Market Trends Report – January & February 2025
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US and the World
2025 dawned with farmers hoping for better markets. 2024 was a year where prices retreated almost every month until harvest time. Since then, there’s been a bit of a bounce back but there is a long way to go. Big supply definitely won the day throughout 2024. As 2025 grows older we will see if that big supply changes. On January the 10th the USDA weighed in with their final numbers from the 2024 crop year.
On January 10th the USDA cut US domestic corn production by 3.8 bushels per acre which resulted in a 276 million bushel cut to production with total production now set at 14.867 billion bushels. The US national corn yield is now set at 179.3 bushels per acre with harvested acreage raised 200,000 acres to 82.9 million acres of corn. Feed and residual use for corn was 5.775 billion bushels down 50 million bushels from last month. Ethanol was forecasted 5.5 billion bushels with total usage at 12.665 billion bushels. Corn exports were down slightly to 2.45 billion bushels. The corn ending stocks for 2024/25 were 1.54 billion bushels which was down 198 million bushels below the pre report estimates. The quarterly grain stocks reported on December 1st totaled 12.1 billion bushels which was down 1% from a year ago.
USDA cut soybean production by 1 bushels per acre down to 50.7 bushels per acre. It also lowered the harvested acreage from 86.3 million acres to 86.1 million acres giving us a total production of 4.366 million bushels. That is 95 million bushels less than their November forecast. This lower production forecast put the soybean ending stocks for 2024 and 2025 down to 380 million bushels, 90 million bushels less than last month. The quarterly stocks number for soybeans was pegged at 3.1 billion bushels on Dec 1, 2024, which was up 3% from December of 2023. USDA maintained Brazil and Argentina production levels at 169 MMT and 52 MMT respectfully. US winter wheat planted area is estimated to be 34.1 million acres which is up 2% from 2024 but down 7% from 2023.
On January 10th corn and soybean futures were higher than the last Market Trends report. Wheat futures were lower. March 2025 corn futures were at $4.70 a bushel. The March 2025 soybean futures stood at $10.25/bu. The March 2025 wheat futures closed at $5.30 a bushel. The Minneapolis March 2025 wheat futures closed at $5.84 a bushel with the September 2025 contract closing at $6.12 a bushel.
The nearby oil futures as of January 10th closed at $76.57/barrel up vs the nearby futures recorded in the last Market Trends report of $71.29/barrel. The average price for US ethanol in the US was $1.96/barrel, up slightly versus the $1.94 a US gallon recorded in the last Market Trends Report.
The Canadian dollar noon rate on January 10th, 2024, was .6934 US, down vs the .7027 US reported here in the last Market Trends report. The Bank of Canada‘s lending rate remained at 3.25%.
Ontario
In Ontario weather has been variable going into mid-January. Some areas especially in the lee of Lake Huron and Georgian Bay have seen heavy snowfall amounts coming from squalls inundating farmland and forming an isolation cushion over winter wheat. Other areas saw rainfall early in January which got away slowly before much icier and colder conditions arrived mid-month. As it is, Ontario cropland is in hibernation.
Statistics Canada is estimating that Ontario corn production will reach approximately 380 million bushels for the 2024 crop year. However, so far in January we have not got the final Agricorp numbers. Needless to say, that is a lot of corn and as always will be a challenge to utilize it both through domestic demand as well as exporting. Seasonally demand for Ontario corn makes it seasonal highs in April and May. Ontario soybean production yielded approximately 160 million bushels of soybeans slightly less than last year.
That may result in basis appreciation as we go into those months. However, we never know about that especially with a Canadian dollar being so weak. As it is, basis levels have increased for both corn and soybeans since the last Market Trends report and surely this is largely due to the weakness in the Canadian dollar currently at .6934 US. There has also been an appreciation in grain futures prices since the last Market Trends report which translates into higher basis levels.
Old crop corn basis levels are $0.95 to $1.58 over the March 2025 corn futures on January 10th across the province. New crop corn basis levels were $0.95 to $1.65 over Dec 2025 futures. The old crop basis levels for soybeans range from $2.88 to $3.45 over the March 2025 futures. New crop soybeans range from $2.87 to $3.25 over the November 2025 futures. Ontario SRW wheat prices are in the $6.34 bu range. For July 2025 new crop the bid is in the $6.70 bu range. On January 10th the US replacement price for corn was $6.76/bushel. You can access all these Ontario grain prices in the marketing section at http://gfo.ca/marketing/daily-commodity-report/
The Bottom Line
There is not as much grain as we thought there might be. That’s at least what the USDA report says. For instance, a 3.8 bushel per acre drop in corn production and a 1 bushel per acre drop in production of soybeans is quite a bite. In many ways you could make an argument that the 3.8 bushel per acre drop is not credible because it’s so major but then again, we have to measure against something. It seems obvious now that we look back into last summer with the dry August and the dry fall it did impact yield.
The reaction from the USDA report resulted in a spike in grain prices and had many farmers resting orders hit. For instance, it was only a few weeks ago that the idea of $4.70 for corn futures was way out there. It’s another indication that having standing orders ready at your elevator is a very good marketing tool. However, with much cash trading hands post report, basis levels in the United States could easily soften as end users become satisfied with what they have on hand and coverage over the next 90 days. As a lesson of the last two weeks, it might be pertinent to have even more standing orders ready as we move ahead.
One wonders as you look ahead which had the greater potential corn or soybean prices. At the present time global ending stocks for soybeans are sitting at 128.37 MMT which is still quite high. Of course, we have that South American crop coming into the marketplace. In many ways it almost looks like soybeans might be holding corn back if the fundamental picture remains the same. Argentinian dryness will not be enough to make this number get smaller.
Corn has a friendlier story. The run up in prices after the USDA report reflect that. For instance, global ending stocks are sitting at 293.34 MMTs, which might sound like a big number, but it is some of the lowest corn ending stocks we have seen when you take China away. As usual, it is hard to know how much corn China does have. Needless to say, as we look into 2025 those corn planters may find favor.
Commodity Specific Comments
Corn
With the apparent bounce in corn prices of the last two weeks it would seem realistic that we’d see a bounce in 2025 corn acres versus soybeans in the fields come this spring. However, it will be probably related to whatever growing areas have a comparative advantage for corn over soybeans. For instance, some areas especially north of I-80 in the United States would likely be in a better position to produce better soybeans than corn. Whatever happens, is certainly taking place in the minds of the decision makers right now. It’s early, but we’d expect more corn acres in 2024.
At the same time plans are certainly taking shape for the Brazilian Safrinha corn crop which will be planted after the soybean harvest. With the corn fundamentals being a little bit more friendly and the Brazilian currency much lower than the United States dollar it is shaping up for a maximum planting push for Brazilian corn post soybean harvest. This may have the capacity to temper corn prices a little bit later.
The March 2025 corn contract is currently priced at 7.75 cents below the May 2025 contract a neutral indication of new 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 27th percentile of the past five-year price distribution range.
Soybeans
Soybeans might be the great liars but of course it’s always hard to tell when they’re lying. USDA actually took down the soybean production figure by 1 bushel per acre, but they left demand fairly strong. There were lots of farmers selling post USDA report on the soybeans. This surely will affect basis levels in the United States going forward as we all know that big Brazilian crop looms in the southern hemisphere.
That Brazil soybean crop is doing well. Yes, they have had dryness in southern Brazil but so far it is not affected the market as much as the concern regarding Argentinian dryness. At the same time, we must remember that the Brazilian real is at a 22 year low versus U.S. dollar. That will make soybeans very attractive to Chinese buyers and make Brazilian farmers lean on the sell button once harvest is complete.
The March 2025 soybean contract is currently priced 10.5 cents below the May 2025 contract considered neutral 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 18th percentile of the past five-year price distribution range.
Wheat
Wheat futures look as rough as usual. For instance, the nearby wheat contract reached new contract lows on the same day that soybeans and corn were racing up on the USDA report. The Russian wheat crop has gone into dormancy and with a poor narrative. In other words, even Russian analysts are saying it’s not too good. However, wheat is the cockroach of grains, so hard to determine how is doing and supply gaps are easily filled around the world.
That overall global market picture really doesn’t bode well for Ontario wheat producers. However, we are used to that as a Canadian dollar under $0.70 does add stimulus to Ontario cash wheat prices. We’re looking at approximately 880,000 acres of Ontario wheat going into next year which is down from 1.1 million acres last year. Hopefully the winter is kind. That will largely determine how much wheat sees the light of day come this spring.
The Bottom Line (cont.)
It has been a tumultuous time in politics since the last Market Trends report was published. What we have is an American president on an aggressive front with Canada regarding almost everything with looming 25% tariffs likely to comes into effect after January 20th. At the same time, we have had the resignation of Prime Minister Trudeau which will come into effect on March 9th when the Liberal Party picks their new leader. Simply put, this has only put added pressure on the value of the Canadian dollar trading under $0.70 US. This adds stimulus to Ontario cash grain prices. It is a redeeming factor in a relatively uneven time for farm country.
On January 20th we will get a new American administration that has promised tariffs on its two biggest trading partners, Canada and Mexico both countries with huge trans-border trade in agricultural commodities. Mexico is the number one corn importer from the United States. The specter of tariffs and retaliatory tariffs on grain are very real for this market. It will affect both the futures market as well as the cash grain market in both United States, Ontario and Quebec.
Simply put, agricultural commodities are low hanging fruit in any trade war. In other words, with any type of trade action from United States, grain and livestock and other food products are easy targets. This will include big buyers in world grains like China and others. There is really no road map to how this might manifest itself but at the end of the day sanctions never work. Case in point is the Black Sea grain trade which has been successfully going on for four years now amidst a hot war. Looking ahead, all of this adds instability and volatility to our grain market.
The challenge for Ontario grain farmers is to continue to balance all of the different factors to foster profitable grain marketing decisions. Keep in mind we are in a weather market in South America. At the same time everyone here in North America is making plans to produce as much as we can this coming year. As we move ahead, having resting marketing orders at your elevator or end user can be a vehicle to capture market gains. At the end of the day, as always, daily market intelligence will remain key. There will be many marketing opportunities ahead.
