Market Trends Report – February & March 2025
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US and the World
It is February and for the most part the greater North American corn belt is frozen with snow and ice infiltrating almost everywhere. It is a time when not much is happening in the production fields as people look toward any hints of warmer weather in the future. In Ontario, generally speaking we have better weather days after the February 15th. Ditto for much of the greater American corn belt. However, the trading of grain continues. We also have huge production going on in South America. On February the 11th the USDA chimed in with their latest WASDE report.
Generally speaking, the February USDA report is quiet being sandwiched between the bigger report earlier in January and the prospective plantings report at the end of March. The February 11th report followed that script. There was virtually no change from previous USDA numbers except for a small change in the projected price for corn and soybeans. USDA is still expecting last year’s crop to come in at 14.867 billion bushels based on yield of 179.3 bushels per acre. The USDA cut both Argentina and Brazilians corn production by 1 MMT to 50 MMTs and 124 MMTs respectively.
On the soybean side the USDA cut Argentinian soybean production by 3 MMT down to 49 MMT. They kept Brazilian soybean production unchanged at 166 MMT. Globally, ending stocks declined by 4 MMT to 124 MMT. Everything domestically from the USDA was the same for soybeans with production at 4.366 billion bushels last year and ending stocks still unchanged at 380 million bushels. USDA estimates for world wheat production were up slightly from last month.
On February 14th corn, soybeans and wheat futures were higher than the last Market Trends report. March 2025 corn futures were at $4.96 a bushel. The March 2025 soybean futures stood at $10.36/bu. The March 2025 wheat futures closed at $6.00 a bushel. The Minneapolis March 2025 wheat futures closed at $6.33 a bushel with the September 2025 contract closing at $6.25 a bushel.
The nearby oil futures as of February 14th closed at $70.74/barrel down vs the nearby futures recorded in the last Market Trends report of $76.57/barrel. The average price for US ethanol in the US was $2.04/barrel, up versus the $1.96 a US gallon recorded in the last Market Trends Report.
The Canadian dollar noon rate on February 14th, 2024, was .7059 US, up slightly vs the .6934 US reported here in the last Market Trends report. The Bank of Canada‘s lending rate was reduced to 3.00%.
Ontario
To say it’s been a nervous time for Ontario farmers is an understatement since the last Market Trends report. The threat of American tariffs and the specter of counter tariffs on grain are very real. This is an aside from the greater tariff discussion currently going on. As of now there is nothing concrete to report. Needless to say, there has been greater uncertainty infiltrating the greater Ontario grain economy simply because of this issue. As we move ahead, grain movement could become stickier across the border.
As it is, American corn has not really had a good reason to move into Ontario in quite some time. Historically, that always had to do with the US replacement price coming into Ontario, which currently stands at $7.10 a bushel, at least $0.80 above where Ontario cash prices are. However, US corn often finds it way into Quebec poultry markets which could affect grain movement in eastern Ontario. We wait to see where the tariff dust settles.
Ontario basis levels have actually increased for corn over a month ago, but it hasn’t been consistent across the province with some eastern Ontario points being lower than a month ago. The Ontario soybean basis is relatively stable compared to the last Market Trends report. The Canadian dollar continues to have a huge stimulus effect on our cash grain prices. Ontario SRW wheat prices are much higher than last month.
Old crop corn basis levels are $1.00 to $1.27 over the March 2025 corn futures on February 14th across the province. New crop corn basis levels were $1.00 to $1.46 over Dec 2025 futures. The old crop basis levels for soybeans range from $3.05 to $3.25 over the March 2025 futures. New crop soybeans range from $2.77 to $3.25 over the November 2025 futures. Ontario SRW wheat prices are in the $7.26 bu. range. For July 2025 new crop the bid is in the $7.60 bu. range. On January 10th the US replacement price for corn was $7.10/bushel. You can access all these Ontario grain prices in the marketing section at http://gfo.ca/marketing/daily-commodity-report/
The Bottom Line
We’re at a good place and we aren’t at the same time. In other words, grain prices are much higher than they were at harvest time with the rally that very few expected. However, it is taking place at a time when geopolitics rule. The recent action by the American administration to put tariffs on Canada and Mexico will surely affect grain movement going forward. Also too, the threat of tariffs against other nations and reciprocal tariffs presents one of the greatest challenges to the orderly discovery of grain prices worldwide.
It is a moving target and one that is difficult to know where we go from here. Canada and United States have the largest trading relationship in the world and that is definitely at risk. Mexico is the largest importer of American corn in the world and any trade dispute will likely involve that in the days to come. It is what it is and as we move ahead everybody will be adjusting within the grain world.
Remarkably, there is more geopolitics considering the war between Russia and Ukraine. The Americans have made moves to try to end that war which may be significant for grain movement going ahead. For instance, have the Russians held back wheat during this time as a safety valve? Ditto for the Ukrainians? If peace breaks out and of course that’s a big if will the Black Sea grain movement increase even in the world of increasing tariffication. There are so many questions.
Meanwhile, back in the production fields corn and soybeans and wheat continue to grow and be supplied throughout the world. We have seen that big rally in corn since harvest time, but it seems like $5 March corn is a stone wall. That is happening even when non-commercial players in the market are at record long levels. It’s likely only a matter of time before that breaks free, but much will depend on the Safrinha corn crop in Brazil being planted at the moment.
Commodity Specific Comments
Corn
We have had about a dollar rise in corn futures prices since harvest time. That has been an incredible surprise for many analysts. Some of them have called this a gift to corn producers. However, the market is never wrong, and those low prices certainly caused demand to explode.
Will the corn trading algorithm start printing over $5 futures? That’s certainly something that every corn farmer would like to see especially with the algorithm’s affinity for printing round numbers. Much will depend on the Safrinha crop in Brazil currently going into the ground. A target of $5.08 might be in the offing, but of course the talk of tariffs makes all of this so tenuous.
The March 2025 corn contract is currently priced at 12.25 cents below the May 2025 contract a neutral indication of old crop corn demand. Seasonally, we know that corn prices tend to peak in early June and bottom out in early October. The March 2025 corn futures contract is at the 36th percentile of the past five-year price distribution range.
Soybeans
The soybean action has all been in South America, specifically Argentina which has been dry. This actually led the USDA to cut the Argentinean production by 3 MMT. However, you know the way droughts are, they end when it rains. Rains have returned recently, and this situation must be monitored closely as we move ahead.
Brazil on the other hand is a different story. They are expecting a record crop and it is very likely to happen. They did not have any bad enough weather conditions to tamper that. The USDA is sitting at 166 MMT, but private estimates are much higher. In essence, there are soybeans everywhere with China waiting to buy. This surely will affect the planting acreage discussion as we move ahead toward March. Soybean plantings are likely to lose out in the United States.
The March 2025 soybean contract is currently priced 16.5 cents below the May 2025 contract considered bearish for soybeans. Seasonally, soybean prices tend to peak in early July and bottom out in early October. The March 2025 soybean contract is currently at the 23rdth percentile of the past five-year price distribution range.
Wheat
Wheat prices were laggards compared to corn and soybean prices since harvest time. However, cold weather in the American Midwest have led to an increase of approximately $0.60 a bushel on wheat prices. Also involved in this has been cold weather in Russia and Ukraine. A 60-cent increase in the price of wheat since the last Market Trends report is like an earthquake in the wheat market. Cold weather in February will continue to push uncertainty in these prices.
In Ontario wheat is under a pile of snow especially in the snow belt areas. So, it is very difficult to know with the condition of Ontario’s winter wheat crop. In the deep SW earlier rains had frozen which doesn’t bode well especially for the weather we’ve had over the last month. The good thing is that prices are much higher than they were a month ago partly because wheat futures have increased and partly because the Canadian dollar is so low. This surely is a pricing opportunity versus a month ago, but of course, is the wheat alive under all that snow and ice? That is always the question wheat producers need to answer when contracting this time of year.
The Bottom Line (cont.)
The poisonous geopolitics currently going on has been tough on the Canadian dollar. For instance, on February 3rd the Canadian dollar dropped down to .6783 US after the threat of a 25% American tariffs on Canadian goods going into the United States became a perceived reality. As I’ve always said, the Canadian dollar is a thinly traded currency but clearly with Canada being attacked economically traders were retreating. Needless to say, there was some recovery with the dollar currently sitting at .7059 cents US. As it is, we will likely see more of this in the next couple months depending on the tariff reality.
Simply put, as always, a lower Canadian dollar does add stimulus to Canadian cash grain prices and that is happening in spades in Ontario and Quebec. It is hard to chart a scenario at the moment where the Canadian dollar gains aggressively. However, if economic peace breaks over between Canada and the United States that is much more likely. The challenge for Ontario grain farmers is to continually balance the value of the Canadian dollar against what grain futures prices are doing. Flat pricing for grain is often the choice. Having market orders ready at the elevator can be a very good instrument in such a market environment.
As we move into March, we’ll need to switch gears away from the geopolitical tumult that is happening among us. There will be a crop planted in 2025 and by the end of February and into March we will know how big that will be. At the present time price ratios are favoring the planting of corn in the United States and this might result in three to four million more acres of corn being planted in 2025. At the same time, it might be a reduction by the same amount in soybeans. In the United States, cotton acres are always in the mix but at the present time those prices are poor. With this in mind, new crop pricing will certainly be in the crosshairs.
What it means is that in the spring of 2025 Ontario grain producers might be challenged like they never have been before. Sure, we have our price risk like we always do but there also will be issues with tariffs going across the US border which will surely affect grain movement. It is uncharted waters for sure. However, there also will be market opportunities based on much of this market uncertainty as a tremendous amount of Ontario grain is utilized domestically or exported into Europe and Asia. The challenges before us we will certainly meet with resilience. Daily market intelligence will remain key. There will be many marketing opportunities ahead.
