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Austin Schroeder

With President Trump taking the oath of office this week we are back to a time of trade talk taking more of a center stage. Not long after taking the oath, there were also threats of a 25% tariff on Mexico and Canada and 10% on China starting on February 1. Now, we have long been stating that tariffs are part of his negotiation tactic. While they may well be put in place in just over a week, after looking back on his first term, the market and even the opposing countries have a better idea of what to expect. To this point, the market has been calling a bluff that the tariffs will go on, or at least that there will be a full-blown trade war in a week. Now, with month end and if things don’t change by Friday, there may be an different attitude.

 

Corn continued the rally on this week with March up another 2 ¼ cents (+0.46%). EIA data showed ethanol production back up 4,000 barrels per day to 1.099 million bpd in the week of 1/17. Stocks of ethanol continue to build, this time by another 866,000 barrels to 25.874 million barrels. Export Sales data showed 2024/25 corn bookings out to a 4-week high of 1.66 MMT for the week ending on January 16. That took export commitments to 41.931 MMT, which is 67% of the new USDA export forecast and still ahead of the average sales pace of 63%. Accumulated shipments have totaled 19.316 MMT, 32% of the projected total and exceeding the 27% average pace. CFTC data indicated managed money spec traders in corn futures and options increasing their net long position by 19,450 contracts as of January 21, taking their net long to 311,678.

 

Wheat posted stronger trade across the three markets this week, mainly on early week strength. Chicago March was the was the weakest, up 5 1/4 cents (0.97%) on the week. March Kansas City posted a 11 cent (2.01%) gain this week. MPLS March was 11 ¾ cents (2.01%) higher than last Friday. The weekly Export Sales report showed US wheat export business back down to just 164,837 MT during the week of January 16. That took export sale commitments to 17.87 MMT, which is now 77% of the USDA forecast for exports and still lagging the 87% average selling pace. Commitment of Traders data showed spec funds trimming 2,601 contracts from their nets short position in CBT wheat futures and options as of January 21 to 91,792 contracts. In KC wheat, they were at a net short of 35,131 contracts, an reduction of 2,475 contracts as of Tuesday.

 

Soybeans had another back-and-forth week but March ended with 21 ¾ cent gains since last Friday. Bean oil was back down 47 points (-1.03%), as meal was back up $7.70/ton on the week (2.59%). Argentina is cutting their soybean export tax from 33% to 26% starting on January 26, with meal and bean oil down from 31% to 24.5%. This week’s Export Sales report tallied 2024/25 soybean bookings at 1.492 MMT, a 7-week high in soybean export bookings. That took the accumulated shipped and unshipped sales to 42.313 MMT. That is 85% of USDA’s expected export total for the marketing year, above the 83% average pace. Commitment of Traders data indicated spec traders in soybean futures and options adding 5,497 contracts to their new net long of 40,330 contracts as of January 21.

 

 

Live cattle were in rally mode this week with February up $8.02 (+4.08%), led by the cash market. Cash trade stout this week, reported at $201-202 early in the week in the South and finishing at $205-208. Northern trade rallied to $210-212 on Friday. Feeders were up another $5.20 (1.90%) on the week in the January contract. The CME Feeder Cattle Index slipped back up $1.22 week/week to $278.28. Wholesale boxed beef prices were back lower this week, as the Chc/Sel spread narrowed to $11.00/cwt. Choice was down $5.77 (-1.7%) to $327.92, while Select was $2.91 lower (-0.9%) to $316.92. Weekly beef production was down 0.3% from last week but 2.8% above the same week last year at 525.3.0 million lbs. Friday’s Cattle on Feed report showed December placements down 3.3% from a year ago at 1.642 million head, with marketings up 1.04% at 1.742 million head. January 1 on feed inventory expected came in at 0.9% below a year ago at 11.823 million head. Cold Storage data showed a total of 457.27 million lbs of beef stocks on December 31, down 11.7% from last year but up 3.77% from the month prior.

 

Hogs were back up $1.175 this week, a 1.45% gain. The CME Lean Hog Index was back up 74 cents this week at $81.93 as of January 22. USDA’s Pork Carcass Cutout was up $1.09 this week (1.2%). The belly was the leader to the upside, up $10.56, with the loin and rib also higher. Pork production totaled 540.8 million lbs this week, back down 5.4% from last week and 7.5% below the same week last year. Cold Storage data showed 400.398 million lbs of pork stocks at the end of December, which was a 2.37% increase from last month but still down 6.3% from last year. Weekly Export Sales data showed pork sales for 2025 totaling 37,741 MT during the week of 1/16. Shipments were tallied at just 22,822 MT, the lowest since early October.  Commitment of Traders data showed specs trimming back 11,448 contracts from their net long position as of January 21 to a net position of 92,150 contracts.

 

Cotton was back up just a single point this week, helped by late week support. Cotton Ginnings data from this week showed 503,650 RB of cotton ginned during the first two weeks of January, taking the marketing year total to 13.55 million RB.  The weekly Export Sales report tallied cotton sales back up again this week to 348,927 RB of cotton sold in the week of January 16. Shipments were back down from last week’s MY high at 222,603 RB. Commitments are now at 8.417 million RB, which is 82% of the new USDA forecast, compared to the normal sales pace of 84% of USDA’s export projection by now. The FSA Adjusted World Price for cotton was down another 27 points this week, to 53.71 cents/lb. CFTC Commitment of Traders data showed managed money spec traders adding 5,353 contracts to their net short position as of 1/21 at 48,439 contacts.

 

Market Watch

 

Next week starts with the weekly Export Inspections report on Monday morning. The Fed will meet on Tuesday and Wednesday, with most expecting to see rates unchanged this month. The weekly EIA Petroleum Status Report will be out on Wednesday next week. Feeder cattle futures and options will expire on Thursday, with the USDA Export Sales report out that morning. On Friday, the USDA will released their annual Cattle Inventory report.

 

Tech Talk: March Soybeans

March soybeans have rallied more than a dollar off the December low of $9.47. In that time, they have hit (among others) the 38.2% Fib retracement resistance at $10.57. The 200-day moving average is next up $10.75 ¾, which put a stop to the rally this week. Pushing past that would open the way to the 50% retracement at $10.91 and the round number resistance at $11. The 61.8% is at $11.25. ADX as 32 says to look at the bullish MACD, which says the trend is still your friend.

 

There is a risk of loss in futures and options trading. Similar risks exist for cash commodity producers. Past performance is not necessarily indicative of future results.

 

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