Speculative fluctuations in grain and oilseed prices will increase due to uncertainty about duties and harvest in South America

Futures for corn, wheat and soybeans on the Chicago Board of Trade rose yesterday despite strong pressure from fundamental factors, as traders focused on Trump’s possible imposition of a 25% duty on imports from Canada and Mexico on February 1. the President of Mexico said that she does not believe in the introduction of duties from the United States, which supported the stock price of corn.

Corn futures rose to a 15-month high, wheat to a 6-week high, and soybeans to a six-month high amid delays in soybean harvesting and corn planting in Brazil.

March futures rose:

• by 3.2% to 206.7 $/t – for soft winter SRW wheat in Chicago,
• by 3.4% to 213.2 $/t – for hard winter HRW wheat in Kansas City,
• by 2.7% to 225.5 $/t – for hard spring HRS wheat in Minneapolis,
• by 2.4% to 195.7 $/t – for corn in Chicago,
• by 1.5% to 389,7 $/t – for soybeans in Chicago.

Press Secretary of the White house Carolyn Leavitt confirmed the intention of trump to impose duties on goods from Canada and Mexico from February 1, and plans to introduce new duties on products from China. Duties can trigger trade wars and mirror measures, as well as facilitate the conclusion of new trade agreements.

StoneX experts believe that the main question now is whether the US and China will conclude an agreement that will facilitate agricultural trade, when it might happen, and how it will affect demand.

The drought in Argentina could lead to a decrease in corn and soybean harvests, which will be offset by record harvests in Brazil if the weather allows for faster harvesting in the coming weeks.

Analysts note that funds are somewhat optimistic about corn, as global supplies remain limited, so they consider it a good hedge against inflation. At the same time, the outlook for soybeans is less optimistic, and wheat remains in short supply.

Ethanol production in the United States decreased by 7% compared to the previous week, and its stocks increased by 6% compared to last year. According to the USDA, in MY 2024/25 corn consumption for ethanol production will reach 139.7 mln tonnes, which will exceed the figures of MY 2023/24 (139.2 mln tonnes) and MY 2022/23 (131.5 mln tonnes).

Without the support of the government of Trump’s green energy programs and industry development, domestic corn processing in the United States will continue to decline, and a possible reduction in exports to Mexico will bring down corn prices in Chicago.

Forecasts of precipitation in Argentina and dry weather in Brazil next week may also change the speculative mood for soybeans and corn.

Possible reduction in the U.S. harvest due to drought and low temperatures contributes to the growth of wheat prices, but they may fall on the data of USDA reports on the condition of crops that received sufficient rainfall in the winter and were not damaged by short-term frosts.

In February, traders will focus on estimates of corn and soybean planting areas in the United States, but now farmers are more profitable to sow corn, which will increase the area under it and, accordingly, lower prices.

Tags: corn, prices, soybean, wheat