AM Comments February 26 2025
Good morning. CBOT markets are again mostly lower this morning to start mid-week trade, with small, overnight rallies in all three of corn, beans and wheat failing and prices falling back lower just after 3am central time last night. As we mentioned previously this week, the looming tariff situation has cast a dark cloud over the space and there just isn't any fresh bullish headlines to counter this. The funds don't want to be caught overly long should Mexico surprisingly decide to take measures against US corn imports, but at the same time, there is enough weather concern in South America, and Europe to some extent, to also keep these traders from wanting to be overly aggressive in covering long positions. That being said, momentum seems to have again turned lower, and will require a new bullish spark to flip back to the upside. Corn futures to start Wednesday are unchanged to a penny lower, soybean futures are down 5-7 cents, and the Chicago wheat market is down 2-3 cents. Products are lower, soybean meal is down around $1/ton, and soybean oil is down around 20 points. Outside markets are mixed/higher, crude oil futures are down 20 cents/bbl, the Dow Jones index is up 100 points, and the US$ index is up 20 points. The S&P500 is up 25 points and the NASDAQ is up 140 points. Of note, yesterday was the first close on May crude below $70 since December 30th. Copper futures are up 15-16 cents this morning and had a gap-higher open last night.
Today's Reports: EIA Weekly Ethanol Production/Energy Stocks
- This morning's weekly ethanol production report for the week ending February 21st is expected to show daily production for the week in a range of 1.050-1.090 mil bbls, and stocks for the week in a range of 25.5-26.5 mil bbls. On average, both figures would be slightly below last week.
- Spot copper futures popped to sharp gains at the end of the day yesterday afternoon and then gapped back to a similar level on the open last night on news that President Trump signed an executive order instructing the Commerce Department to investigate copper imports and possible new tariffs on the metal. To this point, Trump's metal import tariffs had focused on steel and aluminum.
- For the USDA's Ag Outlook Forum at the end of this week, traders according to a Bloomberg survey expect corn planted acres to come in at 93.5 million (+2.9 mil from last year), while soybean planted acres are seen at 84.4 mil (-2.7 mil) and wheat acres are seen at 46.7 million (+0.6 mil); cotton acres are seen falling slightly year over year to 10.0 mil. The Forum is a two day event, with numbers being released on Friday.
- Private Black Sea consultancy SovEcon on Tuesday again lowered their estimate of Russia's 2024/25 wheat exports by 0.6 mmt's to 42.2 mmt's, citing a strengthening ruble and negative exporter margins as the main reasons for the cut. The figure compares to 52.4 mmt's in the 2023/24 season. The group also noted that the full export quota announced in recent weeks may not be utilized.
- Reuters reported on Tuesday that Kansas had joined Ohio in asking the EPA for a one-year delay in the implementation of year-round E15 ethanol sales as it was also seeking more time to get in compliance with the mandate. The announcement is interesting in that KS was not one of the original 8 states the were granted the waivers by the Biden admin in 2024. Currently, sales of the higher blend are expected to be allowed starting April 28th.
- Lawmakers in Mexico's lower house on Tuesday voted 409-69 in favor of a bill backed by President Sheinbaum that would ban GMO corn imports, according to social media posts from people familiar. The bill is being sought as a way to protect domestic producers, and also adds that any use of GMO corn must be evaluated by the government to ensure it is free of health concerns. The decision comes as Mexican lawmakers continue to work with their American counterparts on a deal that would avoid 25% tariffs that are set to go into effect next week.
- Newswires are circulating that President Trump is expecting Ukrainian President Zelensky at the White House on Friday to sign a rare Earth minerals deal that was agreed to between the two sides yesterday, but confirmation of such a visit is seemingly lacking early this morning. The deal would, in leman's terms, provide the US with a way to recoup some of money that has been sent to Ukraine's war efforts the last three years, and also give the US a vested interest in the area's security according to comments from Trump.
- Other news out of the White House yesterday included a narrow two-vote victory in the Republican controlled House of Representatives for Trump's budget resolution, which now sends the measure to the Senate. The bill would pave the way for around $4.5 trillion in tax cuts, and would also include a provision to raise the debt limit, which would avoid a potential payment default this summer.
- In weather news, Argentina saw slightly lighter rainfall totals over the last 24 hours than had been seen the previous few days in the southern/south-central part of the country, while the north was again dry. In Brazil, rains again continued to fall in the west and northwest, while areas further south and east remained on the dry side.
- Forecasts for the next week show mostly a continuation of this pattern, and are drier in northern Argentina/southern Brazil than had been seen coming out of the weekend. Central and southern Argentina will be downright wet in the period, with totals possibly exceeding 6-7" between now and March 5th in some areas. Week two forecasts still show an expansion of rain back north into northern Argentina and southern Brazil into the second week of March.
- In the US, models continue to keep precip the rest of this week and through the weekend largely confined to the northeast and into Canada, while agreement remains on a system mid-week next week providing .5-2.5" of rainfall to a wide swath of the southeast and the eastern Midwest. Temperatures will remain average to above average for nearly all of the country over at least the next 2 weeks, with none of the models currently showing any signs of a return to cooler temps into March 13th.