Grain markets started the week on a downturn as corn, soybeans, and wheat prices all declined, pressured by looming U.S. tariffs on key trading partners like Canada, Mexico, and China, set to begin Tuesday. The bearish mood deepened with improving South American crop prospects and a lack of positive drivers, with corn dropping nearly 3%, soybeans falling about 1.5%, and wheat showing consistent but varied losses across contracts. Uncertainty ahead of President Trump’s State of the Union address and a weakening U.S. dollar added volatility, keeping traders cautious.
Ag Market Insights is dedicated to bringing you timely information to help you consistently get the most money for your crops. Our team painstakingly goes through mountains of information and data and distills insights into a format that you can consume in a few minutes.
In this edition:
Harvest Headlines: Events impacting crop prices.
Technical Analysis: Price projections for corn based on our technical analysis.
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Market Overview
Harvest Headlines
Corn Prices Events
Tariff Threats Weigh Heavily: President Trump’s impending 25% tariffs on Canada and Mexico, plus an additional 10% on China, drove corn futures lower, with May contracts closing down 13¼ cents at $4.56¼ per bushel. Mexico, the largest U.S. corn buyer, secured 114,000 metric tons before the deadline, but fears of disrupted exports to this vital market sparked technical selling. Analysts noted the market’s acute sensitivity to these trade barriers, intensifying the decline.
South American Weather Improves: Better rainfall in Brazil and Argentina alleviated crop stress concerns, bolstering a bearish outlook as South American supplies gear up to compete globally. Brazil’s 2024/25 corn estimate rose to 130.9 million metric tons (MMT), up from 121.0 MMT last year, signaling abundant supply. This optimism about Southern Hemisphere production added further resistance to corn futures.
Acreage Projections Point to Surplus: Forecasts of 94 million corn acres for 2025, up from 90.6 million in 2024, suggested a potential oversupply, pushing prices down. Analysts estimate a carryout closer to 1,835 million bushels versus the official 1,965 million for 2025/26, reflecting higher domestic use but weaker exports. This planting optimism underscores a market preparing for excess supply.
Export Inspections Hold Steady: Weekly U.S. corn export inspections climbed to 53.2 million bushels, surpassing last year’s pace with a season-to-date total of 1.073 billion bushels. Mexico led destinations with 16.4 million bushels, reinforcing its significance despite tariff risks. However, this uptick couldn’t offset broader export worries tied to trade policy shifts.
Ethanol Use Dips Slightly: January corn use for ethanol reached 457.389 million bushels, down 5% from December but up 4% year-over-year. The monthly drop reflects winter weather’s impact on processing efficiency, though annual growth provides modest demand support. Still, lack of administration backing for biofuels limited any price boost
Soybean Prices Events
Tariff Retaliation Looms: China’s pledge to counter U.S. agricultural goods with tariffs, following a doubled levy to 20%, dragged soybean futures down, with May contracts closing at $10.11½, down 14¼ cents. As the top global soybean importer, China’s shift to Brazilian purchases—evidenced by a 25.5 million bushel export inspection decline—rattled the market. This geopolitical friction threatens U.S. export viability.
South American Harvest Advances: Brazil’s soybean harvest hit 50% by late February, with production estimates rising to 151.6 MMT from 149 MMT, despite a higher official figure of 156 MMT. Beneficial rains in central Argentina further strengthened supply expectations, pressuring prices as South America floods the global market. This harvest momentum emerged as a key bearish factor.
January Crush Data Released: January’s soybean crush totaled 213 million bushels, down from December’s record 217.7 million but up 8.4% from 194.8 million last January. Though exceeding expectations of 211.1 million, a soymeal surplus and winter weather slowdowns curbed processing, offering little price relief. End-January soyoil stocks at 1.761 billion pounds, down 13.2% year-over-year, hinted at tighter oil supply.
Demand and Supply Dynamics: Rising Brazilian soybean prices reflected strong domestic demand, with the Paraná Index up 1.5% to BRL 127.33 per 60-kg bag by late February. U.S. season-to-date exports of 1.381 billion bushels outpace last year’s 1.260 billion, yet negative Chinese crush margins and tariff fears cloud the outlook. This mixed demand scenario left soybeans oversold.
Biofuel Policy Concerns: Uncertainty over administration support for biofuels weighed on soybean oil, with May futures falling 63 points to 43.49 cents per pound. Talks of Brazil lowering its ethanol import tariff could open a U.S. market, but current policy ambiguity stifled bullish momentum. This lack of renewable fuel support deepened the day’s losses.
Wheat Prices Events
Tariff Impacts Loom: U.S. wheat prices slipped as tariffs on Canada, Mexico, and China threatened trade flows, with May CBOT wheat down 8 cents to $5.47¾ and KC wheat off 11 cents to $5.62. Mexico, a key buyer with 2.8 million bushels in recent inspections, faces a 25% levy, risking disruptions. Additional import tax risks in April further muddled the outlook.
Global Supply Shifts: Australia’s 2024/25 wheat estimate jumped to 34.1 MMT, a 31% increase from last year, driven by robust yields. Meanwhile, Russian wheat dropped to $203/MT FOB from $215, undercutting U.S. competitiveness. This global surplus kept U.S. wheat futures under pressure despite a softer dollar.
U.S. Export Inspections Modest: Weekly wheat export inspections reached 14.3 million bushels, slightly above prior week and year-ago levels, with season-to-date totals at 574.2 million bushels. Mexico and the Philippines topped the list, but the pace aligns with a modest 850 million bushel goal, offering scant price support. Oversold conditions hinted at short-covering potential, yet no rally emerged.
Weather Concerns Mixed: Persistent dry conditions in the U.S. Plains raised HRW crop risks into April, while Black Sea winterkill concerns lingered. India’s forecast of above-normal heat through May could trim its 112 MMT crop, up 1.3% year-over-year. These issues provided some underpinning, but not enough to offset tariff and supply challenges.
Fund Activity and Technicals: Commodity funds sold 3,500 CBOT wheat contracts recently, with managed money holding a net short 56,326 contracts. Despite an oversold market, technical selling prevailed amid tariff unease and weak demand. Minneapolis wheat, down 6½ cents to $5.91¼, mirrored the broader bearish trend.
Corn Technical Analysis
The technical indicators reveal a dual narrative for corn prices as of February 28, 2025:
Short-Term Outlook: The market has experienced a sharp decline, with price drops of -40.2 (5-day) and -38.2 (20-day), equating to -8.38% and -7.99%. This is corroborated by oversold signals: RSI at 18.47% (9-day), raw stochastic at 0.00% (9, 14, 20 days), and Percent R at 100.00%. The negative MACD values (-24.4 to -32.4) confirm strong bearish momentum in the short term. However, these oversold conditions suggest the market may be nearing a bottom, potentially setting up for a reversal if buying pressure emerges.
Long-Term Outlook: Despite the recent downturn, longer-term indicators remain resilient. The 100-day moving average (445.1) is below the current implied price (around 460-470), and the +25.2 price change (100-day) indicates prior strength. The MACD’s less negative value (-3.5 for 100-day) and Stochastic %D at 63.22% (100-day) hint at a potential shift toward bullish momentum. Declining ATR (5.0 for 100-day) and moderating volatility (20.67% for 100-day) suggest the market is stabilizing, which could precede consolidation or an uptrend.
The short-term bearish trend appears overextended, with multiple indicators pointing to oversold conditions. The longer-term data suggests this could be a correction within an upward trajectory, with decreasing volatility indicating a potential pause or reversal ahead.
Recommendations for Farmers
Short-Term Strategy:
Avoid selling immediately due to oversold conditions (RSI 18.47%, Stochastic 0.00%). The market may rebound soon, potentially pushing prices back toward the 20-day moving average (481.1).
Watch for reversal signals, such as RSI rising above 30% or Stochastic %K crossing above 20%, to confirm a short-term uptick.
Hedging:
Use futures or options to manage risk. A put option with a strike price around 460-470 could protect against further declines while preserving upside potential if prices recover to 480-500, near the 20-day and 50-day averages.
Long-Term Outlook:
Farmers with storage capacity should consider holding corn for a few months. The 100-day price change (+25.2) and moving average (445.1) suggest underlying strength, with a target range of 480-500 as a potential resistance zone.
This aligns with the moderating volatility (20.67% for 100-day) and less negative MACD (-3.5), indicating a possible return to an uptrend.
Market Monitoring:
Track technical signals alongside fundamentals (e.g., weather, demand). A break above the 5-day moving average (460.0) toward 481.1 (20-day) could confirm a recovery. Conversely, a drop below 445.1 (100-day) might signal further weakness.
Key Indicators
1. Moving Average
5-Day: 460.0
20-Day: 481.1
50-Day: 471.2
100-Day: 445.1
200-Day: 429.6
Year-to-Date: 476.4
Standout Numbers: The 5-day moving average (460.0) is well below the 20-day (481.1) and 50-day (471.2), signaling a recent price drop. However, it remains above the 100-day (445.1) and 200-day (429.6), suggesting a longer-term uptrend.
2. Price Change
5-Day: -40.2
20-Day: -38.2
50-Day: +0.2
100-Day: +25.2
200-Day: -36.2
Year-to-Date: -16.2
Standout Numbers: The sharp declines of -40.2 (5-day) and -38.2 (20-day) indicate a significant short-term downturn. In contrast, the +25.2 (100-day) suggests longer-term growth, while the -36.2 (200-day) reflects a broader correction.
3. Percent Change
5-Day: -8.38%
20-Day: -7.99%
50-Day: +0.06%
100-Day: +6.08%
200-Day: -7.61%
Year-to-Date: -3.56%
Standout Numbers: The -8.38% (5-day) and -7.99% (20-day) drops are notable, reinforcing short-term bearishness, while the +6.08% (100-day) highlights moderate long-term gains.
4. Stochastic Indicators
9-Day Raw Stochastic: 0.00% | %K: 46.58% | %D: 46.58%
14-Day Raw Stochastic: 0.00% | %K: 46.75% | %D: 46.75%
20-Day Raw Stochastic: 0.00% | %K: 47.92% | %D: 47.92%
50-Day Raw Stochastic: 10.04% | %K: 23.04% | %D: 41.36%
100-Day Raw Stochastic: 43.58% | %K: 51.74% | %D: 63.22%
Standout Numbers: The 0.00% raw stochastic for 9, 14, and 20 days indicates oversold conditions in the short term. The 100-day %D at 63.22% suggests potential bullish momentum if prices stabilize.
5. Average True Range (ATR)
9-Day: 6.5
14-Day: 6.1
20-Day: 5.6
50-Day: 5.1
100-Day: 5.0
Standout Numbers: The decline from 6.5 (9-day) to 5.0 (100-day) shows decreasing volatility, with the higher 9-day value reflecting recent price swings.
6. Relative Strength Index (RSI)
9-Day: 18.47%
14-Day: 28.26%
20-Day: 35.45%
50-Day: 47.31%
100-Day: 49.44%
Standout Numbers: The 9-day RSI at 18.47% and 14-day at 28.26% (both below 30%) signal oversold conditions. The 50-day (47.31%) and 100-day (49.44%) are neutral, indicating no strong bearish trend long-term.
7. Percent R
9-Day: 100.00%
14-Day: 100.00%
20-Day: 100.00%
50-Day: 89.96%
100-Day: 56.42%
Standout Numbers: The 100.00% for 9, 14, and 20 days confirms the price is at the bottom of its recent range, reinforcing oversold signals.
8. Historic Volatility
9-Day: 18.04%
14-Day: 24.03%
20-Day: 23.19%
50-Day: 22.38%
100-Day: 20.67%
Standout Numbers: The drop from 24.03% (14-day) to 20.67% (100-day) indicates moderating volatility over time.
9. MACD Oscillator
9-Day: -24.4
14-Day: -30.0
20-Day: -32.4
50-Day: -22.4
100-Day: -3.5
Standout Numbers: The deeply negative short-term values (-32.4 for 20-day) show bearish momentum, but the -3.5 (100-day) suggests this momentum is weakening long-term
Extended Commentary
Corn futures tumbled nearly 3% as trade tensions escalated, with impending U.S. tariffs on Canada, Mexico, and China triggering sell-offs. Mexico, the largest U.S. corn importer, rushed to secure purchases before the 25% tariff deadline, but uncertainty over future trade flows pressured prices lower. Additionally, improving weather conditions in South America reinforced expectations of abundant supply, with Brazil's 2024/25 corn production forecast rising to 130.9 million metric tons, up from 121.0 MMT last year. The prospect of a record 94 million planted acres in the U.S. added to concerns of a supply glut, while ethanol demand showed only modest year-over-year growth, failing to offset the bearish outlook.
Soybean prices declined as China responded to U.S. tariff measures with retaliatory duties on American agricultural goods, leading to a sharp drop in futures. Chinese buyers continued shifting purchases to Brazil, with weekly U.S. export inspections falling significantly. Meanwhile, Brazil's harvest progress, now at 50%, and rising production estimates reinforced market pressure, despite a lower official projection. While January’s soybean crush numbers exceeded expectations, a surplus of soymeal and sluggish soyoil demand weighed on prices. Additionally, uncertainty surrounding U.S. biofuel policy dampened any potential support from renewable fuel demand, keeping sentiment bearish.
Wheat futures also faced downward pressure amid global supply concerns and trade barriers. Australia’s production surged 31% year-over-year, while Russian wheat prices declined, making U.S. exports less competitive. The new tariffs threatened shipments to key buyers, including Mexico, adding to the bearish tone. U.S. export inspections showed modest improvements, but overall demand remained weak. Dry weather in the U.S. Plains and concerns over Black Sea winterkill provided limited support, but fund-driven selling and technical weakness maintained the downward trend. Despite oversold conditions, wheat lacked the necessary bullish catalysts to stage a recovery.
