Donald Trump’s return as US president has, despite a blizzard of directives, not - yet - impacted grain trading, as markets had feared, finds an outlook from CRM Agri.
His threats of tariffs against US imports from Canada and Mexico remain in abeyance, while extra levies on China were limited to 10%, the analysts note.
“This apparent recalcitrance has, in lowering the threat of trade wars, encouraged a focus back on supply and demand fundamentals. For wheat, these continue to show stocks heading for their tightest in years. For corn and soybeans, improved South American weather has eased, although not eliminated, supply concerns.
“Nonetheless, with Trump’s agenda unpredictable, the risk of geopolitical influence on grains remains significant - either directly through trade wars or indirectly from a Ukraine peace deal. Funds are significantly net long in corn futures, leaving prices particularly vulnerable to a dip stoked by a sudden selldown,” report the grain and oilseed market specialists.
Wheat prices have, broadly, recovered, especially in Chicago. “Wheat’s price revival is down somewhat to a retreat in geopolitical concerns—for now at least.”
US corn remains competitively priced
US corn appears less vulnerable to Trump-driven trade risks, with only 15% exported versus 45% for soybeans and wheat, commented the analysts.
However, corn’s price advantage has weakened. Lower trade war risks and improved South American weather have eased concerns, according to the CRM Agri report.
Rains in Argentina have eased fears of a repeat of 2022, when corn output dived nearly 30% year on year. By contrast in central Brazil, a turn drier has allowed farmers to accelerate fieldwork. The pace of both soybean harvesting and safrinha corn sowing has improved markedly, if still lagging the three-year average, said the CRM Agri team.
In the US, ethanol margins have turned negative, further dampening corn’s outlook, they added.
That said, downside risks are limited. US corn remains competitively priced, outpacing Ukraine and South America. It must retain its edge in spring planting to rebuild global stocks, with major exporter reserves at their tightest in four years. Still, risks remain from potential US-Mexico trade tensions or shifts in fund positions in corn futures, remarked the analysts.
Growing global soy demand
The soybean relief rally, driven by Trump’s restrained tariff approach, has reversed as South American production concerns ease, reads the outlook.
US soybean exports have slowed, with weekly orders more than halving since Christmas. Soybean oil faces headwinds from reduced trade war risks and uncertainty over a biofuel tax credit. Soymeal, key for protein-rich soybeans, has also declined below $300/T, pressured by Argentina’s increased crush pace and record December exports.
“If all this suggests pressure on soybean prices, this case has limits. These include, notably, the need to guarantee 2025/26 supplies of a crop for which world demand is expanding fast.”