PM Comments February 14 2025
Good afternoon. Happy Friday. Grain markets ended the week mostly higher at the CBOT, in what was another largely macro dominated session. Wheat futures were the clear leader to the upside, as concerns over winterkill occurring in both the US and Russia next week led to short covering by the funds and also some measure of speculative buying according to open interest data.
CH closed Friday at 4.96 1/4, up 2 3/4. CH was up 2 3/4 also at 5.08 3/4. New high for the move in CH at 4.99 3/4. SH closed at 10.36, up 6 cents. SK was up 5 and 3/4 at 10.52 3/4. WH closed at 6.00, up 22 and 1/4; WH also traded above the 200-day moving average for the first time since October 11th last year. Products were mixed, March soybean meal closed at 295.90, up $3.20/ton, and March soybean oil closed at 46.07, down 18 points. Livestock markets were lower to end the week, April live cattle closed at 194.25, down $2.27, March feeders closed at 266.35, down $1.62, and April hogs closed at 92.60, down 50 cents. Outside markets are trading mostly lower, crude oil futures are down 40-60 cents/bbl, the Dow Jones index is down 180 points and the US$ index is down 60 points. The S&P500 is unchanged and the NASDQ is up 100 points. Gold futures were $30-40/oz lower, and coffee futures were down 20 cents/lb; no new contract highs for either.
Spreads closed mixed, corn spreads were unchanged to two and a half cents higher, and soybean spreads were down a penny and a half to up a penny. CH/CK closed unchanged on the day at -12 1/2, and SH/SK closed at -16 3/4, up 1/4 of a cent. Inside day for CH/CK after testing or making contract lows the last several sessions.
For the week: March corn was up 8 and 3/4 cents; May corn was up 8 and 1/4 cents; March soybeans were down 13 and 1/2 cents; May soybeans were down 12 and 3/4 cents; and March Chicago wheat was up 17 and 1/4 cents.
USDA this morning announced daily sales flashes of 100,000 mt's of corn for delivery to Colombia during the 2024/25 marketing year. For the week, USDA announced 595,320 mt's of 2024/25 corn sales.
Comments out of President Trump and/or his team once again largely dominated most of the headlines on Friday, as was the case most of the week. As we approach US spring, the market will continue to trade the usual factors like South American crops and US planting intentions/weather, but we find it increasingly likely that Trump headlines will remain an outsized piece of price discovery as long as algorithm trading continues to make up a large part of daily volume. These computer programs read headlines, and as was clear through both his first presidency and the first few weeks of his second presidency, Trump will give plenty of headlines. As it pertains to today, the announced delays in reciprocal tariffs may have been part of the buying, but this announcement was made before the close yesterday and we would assume the faster moving algo traders had it before the end of the day on Thursday. Also new today was DOGE's beginning of investigations into the IRS, as well as news that the program would be investigating the USDA as part of its review of federal spending. New Ag Secretary Brooke Rollins told reporters that DOGE members had in fact already been in USDA offices for a few weeks, and that she welcomed their findings.
Also being questioned today in regards to tariffs is what the April 1 reciprocal tariffs mean for the duties on Canada and Mexico that are supposed to start at the beginning of March; are these new April measures in addition to the March ones? Will they replace the March ones? Trump said yesterday that countries had the opportunity to lower or eliminate their tariffs before April, but that he didn't expect many would do so; it will be interesting to see if this actually ends up being the case, or if the threats are enough to start getting deals done. This will remain an ongoing subject.
For the wheat market, buying to end the week was attributed to a downright frigid temp forecast for US wheat country next week, and also to forecasts in Russia that will dip will below average. Sources say the weather in Russia likely will not be severe enough to cause widespread damage, but that the situation needs to be monitored nonetheless. Back in the US, western producers are worried that snowpack is still inefficient despite several winter storms the last few weeks, due to high winds that have blown a lot of what accumulation there was. Also likely adding to the higher price action was news that the Grain Industry Association of Western Australia overnight raised their estimate of wheat production in that part of the country to 12.45 mmt's, compared to 10.85 mmt's previously. The group attributed increases in production to the warmest winter on record for the area, and added abnormally warm winters also occurred in 2021 and 2022, which each set total grain production records. USDA currently pegs Australian wheat production at 31.9 mmt's, which would appear too low given the new adjustments.
Commitment of traders data from the CFTC this afternoon showed a heavy week of selling by managed money traders in the week ending February 11th. For the week, funds were sellers of a combined 31,827 contract of corn futures/options, sellers of a combined 28,554 contracts of soybean futures/options, and were buyers of a combined 7,633 contracts of Chicago wheat futures/options. Of note, this was the largest week of selling by the funds in corn since October of last year, and the largest week of fund selling in the beans since July of last year. This makes managed money traders now net-long 332,389 contracts of corn, net-long 28,475 contracts of soybeans, and net-short 82,809 contracts of Chicago wheat. In soy products, funds were seen net-short 47,232 contracts of soybean meal (-13,771 on the week), and net-long 46,560 contracts of soybean oil (+4,344).
Weekend weather for South America looks to be largely similar to recent days this week, with northern/north-central Argentina and into southern Brazil and Uruguay expecting to see trace amounts to 2.5" of rain over the next 3 days, while the rest of Brazil's growing area will continue to see just light/spotty precip. Temps into next week look to stay warm, with just a small pocket of northeast Argentina expected to see temps that are below average. Further out, a similar forecast is seen through the end of next week until rains are seen shifting further south in Argentina into the end of the month, while precip is also seen returning to south-central Brazil as of today. This is a new development in the extended forecast, and will need monitoring.
US weather through the weekend will have its focus on another winter storm system that is set to bring snow, rain and ice to a majority of the eastern US starting this afternoon and lasting through the day on Sunday. Heaviest snowfall accumulation will be seen in the northeast where double digit totals could occur; in the Midwest, northern Illinois and southern Wisconsin expect to see 2-4", while most of Michigan expects to see 4-8". The West Coast will also see a continued active weather pattern through next week. Beyond mid-week next week, models continue to see a shift to a drier weather pattern for a majority of the country beside the PNW. Models are also in agreement on a return of warmer temps into the end of the month, though exactly where the warmest air will be is yet to be determined.
Have a good weekend! And remember there are no markets at the board of trade Sunday night or Monday, with regular trade resuming Sunday evening.