BQC Afternoon Comments Feb 10.2025

Ag Fundamentals: Soybean meal basis values in China have increased +250% since the beginning of 2025. In February alone, soybean meal basis has jumped +75% in China. The shortage due to delayed deliveries should help firm crush margins here in the US. Today spot board crush margins were down 5¢ to $1.14 per bushel. US soybean ending stocks’ average estimate calls for a -6 million bushel drop from January’s report. Global bean stocks also expecting a decrease, a change effected more by the drop in Argentina’s production expectations. Index funds are heading into tomorrow’s report with a near record long corn position. Speculation around potential retaliation from both Mexico and Canada pushes corn and ethanol exports into the crosshairs. Expectations for next year’s planting intentions are heavily in favor of more corn and less beans planted in the US. Dryness in the north central US is raising concerns of a potential drought that would send corn prices soaring. I have heard the phrase “drought begets drought” more than a few times in the last couple weeks. The last three years the Mississippi River Valley has reached record low levels and we finished the 2024 growing season off with 3 months of record low precipitation in several areas of the corn belt. Snow and below zero degree temps are expected to hit Nebraska and Kansas later this week which may also add to doubts of a full winter wheat recovery. In today’s export inspections between corn beans and wheat.. wheat stood out the most at a 4 month high and above expectations at 20 million bushels (corn 52.5 million bushels and beans 38 million bushels were in line with expectations). Increased tariff rhetoric will add volatility to the dollar as well – up 28 basis points today.