Commodities Overview March 2025 Edition

MONTHLY FUTURES MARKET OVERVIEW

>>Read the complete March 2025 Edition HERE

GRAINS

The U.S. ending stocks were left unchanged at 1.540 bil. bu. in the March 2025 WASDE, 25 mil. above expectations. Global stocks were cut 1.4 mmt to 288.9 mmt. There were no changes to Brazil or Argentine production with forecasts holding at 126 and 50 mmt, respectively.  Production estimates from grain exchanges in Argentina continue to come in under to well below the USDA forecast. Brazil’s exports were cut 2 mmt to 44 mmt as a greater portion of their corn demand is being used domestically for biofuel production.

The U.S. soybean ending stocks were also left unchanged at 380 mil. bu., however, the average farm price was cut $.15 to $9.95 per bu. Stocks were in line with expectations.  Bean oil usage for biofuels was cut 150 mil. lbs. to 13.450 bil., while exports rose 200 mil. lbs. to 1.80 bil. lbs.

U.S. ending stocks rose 25 mil. to 819 mil. bu. vs. expectations for no change. HRS and durum stocks both rose 10 mil. bu., while SRW was up 5 mil. Imports were revised up 10 mil., while exports were trimmed by 15 mil. Global stocks rose 2.5 mmt to 260 mmt vs. expectations of no change.

COCOA

The cocoa market has fallen to its lowest level since November in the wake of an improvement in the weather for West Africa and a report from the International Cocoa Association (ICCO) the showed a global production surplus for 2024/25. This ICCO forecast was their first for the 2024/25 marketing year, and it came as a surprise.

COFFEE

The NY (arabica) coffee reached new contract (and all-time highs) on February 11, and it has been in a consolidation mode ever since. Seasonal rains have finally arrived in key growing areas of Brazil, but they have yet to amount to enough to offset concerns after a disappointing rainy season so far. Expectations for the 2025 crop were already down because this is the Brazil arabica crop’s off year in its biennial on/off cycle, and the likelihood that the exceptional drought in 2024 deprived coffee trees of the energy needed to produce strong crop.

COTTON

The cotton market staged an impressive bounce off contract lows in early March, but it has once again run into stiff resistance at the 50-day moving average. Ample global supply and a loss in export business for the U.S. have pressured nearby prices to their lowest level since the pandemic, but a weak dollar and low prices have improved the export outlook a bit. Cumulative export sales are still the lowest for this point in the season in at least six years, but they have narrowed the deficit to year ago levels to 492,000 bales from 1.260 million in late January.

SUGAR

Sugar prices saw choppy two-sided action over the past month, as the market sold off hard in late February, partially off disappointment that it could not trade above a 20-cent level after trying to do so for four straight sessions and also on heavy deliveries against the March contract. By early March the market had given back 62% of its January-February rally and corrected a previously overbought conditions. Adding to fundamental support were concerns that the dry conditions in India had damaged their crop to the extent that they would not be able to meet their 1.0 million metric-ton export quota.

CRUDE OIL

The crude oil on and off tariff threats lowered global demand expectations and sent crude oil prices back near their 2024 lows. But the threatened tariffs against Canadian oil imports and President Trump’s interest in reducing Iran’s export capability helped the market put in a low this month. This week, U.S. airstrikes against the Houthis and the collapse in the cease fire in Gaza have added to global supply anxiety and helped support a modest recovery in prices, although the 17-month old Israel/Hamas war has done little to interrupt supply to this point.

 

 

NATURAL GAS

A four-month rally in natural gas reached a peak this month on a peak of vitriol between the U.S. President and Canadian official over U.S. tariff threats against natural gas imports from Canada and the threat of interruptions of electrical supply from Canada to the U.S., which could increase U.S. gas demand even further. The market saw steep drawdowns in U.S. natural gas supply this winter after a couple of cold weather events that extended into the deep south. This has taken U.S. supply from a record surplus to a near-record shortfall in a period of four months.

LIVE CATTLE

Cattle and beef prices declined in February. The month is often a time when consumers scale back  on expenses. Credit card bills from the holidays are in their third to fourth month of needing payments, especially after holiday spending in 2024 broke records. Home heating bills go up in the winter, further stressing consumers’ budgets. In addition, February is a slow month restaurant dining.

LEAN HOGS

Trading in February 2025 gave both buyers and sellers opportunities because there was active speculative bear spreading. Spread trading is an active part of livestock futures. On February 3  February lean hogs were $84.32. When February lean hogs expired on February 14, they were $89.47. Pork prices also moved higher with the CME pork cutout index moving from $93.40 to $99.19 on February 14.

STOCK INDEX FUTURES

Stock index futures remained in a downward trend through much of February and into the second week of March. However, approximately three weeks ago, there was a significant shift in the fundamentals and outlook for Federal Reserve policies. The likelihood of the central bank taking a more aggressive approach to ease credit conditions this year has increased.

US DOLLAR INDEX

The U.S. dollar index recently dropped to a five-month low, driven by interest rate differentials that are now unfavorable for the greenback. While the Federal Reserve is expected to aggressively reduce interest rates this year, other central banks, such as the European Central Bank and the Bank of England, may take a more gradual approach to cutting their key rates.

EURO CURRENCY

The euro currency has been strong over the last couple of months but came under some pressure when European Central Bank President Lagarde warned of weaker economic growth, but downplayed inflation risks if the EU retaliated against U.S. tariffs.

GOLD

April gold futures advanced to a new record high after the Federal Open Market Committee indicated that it may be lowering its fed funds rate two times this year which is a bullish factor for  non-yielding gold. In addition, the precious metal has been supported by a flight to quality flow of funds in light of ongoing geopolitical issues.

 

 

 

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