AM Comments February 25 2025
Good morning. A further lack of fresh bullish fundamental news has seen prices in the ag space continue to drift lower to start Tuesday's trading, with the wheat market once again being seen as the downside leader. With a looming Saturday tariff deadline and an important data report from the USDA at the end of the week before that, it seems traders are in the risk covering mode this week, at least for the time being. As we see it today, the two big questions going forward in the short/intermediate term that will determine overall price direction are what do final corn production numbers look like in both Brazil and Argentina, and what does the spring acreage mix look like in the US. Until we have answers to at least one of these, and more likely all of them, choppy trade at the CBOT likely continues. Corn futures this morning are trading 3-4 cents lower, soybean futures are around a penny lower, and the Chicago wheat market is down 4-7 cents. Products are mixed, soybean meal is down around 50 cents/ton, and soybean oil is up around 30 points. Outside markets are mixed/quiet, crude oil futures are down around 50 cents/bbl, the Dow Jones index is up 70 points, and the US$ index is down 10-15 points. The S&P500 and the NASDAQ are both near unchanged.
Today's Reports: Monthly Consumer Confidence; API Energy Stocks
- Conab's updated weekly crop progress report, released yesterday evening, showed soybean harvest pace throughout Brazil at 36.4% complete through February 23rd, which is up from 25.5% last week but still behind last year's pace of 38%, which was as of the 24th. Second crop corn planting (safrinha) advanced nearly 20% on the week to 53.6% complete, which is still behind last year's pace of 59%.
- For reference, timing-wise in Brazil it is similar to being the second or third week in May here in the US; the "ideal" planting window is closing, but producers can still plant for the next 10-20 days and get good/normal yields. Our local source tells us that historically speaking on yields, there is little/no yield drag on corn planted by Feb. 15th, then maybe 1 sac/day for the next 10 days until Feb. 25th, and then 4 sacs/day after that. It is then all about rains in April.
- Staying in Brazil, official government export data released on Monday showed soybean exports out of the country through the first three weeks in February have totaled just 3.7 mil mt's, which is down nearly 30% from the same period last year, and is a direct result of the slower harvest pace so far in the current season. Total February exports last year reached 6.6 mil tons.
- The EU's Monitoring Agricultural Resources unit (MARS) said on Monday that most winter crops in the union are in fair to good condition, but noted irreversible yield losses in places due to heavy rainfall and relatively cool temperatures which created unfavorable conditions for crop development. Inversely, rainfall deficits have been a concern in parts of central and eastern Europe.
- Also out of Europe on Monday, private consultancy UkrAgroConsult said they see Ukrainian corn production in the coming season 30.5 mil tons, which would be up 17% from the 2024/25 season. The group cited an increase in both seeded area and yield as reason for the bump up, but we would note as peace talks are ongoing that this is subject to change. We have very little idea what a ceasefire or truce or any other kind of agreement might mean as it pertains to ag, but logically, you would think less mines in fields, more farmers not at war (Russian and Ukrainian), and lower costs of production (insurance) would only add to supply.
- Not a lot new from the 'Tariff Man' overnight; taking questions from reporters in the Oval Office following meetings with French President Emmanuel Macron, Trump said that plans for 25% tariffs on imports from Canada and Mexico were "on time". Officials also added that much discussed reciprocal tariffs were also still set to go ahead in April. Bean oil futures traded higher overnight, possibly in anticipation of the measures causing a slow down of Canadian palm oil imports.
- Argentina's security ministry on Monday announced a loosening of safety regulations on shipments traveling down the Parana-Paraguay River, which would allow the vessels transiting it to carry more cargo. The move is expected to increase shipments through the waterway by nearly 7%, while officials added that it would make firms more efficient without affecting overall industry safety.
- According to a monthly report form the USDA, US egg production in the month of January fell to 8.87 bil eggs, which was down nearly 3% from December and down more than 4% from January of last year as bird flu continues to decimate the US poultry flock. The report also showed the number of laying hens in the month at just over 363 mil birds, which was also down nearly 4% from last year, and was the lowest figure for the month since 2016.
- Weather in South America was similar to what was seen over the weekend on Monday, with good rains falling in Argentina's southern/south-central growing regions, and a relatively small pocket of more scattered showers seen through wester/northwestern Brazil. Forecasts for the rest of this week continue to show a northward expansion of Argentine rainfall, while Brazil sees another 24-48 hours of scattered shower activity in the south and east before drier conditions emerge again into the weekend.
- Also not a lot of updates overnight to the US forecast; most of the Midwest will be dry this week aside for some possible light precip through the northern half Wednesday/Thursday, before a bigger storm system is expected to provide heavier precip to most of the eastern half of the US the middle of next week. Temperature forecasts in both the 5-10 day and also the 10-15 day period are in good agreement again this morning on a continuation of the above average temp pattern through country into at least March 12th, while week two precip forecasts still show good moisture potential returning for the east into the start of March.