AM Comments March 26 2025
Good morning. Another night of quiet/choppy/low volume trade has been had at the CBOT Tuesday night into Wednesday, with the grain markets trading either side of unchanged, and the soybean market trading a penny or two higher. We are simply running out of ways to describe the current fundamental situation, which consists almost exclusively of trade policy/tariffs and the US spring acreage mix; and until more information is known on either front, we assume this causes the directionless trading experienced over the past few days to continue. Ongoing peace talks in Ukraine are the other fundamental factor that remains at play, but it seems the market is much less interested in these headlines than it is ones regarding tariffs or trade. Corn futures to start mid-week trading are mixed, soybean futures are 1-2 cents higher, and the Chicago wheat market is 2-3 cents lower. Products are mixed, soybean meal is down 50 cents/ton, and soybean oil is up around 20 points. Outside markets are also mixed, crude oil futures are up 50-60 cents/bbl, the Dow Jones index is up 20 points, and the US$ index is up 10-15 points. The S&P500 is unchanged and the NASDAQ is down 20 points; gold futures are quietly higher.
Today's Reports: Monthly Durable Goods Orders; EIA Weekly Ethanol Production/Energy Stocks
- This morning's weekly ethanol production report for the week ending March 21st is expected to show daily production in the week in a range of 1.085-1.145 mil bbls, while stocks are seen between 25.60-26.775 mil bbls; both figures, on average, would be down slightly from last week.
- The USDA's monthly cold storage report, released yesterday afternoon for the month of February, showed total red meat supplies in freezers as of February 28th at 871.4 mil lbs, which was down 1% from January and down 5% from February of last year; beef supplies at 428.1 mil lbs were down 6% on the month and down 2% on the year, and pork supplies 423.1 mil lbs were up 4% on the month but down 8% on the year. To view the full report, please click here.
- Along with agreements on a maritime ceasefire yesterday, rumors were circulating that Russia has also discussed during talks interest in reviving the former Black Sea Grain Initiative, which was implemented at the start of the war in 2022 following a blockade of Ukraine's Black Sea grain exports in the months prior. Sources indicate any such move would largely be a PR play, as Ukraine's grain exports have been functioning near normally without any such agreement.
- Speaking further on the matter, Russian Foreign Minister Sergei Lavrov said the desire to reimplement the agreement was a way to help ensure global food security, and would also allow re-entry into the country's typical grain and fertilizer markets, which amid an ongoing trade riff between the US and Canada, would presumably be a benefit to US fertilizer imports. It is unknown this morning what the odds of this agreement being revived actually are.
- Data from the European Commission shows EU wheat exports have continued to struggle in recent weeks on the back of a short crop last season; marketing year exports are said to have reached 15.5 mmt's as of Sunday, which compares to 23.7 mmt's through the same period last year. Data also shows barely exports down similarly at 3.64 mmt's, while corn imports were expectedly up from last year at 15.4 mmt's. The EU's 2024/25 marketing year ends on June 30th.
- Along similar lines, private analyst SovEcon lowered its Russian wheat export forecast for the 2024/25 season from 42.2 mmt's previously to 40.7 mmt's, due to a continued slow pace of shipments and weak margins. Total exports through the month of February totaled 32.6 mmt's, compared to 33.8 mmt's through the same period last year. Same group sees 2025/26 exports at 39.1 mmt's, which reflects higher carry-in stocks from the current season.
- Precip in South America was spotty again on Tuesday, with a small part of southwest Argentina seeing light rains; good rains were seen in southern Brazil, but areas in the south-central and northern parts of the country largely missed out. Forecasts are little changed though, and continue to show improving moisture over the next 5-10 days for both countries. There were no overnight changes to the temp forecast, with above avg temps still seen through most of Brazil, and below avg temps still seen through most of Argentina.
- US precip was generally lighter than expected on Tuesday, with just a narrow band through the central Midwest picking up a few tenths over the last 24 hours. Additional light precip is expected in generally the same corridor through the end of the week, with heavy rains still expected in south TX beginning this afternoon/this evening and lasting through the day tomorrow. Week two forecasts remain downright wet, as active upper level air flow will continue to allow storm systems to race across the central US through the first week of April.