Grain markets experienced mixed trading on January 22, 2025, with corn and soybeans seeing some profit-taking after recent gains, while wheat prices were mixed but mostly firm. Corn prices were pressured by spread trade and profit-taking, while soybeans faced technical selling despite strong export inspections. Wheat markets consolidated after recent gains, with concerns over winterkill easing but still present. Overall, the markets were influenced by weather conditions in South America, export demand, and ongoing concerns about global supply and demand dynamics.
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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 Market Highlights:
Profit-Taking and Spread Trade: Corn prices were mostly lower due to profit-taking and spread trade, with March corn closing down 5¾ cents at $4.84¼. The market is watching Brazil’s soybean harvest pace for clues on second-crop corn planting, which is critical for global supply.
Export Demand: Unknown destinations purchased 136,000 metric tons of U.S. corn for the 2024/25 marketing year, providing some support. Weekly export inspections were strong at 1.541 million metric tons, up 7% from the previous week.
Brazil’s Second Crop: Brazil’s soybean harvest is progressing ahead of average pace, allowing for earlier planting of the second corn crop. This crop is crucial for Brazil’s exports, and any delays could impact global supply.
Weather Concerns: South American weather is trending drier in southern areas, but overall conditions remain favorable for crops. Argentina’s corn crop is under stress due to warm and dry conditions, which could impact yields.
Ethanol Production: The U.S. Energy Information Administration’s weekly ethanol production report, delayed due to the MLK holiday, is expected to provide further insight into domestic corn demand.
Soybeans Market Highlights:
Profit-Taking and Technical Selling: Soybean prices saw profit-taking and technical selling, with March soybeans closing down 11¼ cents at $10.56. The market is balancing between strong export demand and expectations of a large Brazilian crop.
Export Inspections: Weekly soybean export inspections were decent at 973,145 metric tons, with 495,000 metric tons destined for China. However, China has temporarily halted soybean imports from five Brazilian firms due to phytosanitary issues, which could shift demand to U.S. soybeans.
Brazil’s Crop Outlook: Brazil’s soybean crop is estimated at 171.7 million metric tons by Abiove, up 3 million tons from December’s estimate. Early harvest yields have been poor, but more accurate estimates will come as harvest progresses.
Argentina’s Weather: Argentina’s soybean crop is under stress due to warm and dry conditions, with 15-day rainfall totals expected to be 25-50 mm below normal. This could lead to yield reductions, though Brazil’s large crop may offset any losses.
Product Spreads: Soybean meal was higher, while soybean oil was lower, reflecting adjustments in product spreads. Spot board crush margins rebounded to $1.27½ per bushel, supported by strong meal prices.
Wheat Market Highlights:
Mixed Trading: Wheat prices were mixed, with Chicago SRW wheat down 4¾ cents at 5.54, while Minneapolis wheat gained 2 cents to 5.54, while Minneapolis wheat gained 2 cents to 6.06½. The market is consolidating after recent gains, with winterkill concerns easing but still present.
Export Demand: Weekly wheat export inspections were 261,786 metric tons, down 13% from the previous week. Japan is seeking to purchase 126,893 metric tons of food-quality wheat from the U.S., Canada, and Australia in a tender closing on January 23.
Winterkill Risks: Winterkill concerns are easing in parts of the Midwest and Plains, but another cold spell could renew fears. Russia’s wheat crop is also at risk, with 37% of the crop in poor condition due to weather damage.
Global Competition: Russian wheat export prices fell to $234 per metric ton, adding pressure to U.S. wheat prices. Australia’s wheat production is expected to reach 32 million metric tons in 2024/25, with exports projected at a record 24 million metric tons.
Red Sea Shipping Issues: More European wheat shipments are being rerouted due to ongoing issues in the Red Sea, increasing shipping costs and potentially impacting global trade flows.
Outside Markets
Ethanol
U.S. ethanol prices reversed a recent downward trend, increasing by approximately 3% in early week trading, with Midwest wholesale rack ethanol prices at 47.75 cents per liter (180.74 cents per gallon) and FOB Houston prices at 47.27 cents per liter (178.94 cents per gallon). Looking ahead, the price of ethanol is likely to see moderate upward movement in the near term due to continued strong demand from biofuel blend mandates and lower U.S. ethanol prices making exports more competitive. Analysts project that ethanol prices could hover between 48 to 50 cents per liter in the coming weeks, assuming stable corn prices and no significant disruptions in supply or policy changes. This projection is based on the current market dynamics, including the increased U.S. ethanol exports to countries like India and Canada and the ongoing influence of international demand paired with domestic production levels.
Oil
The price of Brent crude oil stands at $76.34 per barrel (as of 1/22/2025). The oil market is poised for some volatility in the near term due to a combination of geopolitical tensions and supply adjustments from major oil-producing countries. Recent analysis suggests that OPEC+ has decided to maintain current production cuts through at least the first quarter of 2025, which is expected to keep global oil inventories relatively tight, potentially pushing prices upward. However, the anticipation of increased oil production from non-OPEC countries like the U.S., Canada, Brazil, and Guyana might temper this rise, leading to a forecast where oil prices could range between $75 and $80 per barrel in the upcoming months. This projection assumes no significant new disruptions or escalations in geopolitical conflicts that could introduce a risk premium to oil prices.
Fertilizer
The fertilizer market for corn, soybeans, and wheat is experiencing mixed dynamics. Fertilizer prices have been trending slightly lower due to decreases in input costs like natural gas and improved production prospects, but they remain above historical averages. According to recent analyses, nitrogen (urea) fertilizer prices are expected to hover around high levels due to persistent high natural gas costs, with projections suggesting a range of $600-$750 per ton. Phosphate fertilizers, such as DAP and MAP, have seen some relief but are still forecasted to stay elevated due to sustained high ammonia and sulfur prices, with DAP expected to range from $650-$750 per ton. Potash, which has been influenced by geopolitical tensions and export restrictions, might see prices between $300-$400 per ton. Given the current oil price as of January 22, 2025, which stands at approximately $75 per barrel, this could slightly temper the cost of production for fertilizers, as oil is a significant factor in transportation and production costs, yet the overall fertilizer affordability remains a concern for farmers due to robust demand and some export limitations.
Extended Commentary
Grain markets on January 22, 2025, experienced mixed performance as corn and soybeans faced profit-taking and technical selling, while wheat held firm amid consolidation. Corn prices, pressured by spread trades, remained sensitive to Brazil’s fast-paced soybean harvest, critical for second-crop corn planting. Strong U.S. export inspections and drier conditions in Argentina offered support but were offset by easing ethanol concerns. Soybeans saw technical weakness despite robust U.S. export inspections and strong demand from China, with the market balancing Brazil's record 171.7 MMT crop projections against Argentina’s drought-induced yield risks. Early poor yields from Brazil's harvest and China’s temporary import suspension from Brazilian firms may create short-term opportunities for U.S. exporters.
Wheat markets consolidated following recent gains as easing winterkill fears in the U.S. competed with risks from Russia's crop conditions and global price competition. Chicago SRW wheat saw minor losses, while Minneapolis wheat edged higher amid export challenges and shipping disruptions in the Red Sea, potentially affecting trade flows. Outside markets added context to grain pricing, with ethanol prices reversing their decline due to biofuel mandates and lower U.S. costs improving export competitiveness. Meanwhile, stable oil prices around $76 per barrel and easing fertilizer costs provided additional market clarity, though elevated input prices remain a challenge for farmers navigating global supply dynamics.
