PM Comments March 5 2024
Good afternoon. The Wednesday rebound in the ag space made it to the close today, though there was a brief mid-morning hiccup that sent values to the red again for all of about 45 minutes. It will be interesting to see how values trade the rest of the week and into the weekend, but at least for now it appears that there is a chance short-term lows have been scored with front month contracts on all three of corn, beans and wheat ending their losing streaks.
CK closed mid-week at 4.55 3/4, up 4 and 1/4. CN was up 4 cents at 4.63 1/4. SK finished at 10.11 3/4, up 12 and 3/4. SN was up 11 and 1/4 at 10.25. Inside day for SN. WK closed at 5.48 and 1/4, up 11 and 1/2. Inside day here also. Products were higher also, May soybean meal closed at 299.80, up $6.30/ton, and May soybean oil closed at 42.99, up 15 points. New lows for the move in bean oil this morning before finishing the day higher. Livestock markets were higher, April live cattle closed at 196.55, up $1.90, April feeders closed at 276.07, up $3.57, and April hogs closed at 84.70, up $2.35. Outside markets are sharply mixed, crude oil futures are down $1.60-1.80/bbl, the Dow Jones index is up 470 points, and the US$ index is down 130-140 points. This the lowest trade in crude oil since the two-day bottom made last September and the lowest trade in the $ index since last September. The S&P500 is up 60 points and the NASDAQ is up 260 points; inside days for all three of the major stock index futures.
Spreads were mostly higher to close Wednesday, corn spreads were unchanged to up 4 and 1/4 cents, and soybean spreads were up a penny to up 7 and 3/4. CH/CK closed unchanged on the day at -15 1/2, and SH/SK closed at -14, up a penny.
Following a day filled with headlines on Tuesday, newswires were relatively quiet on Wednesday, as chatter was largely rumor-focused. There were reports abound on social media that Trump was considering modifications to the tariffs announced yesterday, with it being announced later in the day that there had in-fact been a one month delay agreed to for automakers following a phone call between him and the heads of the so-called 'big three' (Ford, GM and Chrysler/Stellantis). It is unknown as of this writing whether this delay is what Commerce Secretary Howard Lutnick was eluding to overnight or if further adjustments to the measures should be expected the rest of this week. Speaking to reporters at the White House this afternoon, Press Secretary Karoline Leavitt continued to reiterate Trump's stance that if company's want to avoid the new tariffs permanently, all they have to do is move their manufacturing back inside the US... in the next 30 days. Simple. Trump also posted on Truth Social this afternoon that him and Canadian PM Justin Trudeau had a phone call earlier this morning that was "somewhat friendly," but added that Canada had still not done enough in his eyes to stop the flow of fentanyl and migrants from crossing the border, which he has alleged since day one are the reasons for the new tariffs. Interestingly, Trump also added in the post that Trudeau was unable to tell him when the Canadian election would be taking place, which he said was curious and seemed to point to Trudeau wanting to use the tariff/trade issue to stay in power.
This morning's weekly ethanol report for the week ending February 25th from the EIA showed a somewhat surprising drop in stocks from the week prior, while production in the week saw a small uptick to a new four-week high. Daily production averaged 1.093 mil bbls/day, which was up 1.1% from the week prior and up 1.4% from the same week last year. Total production of 7.651 mil bbls was a new record for this particular week in the year. Stocks were seen at 27.289 mil bbls, which was inside the low end of Bloomberg trade expectations, but varied from some analysts opinions that stocks could exceed 28 mil bbls for the first time in history; the figure was down 1% from last week but up 5% from the same week last year. We estimate corn usage in the week at 108.0 mil bu's, which brings cumulative use in the marketing year to 2.773 bil bu's; this compares to 2.679 bil bu's last year and the USDA's full marketing-year forecast of 5.500 bil bu's. The EIA report also showed US crude oil stocks in the week at 433.775 mil bbls, which was up 3.614 mil bbls from last week, while gasoline stocks were seen at 246.383 mil bbls (-1.433 mil) and distillate stocks were seen at 119.154 mil bbls (-1.318 mil). Implied gasoline demand in the week was estimated at 8.877 mil bbls/day, compared to 8.454 mil last week and 9.013 mil in the same week last year.
The National Weather Service's Climate Prediction Center (CPC) forecast for South America over the next 5 days continues to show good rains through the heart of Argentina's ag belt, while Brazil looks to stay dry in the east/southeast. Precip over the last week has brought a break in the heat, with most of Argentina now seen with average to below average temps over the next week, while Brazil sees warmer than average temps in the east, but not to the extreme level seen in the south of the country over the last 10 days. Week two forecasts at mid-day Wednesday still showed a shift to a wetter pattern throughout Brazil into the middle of March, while Argentina is expected to see spotty showers mostly favoring the north in the same period.
Forecasts for the US look to stay active over the next week to 10 days, as models continue to show upper air flow allowing several systems to work around the bottom side of low pressure that is anchored over the western US. Seven-day precip maps from both the GFS and the EU models show a band of precip stretching across Nebraska/Iowa/N Illinois/Indiana and then into the East Coast, but also show noticeable dry pockets both to the north and the south. The pocket to the north, which includes the Dakota's and Minnesota, is slowly becoming one of the more 'needed-to-watch areas' in terms of drought concern as we get into US spring. The GFS's 10-15 day temperature outlook map at mid-day today showed more average temps across the whole of the country as opposed to the above average outlook that had been offered yesterday, which will need monitoring as we go into the weekend. Week-two precip maps are still wet for everywhere but Texas and areas around the south-central US.