Corn, soybeans, and wheat markets experienced mixed movements today. Corn prices slightly declined with old crop contracts leading the downturn, while soybean prices were mixed with meal down and oil up. Wheat prices across all classes saw a more significant decrease in the absence of new supportive news.
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In this edition:
Harvest Headlines: Events impacting crop prices.
Outside Markets: Overview of ethanol, oil, and fertilizer price projections.
Market Overview
Harvest Headlines
Corn:
Price Movement: Corn prices experienced a slight dip today, with old crop contracts leading the decline by $0.02 to $0.04. This drop was accompanied by weaker spreads, possibly due to increased farmer selling, pushing the March/May spread to $0.08½ carry, the lowest in over two months.
Ethanol Production Insights: The EIA reported a minor decrease in ethanol production to 1,102 thousand barrels per day from last week's 327 million gallons. Despite this dip, production remains 3.8% higher than last year and aligns with the USDA's corn usage estimates for the season.
Ethanol Stock Levels: Ethanol inventories have climbed to an 8-month peak at 24.15 million barrels, slightly below last year's levels. However, an increase in implied gasoline demand by 4% from the previous week might help mitigate the impact of higher stock levels on corn prices.
USDA's Corn Usage: Weekly corn usage for ethanol production was 111 million bushels, translating to 15.9 million bushels per day, which exceeds the pace required to meet the USDA's annual estimate of 5.50 billion bushels for the marketing year.
Historical Price Behavior: There's a historical trend on January report day where corn prices tend to be bullish, with spot March futures closing higher 58% of the time since 2000. This could suggest potential for a positive price movement in anticipation of the upcoming report.
Soybeans:
Mixed Prices: Soybean prices showed mixed results, with beans down by $0.01 to $0.03, meal down $2 to $3, but oil up by 30 to 40 points. Weaker spreads across the complex suggest a cautious market stance.
Weather in Argentina: Anticipated rains in Argentina's key agricultural areas between January 16th and 22nd could alleviate recent hot and dry conditions. This forecast might have contributed to late session price weakness, although crop stress is expected in the short term.
Brazilian Market Influence: Weakening basis levels in Brazil are capping upside potential for soybean prices. This reflects local supply dynamics affecting global price expectations.
USDA Sales Announcement: The USDA announced the sale of 120,000 metric tons of soybeans to an unknown buyer, which might offer some support to soybean prices in the short term.
Historical Performance: Since 2000, spot March soybean futures have closed higher on January report day 60% of the time, suggesting a moderate bullish bias for the upcoming report.
Wheat:
Price Drop: Wheat prices across all three classes decreased by $0.05 to $0.10. The market lacked fresh news to sustain the minor rebound seen earlier in the week following lower US winter crop ratings.
Weather Forecast: A new winter storm is expected to affect areas from North Central Texas to Arkansas and into the Ohio Valley, but the central plains and Western Corn Belt will see little moisture in the next week, potentially affecting wheat conditions.
Speculative Positioning: Despite a heavy short position by speculators in wheat, there's no significant trigger to prompt a short-covering rally, keeping prices subdued.
International Tenders: Multiple tenders from South Korea and Jordan for wheat indicate ongoing demand, though at relatively low prices, which might not be enough to lift market sentiment significantly.
Historical January Performance: Wheat has shown the strongest upward bias on January report day since 2000, with spot March futures closing higher 68% of the time, suggesting potential for a positive reaction to the upcoming report.
Outside Markets
Ethanol
The ethanol market is experiencing mixed trends. U.S. ethanol prices have shown a slight decline, with Midwest wholesale rack ethanol prices down slightly, while FOB Houston ethanol prices are up marginally. In Brazil, FOB Santos anhydrous ethanol prices have risen, indicating a widening spread between U.S. and Brazilian ethanol prices. Looking ahead, ethanol is projected to trade at a moderate upward trend, supported by growing demand for renewable fuels and government policies promoting ethanol-blended fuels. However, factors like fluctuating crude oil prices and regional supply-demand imbalances may introduce volatility. Farmers should monitor these trends closely, as ethanol prices directly impact grain demand, particularly for corn, which is a primary feedstock for ethanol production.
Oil
The oil market is showing signs of tightening, with West Texas Intermediate (WTI) crude prices hovering around $74 per barrel and Brent crude near $76, supported by declining inventories and geopolitical tensions. The Cushing hub, a key storage site, has seen its lowest inventory levels in years, which has provided a floor for prices despite recent volatility. Analysts project Brent crude to average slightly higher in 2025, with WTI expected to average moderately lower, reflecting weaker global demand growth and sufficient supply. However, factors such as OPEC+ production cuts, U.S. sanctions on Iran, and seasonal demand from winter weather could push prices higher in the short term, with Brent potentially reaching $80 or above if supply tightens further. For farmers, these trends suggest that oil prices may remain relatively stable but with upward pressure, which could influence fuel and fertilizer costs, indirectly impacting grain prices.
Ethanol
The fertilizer market is experiencing upward pressure due to tightening global supply and increased demand. International fertilizer prices, particularly for nitrogen-based products like urea and UAN, have risen notably, with Middle East urea prices reaching a higher range compared to previous levels. In North America, UAN prices for March delivery surged significantly, reflecting tightening domestic nitrogen supply and weaker-than-expected fall ammonia production. These trends are exacerbated by restricted exports from key regions and reduced supply from major producers, which have shifted demand to other areas. Looking ahead, phosphate prices are expected to remain elevated, incentivizing new investments in production capacity, particularly in the U.S. and Australia. For corn, soybean, and wheat farmers, these rising fertilizer costs could squeeze margins, especially as grain prices are projected to remain subdued. Meanwhile, oil prices, which influence fertilizer production costs, are stable, with WTI crude hovering around $74 per barrel and Brent at $76, supported by tightening inventories but capped by ample global supply. Farmers should monitor these dynamics closely, as higher fertilizer costs and stable-to-lower grain prices may challenge profitability in the 2025 growing season.
Extended Commentary
Grain markets exhibited mixed performance on January 9, 2025, influenced by varied factors across corn, soybeans, and wheat. Corn prices declined slightly, led by old crop contracts, as increased farmer selling and weaker spreads weighed on the market. Ethanol production remained robust despite a minor dip, aligning with USDA corn usage projections, but rising ethanol stocks reached an eight-month peak. Meanwhile, soybean prices showed mixed results, with oil gains offsetting declines in beans and meal. Anticipated rains in Argentina may alleviate drought concerns but capped price upside, while weakening Brazilian basis levels and USDA export sales announcements added complexity to soybean market dynamics.
Wheat prices fell across all classes, with no fresh supportive news to sustain earlier gains. Weather forecasts showed minimal precipitation in critical areas, adding pressure to already subdued market sentiment. Despite speculative short positioning and ongoing international tenders, wheat markets lacked a catalyst for recovery. Outside markets provided mixed signals: ethanol and oil prices showed stability with slight upward pressure, while tightening fertilizer supplies and rising costs posed challenges to grain producers. These combined trends underline a cautious outlook for grain markets, with upcoming USDA reports likely to influence price trajectories.
