PM Comments February 26 2025
Good afternoon. In a nod to Spring Training getting started last week for major league baseball, the grain markets in Chicago are 'batting a perfect 1.000' on lower closes so far through the first three days of trading this week, with corn and wheat again shedding premium on Wednesday. Announced delays in tariffs on Canada provided a bullish spark to the market the first time around, but failed to do so today despite announcing a further push back to April 2nd.
CH finished Wednesday at 4.78 1/4, down a penny and a half. CK was down 3/4 of a cent at 4.93 1/2. SH closed at 10.24 1/2, down 6 and 3/4. SK was down 7 and 1/2 at 10.41 1/4. Inside days for both bean contracts. WH finished at 5.66, down 6 and 3/4. Products were lower, March soybean meal finished at 293.40, down 40 cents/ton, and March soybean oil closed at 44.97, down 47 points. Bean oil was 40-50 points off its lows after spiking down on the tariff delays, but still closed in the red for the fourth straight session. Livestock markets ended mixed, April live cattle closed at 194.62, down $1.10, March feeders closed at 274.37, up 15 cents, and April hogs closed at 88.30, up $1.72. Inside day for feeders. Outside markets are mostly lower, crude oil futures are down 20-30 cents/bbl, the Dow Jones index is down 230 points, and the US$ index is up 20-25 points. The S&P500 is unchanged and the NASDAQ is up 60 points. New lows for the move again in crude oil and an inside day as of this writing for the NASDAQ. Copper futures ended up back closer to yesterday's close by the end of the day but were still higher.
Spreads were mixed across both markets at mid-week, corn spreads finished 3/4 of a cent lower to 3 cents higher, and soybean spreads finished 3/4 of a cent higher to 2 cents lower. CH/CK closed at -15 1/4, down 3/4 of a cent, and SH/SK closed at -16 3/4, up 3/4 of a cent. New contract low in CH/CK at -15 1/2
The tariff news seemed to fly under the radar a bit this afternoon, which we find somewhat interesting. One possible reason for the lack of attention, or perceived lack of attention by the markets, could have been that Trump also announced new 25% on imports from the EU including cars and "some other products," as he quoted. Trump added that we run a current "$300 billion deficit" with the EU, and also that the union was essentially created to "screw the US", which he says they've succeeded at. The comments came during the President's first cabinet meeting, where Trump and members of his team fielded questions on not only tariffs and trade, but also a number of other topics including Russia/Ukraine, DOGE, immigration, and China/Taiwan. As it pertains to DOGE, Elon Musk was also present at the White House as expected, and fielded questions from reporters as well. On Russia/Ukraine, Trump, along with several news agencies throughout the day, said he expected Ukrainian President Zelensky in Washington Friday to finalize and sign the rare Earth metals deal that was tentatively agreed to yesterday.
Ethanol production for the week ending February 21st was in the 1.08 mil bbls/day range for now the third straight week according to the EIA, though stocks in the week unexpectedly took a jump to a new marketing year high. Production data for the week showed daily production at 1.081 mill bbls/day, compared to 1.084 mil both last week and the same week last year. Stocks were seen at 27.571 mil bbls, which as previously mentioned was the highest level seen this year; EIA records going back to 2010 show just 3 other weeks ever that ethanol stocks in the US were above 27 million bbls, and those were all during April of 2020, when the Covid-19 panic was perhaps at its height. We have no sure-fire explanation for the build in stocks, but would logically see the fact that there hasn't been a significant production fall off due to adverse weather like there has been the past couple years, and also a likely slow down in exports due to anticipated tariffs as some of the reason for the build. Corn usage in the week was estimated at 106.8 mil bu's, which brings cumulative use in the marketing year to 2.665 bil bu's; the USDA's full marketing year forecast is at 5.500 bil bu's.
The EIA also reported petroleum stocks data in its weekly report, which showed crude oil stocks in the week falling by 2.332 mil bbls to 430.161 mil, gasoline stocks rising 369k bbls to 248.271 mil, and distillate stocks rising 3.908 mil bbls to 120.472 mil. Implied gasoline demand in the week was estimated at 8.454 mil bbls/day, compared to 8.239 mil last week and 8.467 mil in the same week last year.
Weather news continued to be rather stagnant for both South America and the US on Wednesday in the short term, with forecasts still not offering a lot of change. Starting in South America, models show continued wet weather through most all of Argentina's main growing regions through the rest of this week and into next, while temps here will be below average in the south and above average in the north. For Brazil, there continues to be a pretty stark line between who's receiving rain and who isn't that goes almost directly through the middle of Mato Grosso; areas to the south and west of this line have been dry, while areas to the north and east continue to see near daily rainfall. Temperatures here are following the same line for the most part, with the warmest areas also being the driest.
In the US, warm air temperatures have been the talk of the Midwest this week, as precip has been largely limited save for some light/spotty rains that worked through the upper Midwest last night and this morning. Over the next two weeks there will be chances for cold air intrusions, but they will largely be localized and short-lived as the models remain in good agreement that the overall pattern will be one of above average temps at least through mid-March. The GFS's 12Z precip forecast shows a small low pressure system working through the Great Lakes area towards the end of this week and into Saturday, but otherwise the next big moisture event looks to crank up mid-week next week, with potentially severe storms again forecast for the mid-south/southeast and parts of the southern Midwest. Rainfall is generally estimated in a range of 0.5" to 2.5", with the heaviest totals expected through Arkansas/N Mississippi and into Tennessee.