Daily Ag Direction 2/3/25
Good Morning!
A wild Monday morning for markets as on-again off-again tariff threats loom. Markets backed off in the overnights on tariffs against Mexico and Canada totaling 25% were announced Saturday. Then this morning announcements that the tariffs against Mexico would be delayed a month as negotiations on security at the border are underway. All I can say is hang on to your hat as things will continue to be interesting. Markets reacted very favorably to the delay and are up across the big three grains. Paris wheat is up as the EURO loses strength. As we have written about before, the big short in wheat remains and is fuel for this market if it gets liquidated. Funds are currently short 100k Chicago. Warm and dry across the southern plains wheat growing regions with cold in the long-term forecast. Southern Russia is seeing the potential for rains but the Volga and the Central Black Lands are still dry. Ukraine is experiencing much of the same dry weather as well. Corn gapped lower in the overnights but recovered on the tariff delay announcement. Talks with Canada and Mexico are ongoing. Funds added 22k contracts to their long position in corn for a total of 343k contracts. Beans were under pressure from tariff news but also increasing rainfall potential in the drier regions of Argentina and Southern Brazil. Canadian tariffs can make US bean oil more valuable as canola oil has a harder time competing. Cattle are down sharply as we receive news that the border will be open for Mexican feeder cattle imports soon. The Friday Cattle Inventory report showed a larger 2024 calf crop and feeder supplies. Beef replacement heifers were hard to come by however and that will continue to fuel the current market situation. As heifers continue to enter feedlots, the cattle inventory will remain at historic lows and supplies of feeder cattle will remain low. This high price environment is not fixing itself anytime soon internal to the US. A change in beef demand or an influx of foreign cattle/meat supplies could influence markets in the near term.
Mar KC Wheat +9.2 @ $5.89
July 25 KC Wheat +8.0 @ $6.07
Mar Corn +7.4 @ $4.90
Dec 25 Corn +5.0 @ $4.65
Mar Beans +15.0 @ $10.57
Nov 25 Beans +9.0 @ $10.60
Mar Feeders -4.225 @ $270.900
Feb Live -1.150 @ $203.450
Please reach out to your CEA Risk Management Advisor if you have any questions. Have a great day!
-Trent
