Insight Focus
Corn fell in Chicago, while wheat rose due to winterkill risks in the US and Russia. European grains broadly followed the rise of wheat. Meanwhile, Trump’s tariffs and potential retaliation could disrupt US corn exports, adding volatility.
Over the weekend, President Trump announced a 25% import tariff on Mexican and non-energy goods from Canada, as well as 10% tariffs on Chinese imports and energy imports from Canada. Trump has also stated that Europe is next on the list. Mexico and Canada have already announced plans to retaliate. Sooner or later, we should expect some form of tariffs on US agricultural exports.
We should expect volatility this week due to Trump’s tariffs and the potential retaliation on US exports. At first glance, tariffs are likely to negatively affect the market, as they are inflationary and can reduce consumption.
However, in the short term, they could cause supply disruptions for basic goods like cereals, which may support prices. In any case, the uncertainty surrounding global trade flows is expected to bring volatility this week, and it will persist until there is a clearer picture.
There are no changes to our forecast for Chicago corn for the 2024/25 crop (September/August) to average USD 4.55/bushel. The average price since September 1 is running at USD 4.3/bushel.
Chicago Corn Rally Falters Amid Profit-Taking and Tariff Fears
Despite a negative start to the week due to some profit taking, corn in Chicago rallied last Wednesday, hitting a high of USD 4.97/bushel. However, it then sold off due to profit taking and loss of competitiveness on a FOB basis during Thursday and Friday. This was exacerbated by fears over US tariffs, which finally arrived over the weekend. The weekly close was negative.
US corn inspections published last Monday were down 19% week-on-week, but within estimates. This triggered some profit taking at the start of last week.
In Brazil, Safrinha (second corn crop) planting is 1.4% planted compared to 10.3% last year. The harvest of the first corn crop is 6.3% complete compared to 10.4% last year. In Argentina, corn planting is 98% complete, with conditions 28% good to excellent.
Wheat Markets Rebound on Winterkill Fears
US wheat inspections published last Monday were up 85% week on week, which was above expectations. However, profit taking from the previous week’s rally weighed, which led to a negative start for the week. But the market turned around on Tuesday, due to fears of winterkill in the US and Russia.
The Russian government announced that 82% of wheat area is in good or excellent condition, not taking into account the recent cold snaps.
On the weather front, cold weather is expected again in the US which could cause some winter killing in wheat. Brazil and Argentina are expected to receive rain again, which may go some way towards alleviating drought concerns. Mild temperatures and rainy weather are expected in Europe, including the Black Sea region.
