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Looming tariff threats erased early-week gains across the grain markets this week. Early Friday, Reuters falsely reported that tariffs on imports from Canada and Mexico would be delayed until March 1st, but the White House reiterated that tariffs would take effect starting February 1st. Tariffs aren’t new news, but they may impact corn and soybean prices in the short term – especially if Mexico implements retaliatory tariffs on U.S. corn. Mexico is the largest buyer of U.S. corn and remains at a record pace thus far in ‘24/’25. A disruption in that trade would be a boon for corn prices. Soybeans should be less affected as China is typically dormant in January and February and completely shut down this week for their New Year celebrations. U.S. soybean exports typically wane as we enter February, so any Chinese business won during the month while Brazilian ports are sidelined should support soybean prices. Last but certainly not least, wheat looks strong. Wheat’s blowout export sales report is emblematic of the revival in the global wheat trade. Over the past few weeks, we’ve seen large buyers like Egypt re-enter the market while global stocks dwindle at 7-year lows.Â
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Corn Futures Market Overview
March corn futures failed to break through the psychologically significant 500 handle on their first test this week, but there remains room for optimism. For the week, March corn settled at 483, down 3 ¾ of a cent. Prices rallied sharply on Tuesday and Wednesday, and saw March corn trade up to 497 before receding on Thursday and Friday on tariff fears. Friday’s gap-and-run lower resulted in corn settling below our pivot pocket between 487-488, but we still defended the previous swing low, and RSI is back in neutral territory at 51.5, which may provide some support. While we may retest 3-star support between 477 ¾-479 ¾ before moving higher, there are fundamental reasons why corn may continue to rally.Â
Corn Moneyflow Overview
Implementation of tariffs will likely induce some long-liquidation on behalf of managed funds next week. Again, the tariffs have been known for some time, but the implementation be cause enough for managed money to take some risk off the table in corn. Managed money is now approaching record net-long territory holding 350,721 contracts between futures & options. Meanwhile, commercials expanded their net-short position to 324,689 contracts between futures & options, likely due to the swath of farmer selling over the course of the past three weeks. If long liquidation materializes, it will likely see a drop in prices fairly quickly before stabilizing. For our Blue Line Ag Hedge clients, we’ve looked to protect against this by using protective puts on the spring and summer contracts for unpriced 2024 bushels. If you’re in need of marketing assistance, call our trade desk at (312) 278-0500, and request information on Blue Line Ag Hedge.Â
Read the full article here: https://bluelinefutures.com/2025/01/31/weekly-grain-market-recap-12/
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