PM Comments February 19 2025
Good afternoon. Corn and soybean futures saw lower closes at the board of trade on Wednesday, as a lack of buyers beyond mid-morning allowed markets to correct a bit following higher trade the last few sessions. It wasn't sharp, but March corn futures did put in a reversal day after trading above yesterday's highs last night and this morning which will be seen as disappointing to the bulls.
CH closed Wednesday at 4.97 1/2, down 4 and 1/2 cents. Back below $5. CK closed at 5.12 1/4, down 3 and 1/2 cents. SH finished at 10.31 3/4, down 6 and 3/4. SK was down 7 and 1/4 at 10.48 1/4. WH closed at 5.92, down 12 and 3/4. Products were mixed, March soybean meal closed at 294.70, up 90 cents/ton, and March soybean oil closed at 46.30, down 100 points. Livestock markets were mixed, April live cattle closed at 194.77, up 75 cents, March feeders closed at 269.02, down 70 cents, and April hogs closed at 89.75, down $3.45. Hogs gapped lower on this morning's open, and also closed the open chart gap left from the open on February 5th. Outside markets are quiet/higher, crude oil futures are up 20-30 cents/bbl and the US$ index is up 5-10 points. All three of the Dow Jones, the S&P500, and the NASDAQ are trading near unchanged. Gold had a quiet day also, and is down $1-2/oz.
Spreads were mixed, corn spreads were down a quarter cent to down 3 and a half cents, and soybean spreads were up 3/4 of a cent to down a penny and a half. CH/CK closed at -14 3/4, down a penny, and SH/SK closed at -16 1/2, up a half cent. New contract low for CH/CK at -14 3/4.
Overall, trade was fairly quiet at mid-week despite the lower to sharply lower action across the ag space. Wheat futures traded in the red from the word go last night and were largely seen as the downside leader throughout the session, but an 8:30am sell-off in soybean oil of more than 50 points also didn't help things. As was the case at the close yesterday, we are continuing to have a hard time finding a specific reason for the price action in bean oil, but would note that prices since the rally at the start of the year have been largely aside sideways aside from a few days here or there. If 'wait and see' could be defined in a chart, the daily March soybean oil chart from mid-January to now would be it. There was also policy chatter in the marketplace again this week, as traders are again requesting the return of the $1/gallon blenders tax credit that expired at the end of the last year. There has still been no further comment made on 45Z guidance, and it appears clear that domestic biofuel policy is not something that is high on Trump's list of priorities. The matter also doesn't appear overly important to new Ag Secretary Rollins or new EPA head Zeldin, with Rollins reiterating that her number one priority remains the ongoing bird flu situation.
With Trump's comments focusing more on Russia than US trade or tariffs for the day, focus in the financial world on Wednesday was largely on the afternoon release of the January FOMC meeting minutes. Officials didn't illustrate anything overly new, but mentioned that added inflation pressures would likely lead to interest rates remaining unchanged for the time being. The minutes also reiterated that policy changes from the Trump administration could cause opinions to change, but added that the fact the US economy was fairly healthy put them in a good position to be able to adequately handle such changes should they occur. Generally speaking, comments in the meeting largely echoed the message Fed Chair Powell has been sharing with reporters for weeks, which is that the US economy is in a good spot and that the Fed will look at new data as it comes and make rate decisions based on these numbers.
Mid-day weather forecasts in South America also could've potentially contributed to the day's selling, as changes leaned bearish in the noon runs. Precip was added to the whole of Argentina in the week-two period, while rain potential in the main growing areas in the south was also increased to include a larger over the next week than was seen this morning. There will be a strip through south-central Brazil and into Paraguay that will continue to see light/scattered precip over the next week, but otherwise, the bulk of Brazil's growing regions, especially those to the east, look to keep trending drier in the days ahead. The mid-day temperature outlook trended slightly cooler in northern and northeast Brazil, but was unchanged in keeping well above average temps in place across north-central Argentina and into Uruguay over the next week.
US weather looks to stay volatile over the next week to 10 days, with models continuing to predict a return to stormier conditions after a few calmer days to wrap up this week and going into next week. The EU AI and the CPC models remain the wettest of the bunch, and show above average moisture chances for a majority of the eastern third of the US, and also through the central Plains and into Canada for the first week of March. The EU ensemble meanwhile is similarly wet in the northeast, but sees just average precip chances through most of the rest of the country. On temperatures, the CPC and the GFS are in fair agreement on a return to cooler air in the eastern US to start March, while both the EU AI and EU ensembles keep this cold air further north. As spring approaches, we would remind that a fairly large majority of the north-central US is in some type of drought condition according to the national drought monitor, meaning moisture will be important over the next 10-12 weeks as soils begin to thaw.