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2.12.25

Good afternoon. The USDA's February crop report has come and gone, and was a snoozer by basically all accounts. Corn and soybean futures spent the morning trading higher before the report, and then largely chopped around just below unchanged following the release of the data as the numbers did next to nothing to alter the current fundamental landscape. Like we eluded to yesterday, focus in the ag space following today will quickly return to South American production figures, as well as trade policy and tariffs.

 

CH closed Tuesday at 4.84, down 7 and 1/2 cents. CK was 6 and 1/2 cents lower at 4.98. SH finished the day at 10.43 1/2, down 6 cents. SK closed at 10.60 and 1/4, down 5 and 1/4. WH was down 2 and 1/2 cents at 5.77. Products were mixed, March soybean meal closed at 296.60, down $3.90/ton, and March soybean oil closed at 46.13, up 40 points. Outside day lower for meal and an outside day higher for oil. Livestock markets were again mixed, April live cattle closed at 196.00, down $2.12, March feeders closed at 264.77, down $3.35, and April hogs closed at 92.97, up $1.35. Inside day for hogs. Outside markets are mixed, crude oil futures are up 80-90 cents/bbl, the Dow Jones index is up 140 points, and the US$ index is down 40 points. The S&P500 is unchanged and the NASDAQ is down 50 points. Inside day for the NASDAQ as of this writing. Gold futures are $7-8/oz lower, and coffee finished 15.6 cents/lb lower; both again made new contract highs.

 

Spreads were lower, corn spreads were down a quarter cent to down 6 and 1/2 cents, and soybean spreads were down 3/4 of a cent to down 4 cents. CH/CK closed at -14, down a penny, and SH/SK closed at -16 and 3/4, down 3/4 of a cent. New contract low for CH/CK at -14, and SH/SK matched its contract low at -17.

 

The bull camp was hoping for further additions to corn demand in today's release that would've led to a lower ending stock number, but had no such luck as USDA made no adjustments to the domestic balance sheet. There's an ongoing murmur that exports are a shade too low currently, but with pending tariff reviews due at the end of the month on our biggest corn buyer, Mexico, we see the USDA as likely slow playing this situation after already adjusting the figure 150 mil bu's higher in December. From a global standpoint, world corn stocks came in at 290.31 mmt's, which was below both last month and the average trade guess; reductions were mainly a result of decreases in production in South America, where Brazil and Argentina were each trimmed by 1 mmt. Other notable adjustments globally included a one million ton reduction in exports out of Brazil that coincided with the drop in production, and also a 3 mmt's drop in corn imports into China, which puts this figure at just 10 mmt's. For reference, China imported 29.5 mmts of US corn in the 2020/21 crop year, and imported 23.5 mmt's of US corn last marketing year.

 

Soybean data was equally uneventful, as similar to corn the USDA made no adjustments to the domestic balance sheet which held ending stocks steady at 380 mil bu's. World ending stocks came in at 124.34 mmt's, which also like corn was below both last month and the average trade guess. Main culprits here were again in South America, where Argentina was trimmed by 3 mmt's; Brazil was once again left unchanged at 169.0 mmt's, as the USDA remains firm in holding below the 170 mark despite a plethora of private companies going above these levels in recent days. Other global adjustments were lacking as there was no update made to Chinese imports. Also of note as it pertains to the soy complex, there were no balance sheet adjustments made to either meal or bean oil either.

 

Wheat numbers, like the other two crops, were also dull and uneventful. Carryout was lowered 4 mil bu's to 794 mil bu's on a 4 mil bu increase in food use, but otherwise, the balance sheet here was also more or less the same from last month. Global ending stocks were slightly lower from last month at 257.56 mmt's, which like the others, was also below the average trade guess. USDA trimmed exports out of both Ukraine and Russia by 0.5 mmt's a piece, and also trimmed imports into China by 3.5 mmt's to just 8 mmt's. China imported 13.6 mmt's of US wheat in the 2023/24 marketing year, and imported 13.3 mmt's of wheat in the 2022/23 marketing year.

 

Other news throughout the day wasn't necessarily market-moving, but included comments from Fed Chair Powell to Congress, an announcement that Vice President Vance would be meeting with Ukrainian President Zelensky next week, and comments out of both Trump and Israeli Prime Minister Netanyahu that if hostages aren't returned by Hamas by Saturday, all bets are off regarding the current ceasefire agreement in Gaza. Powell would be considered the most market-related, but he offered little in terms of new insights past what was said following the last FOMC meeting at the end of January. His message remains fairly straightforward; the US economy is in good shape, which gives the Fed the ability and freedom to make policy decisions based on the most recently available data. He added that officials saw the current rate as being in a good place, but wanted to see more progress on inflation before reducing rates any further. Powell will wrap up his two-day hearing tomorrow on Wednesday.

 

Weather forecasts for Brazil and Argentina were again unchanged through the day on Tuesday. Rains will improve in northern Argentina and southern Brazil beginning the end of this week, and look to largely hold in this pattern over the next 10-15 days. The rains in Argentina will greatly benefit later planted corn, while the dryness in Brazil should allow for a significant increase in soybean harvest between now and the end of the month. Increased moisture will also cause temps to return to more seasonal levels over the next week, while Brazilian dryness allows heat to expand north and west.

 

US Midwest weather continues to feature several storm systems across the Midwest and broader eastern half of the US the rest of this week and into next week that will provide heavy rain to the southeast and likely heavy snow to the east and the north. The 12Z GFS run shows a small/narrow band of heavy snow through northern Virginia tonight into morning, while a second system will start up in the west early in the day tomorrow and work its way east through the day and into Thursday. Heaviest totals will be seen in the northeast and into Canada, as models the last couple runs have been reducing accumulation through the country's mid-section. The west and northwest will also see continued heavy precip, while the southwest and north-central Plains look to be the lone dry spots. Extended forecasts are still showing a shift to a drier bias for most of the country in the week two period, while temp forecasts in this timeframe remain in disagreement; the EU and GFS ensembles are sticking with the cool east/warm west pattern that is currently in place, while the EU AI model shifted even warmer for the whole of the country than was already seen this morning.

 


Quotes are delayed, as of February 13, 2025, 09:55:30 AM CST or prior.

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