Grain markets saw mixed movements on February 5, 2025, with soybeans leading the declines due to profit-taking and technical selling. Corn prices were narrowly mixed, supported by strong ethanol production but pressured by delayed planting in Brazil. Wheat prices were mostly lower, with concerns over global demand and competition from Argentina and Australia weighing on the market. Overall, traders are closely monitoring South American weather, export sales, and geopolitical developments, particularly in the U.S.-China trade relationship.
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In this edition:
Harvest Headlines: Events impacting crop prices.
Technical Analysis: Price projections for corn based on our technical analysis.
Market Overview
Harvest Headlines
Corn Market Highlights
Ethanol Production Surges: Ethanol production averaged 1.112 million barrels per day, up 97,000 barrels from the previous week and 79,000 barrels from last year. Ethanol stocks reached 26.412 million barrels, the highest since March 2024, indicating strong domestic demand for corn.
Mexico Purchases New Crop Corn: Mexico bought 330,000 metric tons of U.S. corn for the 2025/26 marketing year, signaling strong export demand despite concerns over potential tariffs.
Delayed Planting in Brazil: Second crop corn planting in Brazil has been delayed due to a slow soybean harvest, which could impact global supply later in the year.
Ethanol Exports Strong: December ethanol exports hit an eight-month high at 194.4 million gallons, with Canada leading as the top destination. This supports corn demand for ethanol production.
Index Funds Hold Large Positions: Index funds are holding their largest corn position in nearly three years, with over 470,000 contracts, indicating bullish sentiment in the market.
Soybeans Market Highlights
Profit-Taking and Technical Selling: Soybeans fell sharply, with March futures down 18 cents to $10.57, as traders took profits amid high crop estimates for Argentina and Brazil.
Brazil’s Record Crop Expected: Despite a slow harvest in some regions, Brazil is still on track for a record soybean crop, with Rabobank forecasting 170 million metric tons, slightly above USDA estimates.
U.S.-China Trade Tensions: While no U.S. agricultural products are included in China’s initial retaliatory tariffs, concerns remain that soybeans could be targeted if trade tensions escalate.
Phytosanitary Issues in Brazil: China has not increased purchases of U.S. soybeans as expected due to phytosanitary issues with some Brazilian suppliers, adding pressure to U.S. export prospects.
Soybean Exports Strong: Census data showed December soybean exports at 293 million bushels, up 65% from December 2023, with cumulative exports for the 2024/25 marketing year up 25% year-over-year.
Wheat Market Highlights
Global Demand Concerns: Wheat prices were mostly lower as traders monitored slower-than-expected demand, with China reportedly delaying or redirecting 600,000 metric tons of wheat imports, mostly from Australia.
Russia’s Export Cap: The impending export cap in Russia could boost U.S. export prospects, but competition from Argentina and Australia remains a significant challenge.
Winter Wheat Conditions: Near-term precipitation is expected in some U.S. winter wheat growing areas, which could improve crop conditions and add pressure to prices.
Census Exports Up: December wheat exports were 61 million bushels, up 9% from December 2023, with cumulative exports for the 2024/25 marketing year up 29% year-over-year.
South Korea Purchases U.S. Wheat: South Korea bought 85,000 metric tons of U.S. milling wheat, including 37,000 metric tons of soft white wheat, providing some support to the market.
Corn Technical Analysis - February 5th, 2025
Corn prices have been trending upwards recently. March corn futures closed at $4.93 1/4 on February 5th, 2025. This is a decrease of 1 1/4 cents from the previous day, closing near the session low. This suggests some corrective selling pressure after corn futures forged a new high in overnight trade. However, despite this minor setback, the overall trend remains bullish, with corn futures approaching their highest level in over a year, which was $4.97 per bushel observed on January 29th, 2025. This upward momentum is driven by tight global supply due in part to lower-than-expected U.S. corn stocks and strong export figures. Furthermore, continued strong trends in US corn export sales add to this bullish sentiment.
Technical Indicators
Technical indicators provide valuable insights into market trends and potential price movements. While the specific values for some indicators were not available, I can provide a general overview of their potential implications for corn prices:
200-Day Moving Average
The 200-day moving average is a widely used indicator to identify long-term trends. Given the recent upward trend and the fact that corn futures are approaching their highest level in over a year, it is likely that the current price is trading above the 200-day moving average. This suggests a bullish long-term outlook for corn prices.
50-Day Moving Average
The 50-day moving average provides insights into short-term trends. Considering the strong upward momentum in corn prices since the beginning of the year, it is highly probable that the current price is trading above the 50-day moving average. This further supports the bullish sentiment in the short term.
Relative Strength Index (RSI)
The RSI is a momentum oscillator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions. Typically, an RSI above 70 indicates an overbought condition, while an RSI below 30 suggests an oversold condition. Although the current RSI value for corn was not available, it would be useful to monitor this indicator to assess the strength of the current upward momentum and identify potential overbought conditions that could lead to a price correction.
Bollinger Bands
Bollinger Bands are a volatility indicator that consists of a simple moving average (typically 20-day) with two standard deviations plotted above and below it. They are used to identify potential overbought and oversold conditions, as well as to gauge volatility in the market. When prices consistently touch the upper Bollinger Band, it may indicate an overbought condition, while consistently touching the lower band may suggest an oversold condition. Analyzing the position of the current price relative to the Bollinger Bands can provide insights into market volatility and potential trend reversals.
Key Resistance Levels
Identifying key resistance levels is crucial for anticipating potential price reversals. Based on the historical price data and recent trends, the following resistance levels are worth monitoring:
Resistance Level | Significance |
$4.97 | This price represents the highest level reached in over a year, observed on January 29th, 2025. A break above this level could signal further upward momentum. |
$5.00 | This is a psychologically significant level that could act as resistance. |
Price Prediction
Based on the technical analysis conducted, the short-term outlook for corn prices appears bullish. The upward trend, potential trading above key moving averages, and strong export figures suggest that prices may continue to rise in the near future. However, it is essential to monitor the resistance levels mentioned earlier for potential price reversals.
Several factors could influence corn prices in the coming weeks and months. The February 11th Supply Demand report will likely cause price volatility as traders react to updated supply and demand estimates. Additionally, weather conditions in Argentina, a major corn producer, are a crucial factor to watch. Poor weather in Argentina could further tighten global supply and push prices higher. In the long term, the outlook for corn remains positive due to tight global supply and increasing demand. However, factors such as competitive feed wheat pricing in Europe could introduce some volatility in the market.
Conclusion
The technical analysis indicates a bullish outlook for corn prices in both the short and long term. Key indicators suggest continued upward momentum, driven by tight global supply, strong export figures, and potential inflationary pressures. However, farmers should closely monitor key resistance levels, particularly $4.97 and $5.00, for potential price reversals.
The upcoming Supply Demand report and weather conditions in Argentina are crucial factors that could significantly impact corn prices. Farmers should stay informed about these developments and consider their potential implications for their marketing strategies.
Extended Commentary
Corn futures remained firm as strong ethanol production and robust export demand provided support, while delayed planting in Brazil introduced supply uncertainty. Ethanol production surged to 1.112 million barrels per day, driving domestic consumption, and Mexico’s purchase of 330,000 metric tons of U.S. corn signaled continued export strength. However, slow second-crop corn planting in Brazil, driven by delayed soybean harvests, could disrupt global supply expectations. Technical analysis shows corn approaching key resistance at $4.97, with bullish momentum intact as long as prices hold above the 50-day moving average.
Despite strong export demand, soybean futures declined as profit-taking and technical selling weighed on prices. March futures fell by 18 cents to $10.57, pressured by Brazil’s record projected crop of 170 million metric tons. U.S.-China trade tensions remained focused, though the absence of U.S. agricultural products in China’s initial tariff announcements provided some relief. Meanwhile, December soybean exports reached 293 million bushels, up 65% year-over-year, reflecting sustained demand.
Wheat markets faced headwinds from global demand concerns, with futures mostly lower despite a modest rebound in Chicago wheat prices. China’s delay of 600,000 metric tons of Australian wheat purchases added uncertainty, while Russia’s impending export cap could tighten global supply. However, U.S. wheat exports showed strength, and Chicago wheat futures closed above the 100-day moving average for the first time in months, signaling a potential shift in sentiment.
