Corn producers: Advance 2025 crop sales...March corn futures have broken below the uptrend dating back to the January low. That indicates a trip to the January 13 low is likely. Yesterday’s bullish surprise in USDA’s supply and demand reports did little to spur strength. When markets can’t rally on bullish news, it is a sign of additional potential weakness. We advise corn hedgers and cash-only marketers to sell 15% of 2025-crop production to get to 40% priced. You should also have 10% of expected 2026-crop production sold for harvest delivery.
House Republicans on the Rural Domestic Energy Council, set up last month after lawmakers were unable to include a year-round E15 ethanol blend authorization in key spending legislation, are nearing a deal on ethanol sales after spending much of a recent meeting debating exemptions for oil companies, Politico reported Wednesday, citing a lawmaker with direct knowledge of the talks.
The EPA grants waivers to small refineries under the Renewable Fuel Standard if compliance can be shown to be too costly. The council faces a Sunday deadline to submit legislation. The report quoted the lawmaker as saying the leaders of the council have made real progress after talking to a cross section of stakeholders, including small refineries.
It was opposition from small refiners, which divided House Republican lawmakers, that was seen quashing the language in funding legislation, which in turn enraged farm and ethanol groups. The language establishing the council called for legislation to be considered by Feb. 25, but a standalone bill is seen as a much heavier lift.
Indian farmers to protest as corn, soy prices fall: Indian corn and soybean prices fell on Wednesday, Reuters reported, after New Delhi agreed to duty-free imports of U.S. soyoil and a protein-rich animal feed under a new trade deal with the U.S., stoking fears of cheaper supplies among farmers. Farm unions and opposition parties, concerned about cheap U.S. supplies, have called nationwide protests for Thursday, the report said.
- A joint statement from India and the U.S. last week said New Delhi had agreed to allow duty-free imports of soyoil and distillers dried grains with solubles (DDGS), a corn-based ethanol byproduct used as cattle feed.
- Soybean and corn prices dropped by 10% and 4%, respectively, since the framework was announced last week, the report said, stoking anger among millions of small Indian farmers, a key constituency whose 2020-21 protests forced New Delhi to repeal laws aimed at deregulating markets.
Jobs and rate cuts: Expectations Federal Reserve chair-nominee Kevin Warsh would preside over resumed rate cuts beginning as soon as June took a big hit Wednesday after a robust round of January jobs data.
- Employers added a stronger-than-expected 130,000 jobs in January, while the unemployment rate unexpectedly fell to 4.3%.
- Revisions, however, showed the pace of job gains last year was much slower than initially reported at around just 15,000 a month last year versus the initially reported 49,000 a month.
- Total revisions showed nearly 900,000 fewer jobs were created in the 12 months ending March 2025, but the figure wasn’t far off expectations.
Focus on the drop in the unemployment rate, or u-rate, said economists at BofA Research, which explains why fed-funds futures traders rolled back the probability of a resumption of rate cuts in June to around 50%.
- ‘Good reasons’: The stronger-than-expected payrolls figure and the drop in the unemployment rate were both due to “good reasons,” the economists said. That’s opposed to, say, the unemployment rate falling because people left the workforce.
- The U-6 rate, which includes not only the unemployed, but “marginally attached” workers, and those working part-time for economic reasons, also declined from 8.4% to 8.0%. And the number of people unemployed for 27 weeks or more went down as well.
“The broad-based strength in the Jan jobs report vindicates our view that the Fed won’t cut under Powell,” the economists said. “As of this writing, markets are pricing less than 5bp of cuts over the next two meetings (under Powell) and around 50bp by year-end (vs. nearly 60bp before the Jan jobs report).”
What’s that mean for a Warsh-led Fed? “For now, we are holding onto our forecast of two cuts under his leadership,” the economists wrote. “However, we’ve argued that the key risk to his call for significant cuts is a decline in the u-rate. Therefore, the path to cuts under Warsh (which we don’t think the economy needs) now looks narrower. If the u-rate is stable or down even further by June, Warsh might be stuck on hold for the rest of the year.”
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