The Grain Feed – February 19, 2025

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Oh, and welcome to another edition of the Green Tea brought to you by Ever Act. This is your weekly news feed. All things green, all things feed. Each week we bring you updates on the markets with unique perspectives from an amazing team of analysts with the intention of helping dairy and livestock producers measure risk. I’m your host, Jim Matthews, reporting from Chicago in the Home Office on what has been a very cold week here in the Midwest, but really across much of the country, really.

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And no one would know better than that, than Jake Kingsley, our director of food foundations, who is reporting from Kansas but fresh off the plane from being in the upper Midwest. Jake, how are we today?

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Doing quite well this afternoon, Jim. Thank you. Fun fact. Oh, it is ten degrees colder here at home than it is in the very far north reaches of where I just came from in Michigan.

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Wow. It’s ten degrees colder in Kansas.

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Already wild.

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In Michigan. Yeah. Can you pinpoint on the mitten where you were?

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Yeah. Well, I feel like Beyonce regalia. Single ladies going here.

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Up there where the pinky is, there’s a little hole in the mitten. And that’s where I was.

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Well, very nice, Jake. Well, you know what? All that being said, again, if you’re missing out on the video version of this recording, please touch base with Jake Kingsley to talk about your feed. Procurement and risk management, but also know on where to locate yourself within Michigan. So just something to keep in mind as well. But Jake, we have a lot to run through today after your trip to somewhere in Michigan.

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But first page, if you would kindly timestamp the broadcast. It is Wednesday afternoon. It’s about 315 Chicago time, and after coming out of a three day weekend because the markets were closed on Monday for Presidents Day, I’m not sure if everybody’s cows took the day off of milking, but the markets took the day off for Presidents Day and returning to this week, we had yesterday, Tuesday, money flowing back into the commodity markets an aggressive way with screens green today on Wednesday, perhaps a synthetic turnaround Tuesday.

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But we have the markets back in the red again today. So although it’s been on mostly for let’s say the corn market remaining in an upward and or bullish trend, it has indeed been a very choppy bullish trend. But as we look at these markets, for those of us wanting to feed commodities, we are glad to see things in the red.

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I think on the soybean meal side, impacting our protein pricing, we’re glad to see things at least remain largely under pressure. Just a slight recovery today, but largely sideways and under pressure overall in the meal market. But this corn market today on Wednesday closed down and made three and a half cents at five, 12.25. We took May wheat which is also been on a big run.

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Jake down 11.25 cents for May at 606 and a half. May beans down seven and a quarter back under 1050 ten five zero for May beans and then May meal. Maybe not a stubborn little byproduct. Just up a bumper ton today, holding $300 per ton today with that low of just $300.30. So continues to flirt with 300. So that’s the futures settlements today.

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But again, Jake, the overall trend largely remains the same over the last let’s say, week or so for meal and several weeks now for corn. So I guess for one, what were you hearing in the Midwest for the first half of this week on your trip? Well, I.

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Think folks in the Midwest are still seeing some relatively attractive feed values, especially on the protein side of things. Some folks missed out on the corn futures front there, but they had a really good opportunity at harvest to capture a lot of their needs, and most of them took advantage of that. And like I said, protein continues to be fairly attractive price wise and plenty of opportunity there.

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Even now, stretching out into the new crop year. The folks that I was talking with are some of the first in the Midwest that have confirmed that, yeah, they were able to see some pretty average basis numbers out there for October 25th through September 26th, which is nice to have an opportunity to work on that this early in that next year.

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And I think probably our discussion around what to do about those early offers came down to, well, we’re seeing the old crop curve have basis values five, 10 or $15 a ton below where our goals were to step in for most of this old crop year. Should we expect to see something like that as we get into the next crop year or not?

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And I think that the answer is, yeah, potentially. Maybe not. At this moment, a lot of vendors and processors at the front end of the supply chain maybe aren’t too excited to go out and offer great deals this early in the year. But if you go to them with a firm bid to buy a significant portion of your needs for the next year year, there’s a chance that they could bend and and and hit that bid.

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So that’s probably the way to approach it. And if you still like the cash price without somebody moving the market in your direction, I don’t think it’s a bad place to step in on the first chunk, even if you just took the prices available today. So worth exploring for a lot of folks.

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Yeah. And I think for a while there, you know, it kind of had a tale of two markets, let’s say just focusing back on the corn market. You had the old crop futures rallying steeply. New crop kind of just lagging ultimately has caught up. Then when you go back to that protein market as well, I mean those markets have kind of moved in tandem fairly well you know mule back under pressure for May but you know also largely back under pressure for December too.

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So it does feel like we achieved some lows in protein futures either in, you know, October November and or let’s say December or you know, really coming down to that ultimate low were May was able to trade down towards 290 futures, December was down towards 300, could not quite break it but flirted with it. And then really after that kind of big jump we had after the Christmas holiday, we’ve been in a, you know, let’s call it $20 range really ever since Christmas for this protein market.

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And that’s on both May and December meal. So I think, Jake, to your point, on the meal market, depending on what type of basis you are seeing out there for new crop, when we’re bringing this December futures market back down towards what has been those lows as of late, or at least let’s say, and prior to where we were before it jumped higher that day after Christmas.

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December is going to be around this 310 to 315 level. You know, May referring to that old crop market is going to be right here at this $300 level. So I think depending on where you sit in the country, it might be okay, you know, to wrap things up perhaps on your old crop protein and also really take advantage of where futures are for new crop protein.

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But Jake, this corn market I think is where we are getting, you know, most of our calls lately from our clients and friends in the industry is, you know, hey, when is this thing going to stop? Because largely, you know, after each weekend we come through and I think folks on each side of the industry, whether it’s those buying for feed, those trading amongst elevators and feed mills and or ultimately growing these commodities have said what one is the top because we talked about managed money being as extended as they were, really when Russia invaded Ukraine, which is now very much back in the headlines again this week, there’s been a lot to discuss in

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the corn market, but most of it lately has not been Uber bullish. It sounds like the South American weather markets. And we will hear from meteorologist Mark Russo here in the coming weeks on the grain feed to talk about that. But things largely appeared to have turned favorable. Brazilian bean harvest has very much accelerated the Brazilian corn planting as a result, is very much accelerated.

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So things are looking okay. But there’s also a lot happening globally. But Jake, what’s your take, I guess on the corn market this week after returning from the Midwest.

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I think there is a very good opportunity and the basis side of that thing for the rest of the old crop year, we’re not seeing what we’ve seen in the soybean meal space as far as stretching this out forward into the new crop curve yet, but it is there on old crop basis. And then when you take a look at futures.

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Yeah, I think all eyes, like you said, all eyes are on South American weather at this moment. And if they can continue to catch up to their normal pace on that first harvest and getting this second crop of corn in behind it, if they can get that done. I would like to think that we start to top this market out a little bit and head the other direction, especially with the continued threat of tariffs that would, in theory, slow down Mexican demand for corn and also the current price ratio, the futures price ratio between soybeans and corn, very heavily favoring corn.

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And based on our analysis, we would expect an added two and a half to as many as 4 million acres of corn versus last year’s crop in the US and February 19th were was 60 days away from planting in a large portion of the US growing region here. So a lot of decisions are being made, and the dollar values tell these folks to lean more heavily in the corn.

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So you said it. We’re not hearing a lot of bullish commentary here lately, and yet we still are hanging out at $5, in fact, that we make new highs yesterday.

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Yes we did. And even for old crop markets today, we managed to top yesterday’s highs before ultimately pulling back and closing lower by 3 or $0.04. But you know, not before at least trying to push new highs. And I think Jake you’re talking about this. You know we talk about the new crop being corn ratio. And for folks, you know, tuning in here we take the November bean futures.

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We divide that by December corn futures. And right now if you took that November being settled divided by the December corn settle, you’re going to get something close to 2.2, 2.21, let’s say. And like you noted, Jake, from our insights team at Ever AG, we look back towards that ratio being down at this 2.2 level. It often favors corn planting over soybean planting, never a guarantee.

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And ultimately for the row crop farmer in the United States, it’s going to depend on their rotation, what they plant last year, in the year prior, what inputs they already invest in and or potentially apply back in the fall. But if you have room to potentially be flexible and or pivot and you were on the fence here, you look at this type of ratio and you say, I like where these corn futures are trading and no bean futures, not as much.

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So I think the market is starting to anticipate an even larger planting area for corn. I think we’ll have the world AG Outlook Forum from the USDA at the end of next week, and then planting projection report into March. And like you said, Jake, pretty shocking. But we’re potentially 60 days away from a decent chunk of the Midwest getting going already.

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And when you were up in Michigan, I mean, we talked to a few Michigan folks, two lately that have said they’ve got some moisture that they feel good about. Even if things were to maybe turn dry through March, they’ve at least set a pretty decent base here in terms of soil moisture reserves in decent parts of the Midwest.

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We look at the drought maps as of late, not a huge concern in the Midwest. Other parts of the country, yes, but where we sit, no. So it has the makings for a favorable spring. But obviously there’s no guarantees there. Jake, what about other feed markets that you are watching? Any updates on the cotton seed market.

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So cotton seed starting to kind of get into the time of year where it becomes very transactional or we’re well into the part of the year where it’s transactional. At this point, the inventories are fairly well defined. They’re still good value in veg oil. So we could see some demand from cottonseed crush to produce more veg oil there.

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But prices have elevated in the last handful of weeks, and I expect that they stay fairly firm. I don’t anticipate some big break down to the tune of 30, 40, $50 a ton. From here. Maybe you have some folks that have a little more than they expected and can drop it ten, 15, or $20 a ton and you scoop up the rest of what you need.

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But my expectation would be that we see prices remain fairly firm and likely grind higher as we move through the rest of this year, especially when you take a look at the corn futures market in contrast to the cotton futures market. And I don’t expect there to be a huge loss of acres to corn, because in a lot of the places that grow cotton, they grow it because that’s the thing that produces best.

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So you don’t often go in and put some other high dollar, high input crop in those places, but you could see some ground go fallow or whatever other ways that we could lose some acreage there. So I do wonder if we see this price continue to just grind higher over the course of the summer.

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Yeah, Jake, that’s a really interesting point to actually bring up cotton futures, right? Because when we talk about cotton seed, right. And we’re not exactly talking about actual cotton futures, when we’re talking about the pricing of seed throughout the feed market. And there is a big difference. We often get asked, can you potentially hedge with one versus the other?

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Right? I mean, there’s some ratios you can combine with maybe the soybean meal futures pricing mixed in with cotton pricing, but for the most part, yeah, it’s the actual cotton growers that are watching cotton futures. And that trend has been a largely bearish trend for that product really since October when this thing kind of topped out back then and is, you know, really even today was another big pull lower for the cotton market.

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So kind of been on its lows as of late. So it’s an excellent point where especially when you start getting into the, you know, Mississippi Delta region and folks down there considering their early planting, I mean, they’re starting to plant in March, potentially in some of those spots down there depending on whether. So if corn futures are that much more favorable to even cotton futures, there could be some talk of that.

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And that’s kind of one of those sneaky ones that in the grain and agricultural markets, it’s not the headline when our planting projections reports come out at the end of March. But here at Emerald, we do watch that closely to see if those crops are starting to rotate a bit differently as we move into the spring as well.

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So really great analysis there, Jake. Glad you had a safe trip up to somewhere in Michigan. Very yeah, very helpful analysis and a great Beyonce singles Lady Dance for all viewers out there that want to bring that video back, you know, to the forefront of things. The glory days, if you will, for some. But we’d like to thank the Insights Crew for their support.

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Thank you page for production magic. And thank you, the viewers for watching the green feed. Contact information is on the screen. Greatly appreciate your feedback. That’s all for today. We’ll see you next time on the green feed.