PM Comments March 3 2025
Good afternoon. The turning of the calendar to a new month did not produce any change in trading sentiment on Monday, as selling pressure was once again present across the ag space to start the first week of March. Corn remained the anchor on the group, with spot futures now having completely erased their gains realized in the first two months of the calendar year and also falling back below the 200-day moving average for the first time since the last week of 2024.
CK closed Monday at 4.56 1/4, down 13 and 1/4. CN was down 12 cents at 4.63 3/4. SK finished at 10.11 1/2, down 14 and 1/4. SN was down 14 and 1/4 at 10.25 3/4. WK closed at 5.47 3/4, down 8 cents. All five contracts mentioned took out their lows from both last week and from the month of February. Products were lower, May soybean meal closed at 298.0, down $2.20/ton, and May soybean oil closed at 43.49, down 63 points. Livestock markets were mixed, April live cattle were down 40 cents at 192.25, April feeders were down 95 cents at 272.05, and April hogs closed at 83.70, up 2 cents. New lows for the move again in both live cattle and hogs, with hogs having traded to their lowest level since last September on Monday. Outside markets are lower, crude oil futures are down $1.30-1.40/bbl, the Dow Jones index is down 550 points, and the US$ index is down 105 points. The S&P500 is down 90 points and the NASDAQ is down 400 points; gold futures are up $50-60/oz. Of note, the $ index is some 25-30 points off the lows, while the Dow is 300+ points off its lows and the NASDAQ is nearly 200 poins off its lows.
Spreads were mixed to lower on Monday, corn spreads were unchanged to down 9 and 1/2 cents, and soybean spreads were up a penny to down 3 and 1/2 cents. CH/CK closed at -16, which was unchanged, and SH/SK closed at -13/14, up a penny. New low's for the move in CK/CN at -8.
USDA this morning started the new week with another daily sales flash for the second consecutive session; private exporters this morning announced a sale of 114,000 mt's of corn for delivery to Mexico during the 2024/25 marketing year. Of note, this is the first corn sales flash since February 14th, and the first explicitly to Mexico since February 10th.
Broadly speaking, the news cycle on Monday was largely the same as it was to end the week last week, with macro talk on tariffs and the war in Ukraine dominating most of the intraday headlines. The corn chart as of the close this afternoon is downright ugly for the bull camp, as seven consecutive lower closes have more or less purged what weather premium had been injected into price during the early-season drought in Argentina. As far as the tariffs go, there's not been a lot of new updates as of this writing through the day today, but Mexican President Sheinbaum expressed this morning that Mexico had a "plan B, C, and D" in regards to the new measures that are still set to take affect tomorrow. What new news there was on the tariff front came in the form of a Truth Social post by President Trump, in which he told US farmers to "get ready to start making a lot of agricultural product to be sold INSIDE of the United States." The post added that tariffs would be going on external products beginning April 2nd, and to "Have fun!" Once again, we have little other detail to offer aside from what was typed by the President. It seems the President is trying to portray this as a positive for farmers, but threatening that more goods will be sold domestically to producers of goods that are largely exported does not seem to us to be a good recipe. On the other hand though, should Trump's vague comments be referring to biofuels or other new forms of domestic demand, it would be a rather different situation.
Aside from the daily sales announcement mentioned earlier, other demand news in the ag space on Monday included export inspection data during the morning hours this morning, and also monthly updated soybean crush and corn grind figures from the USDA that came out after the close this afternoon. Starting with this morning's export inspections report, data for the week ending February 27th showed corn inspections up 16% from last week at 1.351 mil mt's, while soybean inspections were down 21% on the week at 695k mt's and wheat inspections were nearly unchanged on the week at 390k mt's.
On the crush side, the monthly Fats & Oils report from the USDA showed soybean crush in the month of January at 213 mil bu's, which was above the average trade guess but down roughly 2.4% from December's figure. Soybean oil stocks as of the end of the month totaled just over 2.090 bil lbs, which was also well above the average trade guess and up more than 23% from December's figure. The monthly grain crushing report showed corn used for ethanol in the month of January at just over 457 million bu's, which was below the average trade guess and down 4.8% from December's figure. Total corn consumption in the month was seen at 503 million bu's, which was down 5% from December but up 4% from the same month last year.
Weakness in the outside markets was also largely related to tariffs to start the week, as it seemed there was a general 'risk-off' theme across the whole of the commodity space. In the case of crude oil, selling was likely related to confirmation out of OPEC that previously paused production increases would in fact be going into effect on April 28th, which further pressed futures below the $70 level. Also on the margin was a poor start to the week for NVIDIA, who's stock was down more than 10% at points during the afternoon trading hours; this likely contributed to some of the pressure in the NASDAQ, but we would imagine selling throughout the rest of the equities would've spilled over to some extent one way or the other.
As was the case to end last week, there remains little of note in the forecast for South America over the next week; models show good rains continuing in Argentina for at least the next 10-15 days, which should help with keeping temperatures closer to average, while Brazil continues to see dry conditions through most of its growing region in the same time frame. Like we talked about this morning, the forecast for Brazil is two-fold in that short term dryness will aid in both harvest and planting activities, but reductions in soil moisture will be long term negative to safrinha corn yields at some point, which will be monitored as we go through March.
In the US, focus remains on a low pressure system that is expected to work its way east out of the Rocky's starting tonight/tomorrow morning, which will provide heavy winds/rain/snow to a wide swath of the Midwest from Texas to Minnesota and then east to the East Coast. Snow will obviously be more of an issue further to the north, but the GFS at noon shows the possibility of accumulation as far south as northern KS/MO. Wind gusts are likely to exceed 50mph, which could possibly create blizzard-like conditions in the northern Midwest where snowfall is expected to be heaviest. Once this system exits, another one is also expected to work through the Midwest Saturday/Sunday, which seems to be being forecast as a similar situation to the one expected at mid-week this week, though total precip is generally expected to be less. Extended range forecasts in the week two period continue to show above average precip chances in the both the east and the west, while the midsection of the country looks to stay in a drier bias. Temperature maps are little changed, and continue to show above average temperature for the eastern 2/3's of the US in both the 5-10 and 10-15 day periods; the West Coast looks to be below average in the same timeframe.