PM Comments February 24 2025
Good afternoon. Bearish headwinds took hold of the market early in the day to start the new week of trading this morning and drove ag values lower into the close on Monday. A combination of growing concerns over the US relationship with China mixed with a beneficial forecast for crops in Argentina were the main reasons for the selling pressure, but there wasn't anything specifically new otherwise that led to the decline.
CH closed Monday at 4.82 1/2, down 8 and 3/4. CK was down 8 cents at 4.97. SH finished at 10.29, down 10 and 1/2 cents. SK closed at 10.47 1/2, down 9 and 3/4. WH was down 11 cents at 5.79. Products were lower, March soybean meal closed at 291.80, down $3.00/ton, and March soybean oil closed at 45.70, down 1.11. New low for the move by 10 cents in meal. Livestock markets were mixed to start the week, April live cattle closed at 195.10, up $1.15, March feeders closed at 272.30, up $4.35, and April hogs closed at 87.40, down 27 cents. This the fourth lower close out of the last seven sessions in hogs. Outside markets are mixed, crude oil futures are up 20-30 cents/bbl, the Dow Jones index is up 100 points, and the US$ index is unchanged to 10 points lower. The S&P500 is down 20 points and the NASDAQ is down 250 points. April gold was up around $10/oz and made new highs at 2974.0/oz. Coffee futures were lower for the fifth of the last six sessions after topping on February 13th.
Spreads ended Monday lower, corn spreads were down a half cent to down 4 and a half cents, and soybean spreads were unchanged to down 2 and a half cents. CH/CK closed at -14 1/2, down 3/4 of a cent, and SH/SK closed at -18 1/2, down 3/4 of a cent also. New contract lows in SH/SK at -19. New three month low in the CK/CN at -5.
Wheat futures were again considered the downside leader on Monday, with spot Chicago prices now having given back nearly to the penny all the of the premium that was injected in recent days due to cold weather spells in both the US and Russia. That being said though, it appeared corn and soybeans, and also the soy products to an extent, were willing followers throughout the session. Corn quickly dropped back to the lower end of the range its been in basically since Trump took office in January, while in the case of beans, prices again closed within spitting distance of the 50/100-day moving averages which have been downside support since the market was initially able to clear them on the day of the bullish January WASDE report over a month ago. With a significant report due at the end of the week, it would be a positive for the market bulls to be able to hold the $4.75 area on spot corn between now and Friday, while a similar line in beans will be seen at the $10.20 area; should these support levels fail, it could possibly lead to further downside momentum in not only flat price, but also spreads, as any friendly data from the report will presumably have more of an impact on deferred months as opposed to the nearby. Also keep in mind that spring crop insurance pricing wraps up on Friday, which some conspiracy theorists feel may also have an impact on price discovery this week.
While the USDA did not announce any new sales flashes on the daily reporting system this morning, they did release regular weekly export inspection data for the week ending February 20th. Numbers for all three crops came in within pre-report estimates, but the corn number was towards the lower end of its range of guesses, while the soybean number was towards the upper end and the wheat number was in the middle. Corn inspections for the week totaled 1.134 mil mt's (-30% from last week), soybean inspections totaled 859k mt's (+18% from last week), and wheat inspections totaled 376k mt's (+50% from last week). The pop in soybean business was a positive sign, but historic trends would say weekly volumes likely continue dropping between now and the middle of summer. Inversely, this was a new six-week low for corn inspections, but historical trends show weekly volumes generally increasing from now until late May/early June.
Other news to start the week included more tariff talk (shocker, we know) as the looming March 1 deadline for new 25% tariffs on Canada and Mexico and also a 10% increase on tariffs to China is just five days away on Saturday. Bloomberg reported on Monday that officials from Mexico's economic and financial ministries were in Washington this week working with members of the Trump administration to find agreements on trade before the previously mentioned Saturday deadline, with one possible outcome being new duties on imports coming from China. Mexican President Claudia Sheinbaum also mentioned that she was prepared to have phone conversations with Trump on Friday should it be necessary. Bloomberg also reported later in the day that Trump said during a joint press conference with French President Emmanuel Macron at the White House that the tariffs would be going forward as scheduled, though no further detail was given. On the same lines, we would not be overly surprised to see similar headlines come out of Canada between now and the end of the week. As the old saying goes, deadlines spur activity; and Saturday's deadline is a big one.
Circling back to the White House meeting between Trump and Macron, not a lot new came from the meeting, but Macron did reiterate that both France and Europe as a whole were willing to be a part of peace talks in Ukraine, and that the Europeans would be open to sending a peace delegation to Moscow on behalf of Ukraine, which was something Trump said he had discussed specifically with Putin and that Putin was open to. British Prime Minister Keir Starmer is also scheduled to meet Trump this week, with officials assuming he will try and take a similar approach to Macron in urging Trump not to rush a deal on Ukraine that would jeopardize European security.
Mid-day weather forecasts in Argentina see rainfall potential slightly further to the north in the early part of this week than was offered overnight, but were otherwise unchanged and continue to offer a soaking outlook through the end of this week and into next. Temperatures will be warmest in the north, while southern growing areas see mostly below average temps over the next week. Brazil saw next to no changes in the mid-day forecasts, with models still showing warmth in the drier eastern part of the country, while rains to the north and east keep temps here average to slightly below average. The Brazil forecast continues to be a bit of a double edged sword, with dryness seen as a good thing short term to allow bean harvest and safrinha corn planting to progress, but on the other hand, the dryness is causing considerable drops in soil moisture in some places, which will need to be replenished once the crop gets put in the ground.
Wetter and warmer was again the mid-day trend in the US forecasts, with models in the extended period showing good agreement on both continued warmth across most of the country into March 10th/11th, and also a precip event through the central Midwest the middle/end of next week. In the meantime, precip this week continues to look limited to the PNW and further north into Canada, and also the far north east and upper part of the Midwest into Canada; most of the Corn Belt will remain dry for the next several days.