a penny and a quarter to down a half cent. CH/CK closed at -12 1/2, up a penny and a quarter, and SH/SK closed at -17, up a penny. CH/CK matched the contract low made yesterday at -14 1/4.
News was rather active on Thursday, and included a monthly crop update from Brazil's Conab crops agency to start the day this morning this morning. The report was a bit surprising in relation to trade expectations, as soybean production was trimmed slightly and corn production was raised slightly despite most in the trade feeling adjustments in the two crops would be made in the opposite directions if anything. Soybean production was estimated at 166.014 mmt's, which was down about 300k mt's from the January estimate but still an all-time record. Of note, planted area was actually adjusted higher to 47.451 mil hectares despite the decline in production. For corn, total production saw a roughly 3 million ton uptick to 122.017 mmt's, while safrinha, or second crop, production increased roughly 1.5 mmt's to 96.048 mmt's. Planted area was increased about 150k hectares to 21.2 mil. While somewhat surprising, the news had little effect on price determination throughout the day and didn't materially change the overall global supply situation. The bottom line remains that global soybean supplies will be plentiful into the US spring and summer months, while the corn supply needs every possible bushel from Brazil to avoid further tightening.
Other news items, in rapid fire fashion, included the Senate's confirmation of both Robert F. Kennedy Jr as health secretary, and also Brooke Rollins as the head of the USDA; comments from Trump on a number of topics including reciprocal tariffs, the Russia/Ukraine war, Taiwan and the chip industry, US steel and auto tariffs, and defense spending, among several other topics; and then weekly export sales, which seemingly took a back seat to everything else going on today. To the tariffs, it's hard to tell what is fact and what is hearsay out of Trump's news conferences that often leave media members with more questions than answers, but we would generally say there wasn't a lot new learned today above what had already been surmised in recent days regarding the new duties. Said Trump, "We will charge them no more, no less. In other words, they charge us a tax or tariff, and we charge them the exact same tax or tariff. Very simple." Trump added that other countries could lower or eliminate their tariffs on US goods to avoid the reciprocal duties, but that he did not anticipate a lot of countries doing so. Other details from the President included mention of Brazil ethanol in the tariff sheet, and also that automobile tariffs would be on top off reciprocal tariffs, and would not need exemptions. This remains an ongoing situation.
Briefly hitting on export sales, corn and wheat sales for the week ending February 6th were good and toward the upper end of trade expectations, but soybean sales in the week were below the lower end of guesses and a new marketing year low. Corn sales in the week totaled 1.649 mmt's, with featured buyers being Japan (459,400 mt's), Korea (325,400 mt's), Mexico (262,600 mt's), and Colombia (250,900 mt's). Soybean sales were seen at 186k mt's; featured buyers were China (222k mt's), and Egypt (205,200 mt's), while unknown destinations assigned out/rolled/canceled 365,200 mt's in the week. Lastly, wheat sales totaled 570k mt's, with Mexico being the featured buyer at 127,600 mt's.
Snows look to return to the upper Midwest by tomorrow afternoon after taking a breather for a day and a half or so; further south, rains also start back up in east Texas and look to work their way east through the weekend. Once again, there will be a hard-to-predict transition line through the Midwest from rain to ice to snow, but models have generally moved this line further north through the day today vs where it was seen yesterday. Not a lot of updates to the forecast otherwise, as models are still in fair agreement on systems number 4 and then 5 following the same general track of the previous systems this week and the one coming this weekend. Number 4 appears to favor a more southerly track and is expected next Wednesday/Thursday, while number 5 is a little more loosely defined as of now but looks to return to the north and come through sometime around Saturday/Sunday the 22nd and 23rd. Beyond here, week-two forecasts continue to show a drier pattern for most all of the country, which is raising our confidence in a coming pattern shift. Temps into next week will be cold to very cold for most of the central US, with the models still trying to bring warmth back into the end of the month.
Mid-day weather for Brazil and Argentina was like the overnight runs, and saw little change from the past several days. An increase in moisture will continue to benefit all of Argentina into Uruguay and southern Brazil through the weekend and into next week, while central Brazil sees just spotty showers in the next 10 days, which should allow for a sharp increase in soybean harvest pace. Temps will be above average through most of Brazil in the period, as a lack of cloud cover allows heat to return. Northern Argentina will see a cooler bias, while the rest of Argentina looks to be average to slightly above average.