Didion Weekly Market Recap

The markets were rejuvenated late last week with indications that tariffs on Chinese vessels may be delayed until this fall. Thursday’s rally helped May and July futures close 5 and 4 cents higher for the week while December futures ended the week unchanged.  The funds ended the week long 96,430 corn and short 12,984 soybean contracts.

Rumors on Thursday that the proposed timeline for tariffs on Chinese vessels may be delayed appeared to be accurate as the following timelines were released:

– March 24, 2025: A public hearing will be held to gather comments on the proposed actions

– April 17, 2025: The deadline for completing findings and finalizing the rule.

– Mid-May 2025: An implementation hearing will take place to finalize the decision, approximately 30 days after the previous deadline.

– November 2025 (proposed): If the White House’s suggested 180-day implementation period is adopted, enforcement of the tariffs or fees would be delayed until around November 2025.

These dates indicate that the United States Trade Representative (USTR) tariffs or fees on Chinese tonnage won’t come into force immediately. Instead, there will be a period of public comment, review, and potential revision before implementation. Assuming that this is accurate, the concern over old crop transactions would move to new crop. This appeared to make traders more optimistic that it will have less impact than originally feared.

There are reports that the US could potentially be trading corn into Brazil out of the gulf. While the volumes would be minimal, due to logistics, it does send a message to the world that US corn is cheap. Recent values suggest that the US is $20/ton cheaper than the world market.  Weekly exports were strong this past week with 58.9 million bushels sold. We continue to run ahead of the USDA’s projections for the year by 182 million bushels (7%).

Tariffs and the talk of increased US planted acres have pushed the market lower since the first week of February, but they appear to have found support levels in the last two weeks. There will be a lot of market movers in the next 10 days with the March 31^st planting intentions, April 2^nd reciprocal tariffs and South American weather. It appears that traders are headed for the sidelines until there is more confirmation of some if not all these unknowns. US stocks are stable and correctly priced if the tariffs are implemented. If tariffs are delayed again, we could see traders begin to take on longer positions as the fear of trade wars will lessen.

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New tariffs and counter tariffs put pressure on the markets last week as traders continue to be on edge wondering what’s next. May futures ended the week 11 lower while July and December futures finished 8 and 3 lower respectively. The funds ended the week long 116,412 corn contracts and short 3,922 soybean contracts.

President Trump put a 25% tariff on EU steel and aluminum and the EU came back hours later with their own tariffs.  The EU put tariffs on 28 billion dollars’ worth of US goods including soybeans, grain, beef and poultry.  The EU believes they can source imported food from other locations.  Europe is reliant on imports to boost domestic supplies. It was the second largest export destination for US soybeans in 2024, buying some $2.4 billion worth, according to data from the US Department of Agriculture.

Relations between Canada and the US were back and forth last week. The US said it is willing to increase tariffs on steel and aluminum to 50% if Canada is going to tax energy into the Northwest US at 25%.

Traders were hoping the March WASDE report was going to be the bullish headline in the markets last week, but the US numbers were largely unchanged. Global ending carryout levels were lowered on corn and beans and raised a decent amount on wheat.

USDA 2024/25 US Carryout (Billion Bushels)

USDA 2024/25 World Carryout (Million Tons)

USDA 2024/25 South American Production (Million Tons)

South American weather continues to be favorable resulting in improved crop conditions for both corn and soybeans. The USDA left production unchanged in both corn and soybeans this month, but overall production for corn is up 6 million tons for corn and more than 16 million tons for soybeans.

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The combination of more acres in corn and wheat, first notice day and the threat of tariffs starting on March 4^th gave traders plenty of reason to exit their long positions last week. With a lack of buyers and motivated sellers March corn futures lost 38 cents during the week while May and July closed 35 and 34 cents lower respectively. The funds ended the week long 255,843 corn and are now short 3,286 soybean contracts.

Brazil’s first crop is 35% harvested which is near the five-year average. The second crop plantings have accelerated the last two weeks coming in at 67% complete which puts the progress equal to the 5-year average. Concerns about the crop being planted outside of the prime window have diminished with this recent pace. Brazil’s forecast continues to have most of the grain belt under a light accumulation over the next 10 days.

Trump put Mexico and Canada on notice regarding tariffs restarting March 4th and now has traders awaiting their response. President Trump, after discussing pushing the tariff pause off to April 2nd, stated that he will be starting the 25% tariffs against Canada and Mexico on the 4th of March. Trump stated the decision to do so was made because of a lack of action against drug trafficking by Mexico and Canada. Trump is also doubling China’s tariffs on March 4th to 20%. Trump’s Administration is also starting to apply special tariffs to companies it feels China is using as transship fronts to avoid tariffs. One company singled out is owned by China and ships aluminum out of South Korea. China has yet to respond to the declaration.

On Thursday the USDA Ag Outlook Forum released their balance sheet for corn, beans and wheat.  The USDA used 94 million acres of corn, 84 million acres of beans and 47 million acres of wheat.  Total acres of 225 million is only behind the 227.8 used back in 2023.  Carryout in corn moves close to 2 billion and beans sit at 320 million.  The USDA is using record yields of 181 for corn, 52.5 in beans and less than a record 50.1 wheat.  Keep in mind that these numbers are not from a survey but are a starting point that traders will use in the markets. The March plantings survey is taking place now that will be released March 31^st and will carry more weight than the outlook forum.

With first notice day behind us, it will be interesting to see if the funds return to the market this week or continue to take money out of the market. As I stated last week, this market has been demand driven since late last year and demand markets need to be fed, or they run out of steam. Favorable weather in South America has helped push the markets lower, but the US continues to be competitive in the world market. Farmer sales of corn have dried up the last couple weeks, which is resulting in stronger basis levels across the country. Look for basis to remain strong heading into spring planting as producers focus shifts to field work and less on marketing.

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After selling off early in the week with the implementation of tariffs, the markets rebounded to end the week unchanged on news the tariffs were being delayed. May, July and December futures all ended the week unchanged following the funds buying more than 50,000 corn contracts on Thursday and Friday. The funds net long position did drop below 200,000 contracts early in the week but ended the week long 251,844 contracts of corn and long 475 soybean contracts.

On Thursday President Trump suspended the 25% tariffs he had imposed earlier in the week on most goods from Canada and Mexico, the latest twist in a fluctuating trade policy that has whipsawed markets and fanned worries about inflation and growth. The exemptions for the two largest U.S. trading partners, expire on April 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all U.S. trading partners.

In response, Canada has delayed a planned second wave of retaliatory tariffs on $125 billion of US products until April 2. Mexican President Claudia Sheinbaum has not implemented any reciprocal tariffs on the US as she continues to negotiate with the US.

20% tariffs do remain in place for goods from China as the two countries have yet to negotiate following Tuesday’s implementation. China implemented a 15% tariff on Corn and Wheat from the US and a 10% tariff on soybeans from the US.

Crop conditions in South America continue to improve with recent rainfalls. The first 5 days of March have already brought half the months average rainfall and temperatures are projected to stay mild through mid-month. This is a significant turnaround from the dry January and early February they experienced. Planting progress of Brazil’s second crop is ahead of the five-year average setting the stage for a potentially large crop.

These tariffs and other items are all fluid and there are no publicly announced thresholds that countries like China, Mexico, or Canada can go by to understand when the tariffs will be lifted or under what conditions. We have to assume that is what is being discussed when the leaders are talking with each other. It appears that the US has plenty of wiggle room and is willing to negotiate. The toughest part of the on and off talk is the inability of the market to have any solid direction. We have been in the “Risk Off” mode more recently and could stay that way until these tariffs are clear or in place.

Tariffs or not, seasonally the markets trade lower in early March before bouncing heading into April and the US planting season. The graph below illustrates where July futures have traded over the last 10 years. May, September and December graphs would all show similar patterns.

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Corn found strength early last week, reaching new yearly highs before trading lower at the end of the week on bearish weather and tariff news. March futures failed to reach the $5.00 resistance level again this past week, setting the stage for another run at it this week. March futures ended 6 cents higher while May and July both closed 8 cents higher for the week. The funds are long 334,531 corn contracts and 62,756 soybean contracts.

Reports on Friday that President Trump was planning to pursue reciprocal tariffs on “many countries” this week sent the markets lower. The story was second hand from sources that said the President made the statement in meetings with Republican lawmakers on Thursday. While they are merely rumors for now, traders were hesitant to enter the weekend without taking some profits.

The Argentina Rosario grains exchange reported late last week that it is confident the recent rains will save the crop from the recent heat.  Northern and central Argentina will be hot and dry through early this week, increasing crop stress, but the second week of the forecast still looks wet. Brazil saw rains in central crop areas over the weekend and coverage looks strong for the next several days, with the heaviest amounts falling in the north before shifting into southern regions in the 6–10-day time frame.

The USDA will release their February S&D numbers on Tuesday the 11^th @ 11:00 AM. Most are looking fora downward revision to 2024-25 U.S. corn stocks while increasing soybeans and leaving wheat unchanged. Argentina corn and soybean production could be revised lower by 2 million tons each.

US Ending Stocks (Million Bushel)

Brazil Production (Million Metric Tons)

Argentina Production (Million Metric Tons)

World Ending Stocks (Million Metric Ton)

USDA’s February S&D report tends to be a non-event compared to other monthly updates, at least for the U.S. balance sheets, but with maturing crop and harvest underway across South America the USDA may address Brazil and Argentina soybean and corn production. We could see traders focus & pricing moved by the South American numbers on Tuesday unless the USDA increases U.S. corn and soybean exports.

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