PM Comments March 6 2025
Good afternoon. What a day (again). If you don't like the markets, just wait a while as sentiment has again seemingly done a near complete 180 from just a couple days ago. News that the tariffs announced earlier this week would not apply to goods coming from Mexico covered under the USMCA agreement sent values sharply higher at mid-morning, which seemingly all but confirmed a short-term bottom.
CK closed Thursday at 4.64, up 8 and 1/4. CN was up 7 and 1/2 at 4.70 3/4. SK finished at 10.27 and 1/4, up 15 and 1/2 cents. SN closed at 10.39 1/2, up 14 and 1/2. WK was up 5 and 3/4 at 5.54. Products were higher, May soybean meal finished at 304.90, up $5.10/ton, and May soybean oil closed at 43.17, up 18 points. Livestock markets were mixed, April live cattle were down 27 cents at 196.27, April feeders closed at 274.42, down $1.65, and April hogs closed at 86.65, up $1.95. Inside day for feeders. Outside markets are mixed/lower, crude oil futures are trading either side of unchanged, the Dow Jones index is down 400 points, and the US$ index is down 5-10 points. The S&P500 is down 85 points and the NASDAQ is down 500 points; gold futures are quietly lower. Inside day for crude oil.
Spreads ended the day higher, corn spreads finished up 3/4 of a cent to up 4 and 1/2 cents, and soybean spreads were up 3/4 of a cent to up 5 cents. CH/CK closed at -14 1/2, up a penny, and SH/SK closed at -13 1/4, up 3/4 of a cent. SK/SN closed at -12 1/4 and traded to -10 and 3/4, which was the highest level since the end of January.
USDA this morning announced a daily sales flash for the third day this week; private exporters reported sales of 20,000 mt's of soybean oil for delivery to unknown destinations during the 2024/25 marketing year. This is an identical sale to the one announced Tuesday.
While on the subject of soybean oil, we'll jump into the rest of the day's demand news first, as weekly exports of soybean oil exceed trade expectations by a good margin and were also the highest weekly total since the week of January 9th at 55k mt's. Of note here, this brings cumulative sales in the current marketing year to 764k mt's, which is up a whopping 1,144% from last year. Corn sales for the week totaled 909k mt's, with featured buyers being the usual suspects of Japan (260,600 mt's), Mexico (249,400 mt's), Korea (132,200 mt's), and Colombia (117,200 mt's); unknown destinations assigned out/rolled/canceled 248,100 mt's in the week. Soybean sales totaled 353k mt's, with featured buyers being China (205,700 mt's) and Germany (114,100 mt's); here, unknown destinations assigned out/rolled/canceled 216,900 mt's. And lastly, wheat sales for the week totaled 339k mt's, with featured buyers being Mexico (91,900 mt's) and the Philippines (66,600 mt's).
Other news throughout the day once again focused on Trump and tariffs, with the bulk of the market action being attributed to headlines pertaining to the topic. We'll go in time order, as the first headlines that started trickling out this morning seemed to indicate that Commerce Secretary Lutnick let the cat out of the bag so to speak, although it was unknown to traders at the time; the Commerce Secretary made comments that a decision could be possibly announced regarding USMCA items later in the afternoon, which ended up being the case. The next headlines out were a partial confirmation of this, but indicated that the deal had been struck with just Mexico. Trump posted to Truth Social that he had a successful phone call with Mexican President Sheinbaum, thanking her for hard work and cooperation, but offered no indication of a deal with Canada. It wasn't then until later in the day after the markets had closed that it was confirmed that all goods under the USMCA agreement from both Canada and Mexico would be exempt from the new measures announced on Tuesday. How this situation progresses through the day tomorrow and into the weekend is anybody's guess, but we would at the very least expect a volatile overnight session this evening. The last 72 hours are a perfect illustration at just how fast-moving the trade situation is, and how quickly things can change if one falls asleep at the wheel for any period of time; do not get complacent in risk management no matter which side of the market you are on.
Forecasts for the US were once again little changed at mid-day on Thursday, with the models remaining in good agreement on a smaller system working through the Midwest later this weekend. Otherwise, rains look to impact the southeast early next week, while the Midwest sees several days of warm and dry weather. Week-two precip maps have remained wet, with all of the country besides the south and areas around Texas expected to see above average precip potential into March 20th. On the temperature front, the 5-10 day outlook continues to show well above average temps for the eastern part of the US, while the west stays cooler than average. 10-15 day maps still show quite a bit of disagreement, with the EU holding to the same pattern seen in the 5-10 day and the GFS shifting to a warmer west and a more average east.
Brazil's forecast is slightly wetter in the south through the weekend and into the first part of next week, but is otherwise also little changed from yesterday. Extended forecasts continue to show a return to wet conditions in the east beyond mid-month, which amid good planting progress of safrinha corn in the last few weeks, will be nearly perfect for producers there. In Argentina, maps have actually turned wetter in the week two period, and now show rains broadly continuing to benefit the country's growing regions over the next two weeks. Threats in the forecast today continue to be very minimal.