Written Commentary
Sean Barry 2025 ChicagoCIO ORBIE Finalist
February 6, 2025
CORN
Prices were down $.03-$.04 while spreads were little changed. It was an inside day for Dec-24 after overnight strength failed to trade above yesterday’s $4.32 high. Support is at its 50 day MA of $4.18. Favorable conditions in South America combined with fears of continued trade tensions with China and uncertainty over US biofuels policies under a Trump Administration weighed on the entire Ag. space. Exports at 59 mil. bu. were in line with expectations. YTD commitments at 1.236 bil. are up 39% from YA, vs. the USDA forecast of up 1.4%. Current commitments represent 53% of the USDA forecast, above the historical average of 45%. Shipments are up 31%. Mexico was the only noted buyer last week with 31 mil bu. The US Climate Prediction Center forecasts there is a 57% chance of La Nina developing in Q4 of 2024, which we are now over halfway thru. If one were to develop, it would likely be weak and short in duration. US corn acres in drought fell another 5% to 59% and are well below the 81% peak just 3 weeks ago. Strong demand will likely keep US stocks heading lower into year-end. Favorable weather is SA however is keeping a lid on rally attempts.
SOYBEANS
The soybean complex was lower across the board in 2 sided trade. Beans are down $.12-$.14, meal was $1-$2 lower, while oil plunged another full $.01 lb. Nearby bean and meal spreads firmed while oil spreads weakened. While Jan-25 beans avoided trading into fresh contract lows, all the deferred contracts did. The Jan/Mch bean spread traded above $.07 bu., its highest level in over 4 months. Tightening spreads are needed to keep the demand pipeline full with US farmers not terribly eager to sell recently harvested crops. Dec-24 meal continues to hover just above its contract low of $285.30 with long term support at the Aug-2020 low near $280 ton. Bean oil sliced right thru 100 day MA support, trading down to the $.42/lb. level. Next support is the Oct-24 low at 41.36. Spot board crush margins slipped another $.03 to $1.19 ½ bu., a fresh 5 month low. Bean oil PV slipped to 42.3%. Soybean exports at 68 mil. bu. were above expectations and bring YTD commitments to 1.161 bil. up 9% from YA vs. the USDA forecast of up 8%. China/unknown combined to buy 40 mil. bu. bringing commitments to 750 mil. bu. just below the 762 mil. YA. Soybean meal sales at 275k tons were in line with expectations. YTD commitments are up 6% from YA, vs. the USDA forecast of up 8%. Soybean oil sales at 48 mil. lbs. were in line with expectations. YTD commitments at 600 mil lbs. are more than 9 times higher than YA and have already met the USDA forecast for the entire 24/25 MY. The USDA also announced sales of 133k mt of meal to the Philippines, 135k mt (5 mil. bu.) of beans to an unknown buyer and 198k mt (7.3 mil. bu.) to China. US soybean acres in drought fell another 4% to 53% and are well below the 73% peak just 3 weeks ago.
WHEAT
Prices were $.03-$.06 lower across all 3 classes with KC futures leading the declines. Prices weakened despite tensions in the Black Sea region remaining elevated. Overnight Ukraine reportedly shot down 6 of 7 intermediate range Russian missiles with the 7th doing little damage. To date the increased tensions have not impacted grain shipments. Wire services are reporting Russian Pres. Putin stated their use of medium range missiles were a test against Western aggression. He also suggested Ukraine’s use of weapons from the West wouldn’t change the outcome of Russia’s “military operation” in Ukraine. US exports at 20 mil. bu. were a 4 month high and at the high end of expectations. YTD sales have reached 544 mil. up 23% from YA, vs. the USDA forecast of up 17%. Commitments represent 66% of the USDA forecast, in line with the historical average. US winter wheat areas in drought eased 3% LW to 40% very near the 41% from YA. The peak drought reading was 62% only 3 weeks ago. The IGC lowered their global wheat production forecast 2 mmt to 796 mmt, still just above the USDA est. of 794.7 mmt.
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