PM Comments February 25 2025
Good afternoon. Bearishness in the grain markets continued for another day on Tuesday, with there still being little to nothing new in the way of bullish information available for traders to chew on. The marketplace feels heavy this afternoon. Participants are unwilling to push the upside amid an improving outlook in South America, and looming tariffs that have hung over the space like a dark cloud for the first two days this week.
CH closed Tuesday at 4.79 3/4, down 2 and 3/4. Low was 4.74 1/4. CK closed at 4.94 1/4, down 2 and 3/4 also. SH finished at 10.31 1/4, up 2 and 1/4. SK was up a penny and 1/4 at 10.48 3/4. WH closed at 5.72 3/4, down 6 and 1/4. Products were mixed, March soybean meal closed at 293.80, up $2/ton, and March soybean oil closed at 45.44, down 26 points. Livestock markets were again mixed, April live cattle closed at 195.72, up 62 cents, March feeders closed at 274.22, up $1.92, and April hogs closed at 86.57, down 82 cents. Hogs lower for the fifth consecutive session going back to last week. Outside markets are also trading mixed, crude oil futures are down $1.50-1.60/bbl, the Dow Jones index is up 220 points, and the US$ index is down 30 points. The S&P500 is down 20 points and the NASDAQ is down 220 points. Gold futures are down around $40/oz, and coffee futures closed lower for the fourth consecutive session.
Spreads saw two-sided trade on Tuesday, with corn spreads unchanged to 2 cents lower and soybean spreads up a penny to up 3 and a quarter. CH/CK closed at -14 1/2, which was unchanged on the day, and SH/SK closed at -17 and 1/2, up a penny. WH/WK was down a half cent at -15, and made a new contract low at -15 1/2.
We are running out of ways to discuss the current market dynamics of crop production in South America and trade/policy decisions that are liable to change by the hour. The situation in corn remains that funds are long and it will take further losses of production in either Brazil or Argentina, or a US acreage number that is we're going to say sub-92, before they will further push values above recent highs. There remains anxiety over what is going to happen from a policy standpoint with our largest corn buyer, Mexico, with no one quite sure of what's going to happen early next week on tariffs. Mexican President Sheinbaum continues to indicate the two sides are working towards a deal, but its unknown from Trump's standpoint whether he is intent on actually applying the tariffs, or if they were a bargaining token all along. For soybeans, focus is slowly shifting away from South America and back to the US; Brazil's production is more or less made, and the overall difference between 172-173 mmt's and 167-168 mmt's is negligible and will not cause much difference in price determination over the next couple months. Domestically, its all about how many acres are lost to corn and how low this is able to drop ending stock projections for the coming year.
Ethanol and biofuels were somewhat back in the headlines again today, as Kentucky Congressman Thomas Massie made a string of posts on X (Twitter) basically saying that using corn for fuel (ethanol) increased food prices in the US and then in response to a comment, added that only producers whose cost of production is below market value should be producing. The ag community obviously took kindly to this (not), and debated whether the posts were in regards to year-round E15 legislation that has again been in the headlines of late or 45Z tax credits, which are still in limbo and seemingly becoming more unlikely as the days go on, at least for 2025.
Other White House news on Tuesday included a Financial Times report this afternoon that Ukraine had agreed to a minerals deal with the US, but few details were given at the time of this writing and there was little other confirmation available. Other non-market related headlines included news from Press Secretary Leavitt that the White House Correspondent's Association would no longer be in charge of determining who from the media was able to ask the President questions, and also that Elon Musk would be present for Trump's first cabinet meeting tomorrow.
Not a lot new on the weather front in either the US or South America, as forecasts for each remain largely unchanged from Monday's runs. Starting in South America, models remain in good agreement on a northward expansion of rainfall the rest of this week in Argentina, while Brazil will remain dry in the east and northeast, with rains continuing further to the north. Heat will be the most extreme in southern Brazil, with northern Argentina and eastern Brazil being seen above average. In the US, most of the country will also continue experiencing above average temps at least through the rest of this week, and more likely through the first week in March, as models are still in good agreement on cooler air being confined to the north in Canada. Precip will favor the northeast into the end of the week and weekend, though rainfall totals will be less than 1 inch. Otherwise, the central US into the southwest remains dry into the first part of next week.