MARKET UPDATE

You can scroll to read the usual update as well. As the written version is the exact same as the video.

Timestamps for video:
Overview: 0:00min
Corn: 4:15min
Soybeans: 7:30min
Wheat: 9:20min

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Overview

After a wild day, soybeans are the only grain who falls under the pressure of the tariffs.

The trade must have realized these tariffs don’t really impact the corn or the wheat market.

Here is a list of all of the tariffs announced.

Notice something..?

Mexico and Canada are not on this list. Mexico is far the US's biggest buyer of corn. Canada is the leading importer of ethanol.

As for price action, soybeans of course took it on the chin because China is one of those countries listed.

But in corn & wheat, we got that initial overnight knee jerk reaction like we talked about yesterday.

The market was simply spooked and followed the rest of the markets lower, as when this type of uncertainty strikes it leads to money flowing out of everything.

A good example of this is the stock market.

It just posted it's worst daily loss in 5 years.

The NASDAQ (tech stocks) posted it's largest loss in history today.

The stock market fear & greed index is it's most fearful in 3 years.

But again, for corn these tariffs do not have any fundamental impact.

The only country that really matters is Mexico.

China doesn’t matter to corn because they aren’t buying our corn anyways.

Like I talked about weeks ago, Trump and Mexico's President have a great relationship.

Mexico's economy can’t handle a trade war either.

So don’t think we will see any issues there. Which means I think tariffs are a non-factor for corn.

Could tariffs actually be friendly corn..?

I wouldn’t call tariffs "friendly" but it could actually have some slightly friendly perks for corn.

Tariffs on foreign ethanol and DDGs (corn based products from Brazil, Argentina, etc.) could make the US versions more completive.

This means more demand for US corn to produce those products here at home.

Mexico stays tariff free. So our top export market stays strong.

This doesn’t directly impact corn. But it could support demand.

The US Dollar Impact:

These tariff headlines have tanked the US dollar which is the silver lining of this.

The dollar at one point had it's biggest one day sell off in history today.

Why this matters to grains:

Cheaper dollar = grains essentially on sale globally.

Forgein buyers get more bang for their buck and make our grains more attractive.

This could boost exports but maybe not right away.

Once this risk off attitude settles a weaker dollar should support export demand.

Some thoughts from others:

Soybeans & China: Trade War 1.0 vs 2.0

The only real risk with tariffs is China.

Right now, China is going to look at Brazil for their bean needs anyways. As they have a record crop and the US's prime time is Oct-Jan. So the impact on tariffs right now are not as significant.

Tariffs would more so affect new crop beans rather than old crop beans.

Because the US has already shipped 1.5 billion bushels vs the USDA's estimate of 1.8 billion.

Here is a seasonal comparison for soybeans today vs last trade war from NoBull Ag.

Scary comparison..

I am not a tariff expert at all. But, these two trade wars are not the same.

Last go around, tariffs were not the only thing that killed demand from China.

Last time China was dealing with African swine fever. Which killed feed demand.

The US farmer is already going to be planting less soybeans (in 2017-2018 we planted 89-90 million).

Another difference is that this time domestic demand is much stronger. The US is crushing more beans than ever.

We've also already ironed out a deal before. This time should be easier. But until a deal is made, the risk is certainly there.

A trade war is still bearish and will pressure prices if it unravels, but without a major demand shock like last time I don’t think it'll be quite as bearish unless it drags on.

Today's Main Takeaways

Corn

What is left for bears to argue?

Bears got their big acre print in the USDA report.

We have the tariff headlines but the #1 buyer of corn Mexico is exempt.

The world situation is tight.

The old crop situation is tight.

We will have more acres but this crop isn’t even in the ground yet.

The funds have zero reason to go full on short, knowing we have an entire growing season ahead that can’t afford any hiccups on a global scale.

After growing season, yes I will probably get really bearish as we inevitability tank into harvest.

But the upside potential here far outweighs the downside potential until then.

December corn is trading at a +20 to +50 cent discount compared to a year ago even though we are starting off the year with the same size of carryout.

There just simply isn’t a reason to be bearish corn today ahead of growing season.

I've shown this before. Here is when new crop corn has posted it's highs for the year.

This doesn’t mean we couldn't have posted our highs in February again, it just shows how often we typically get a pricing opportunity in spring/summer.

Here is a good opinion from the respected Mister Commodity on Twitter.

He points out: When a market rallies on bearish news.. it is not a bearish market.

Corn reversed off the overnight lows after a massive tariff announcement that collapsed all markets.

Corn also traded higher the day of the report when it was announced we would be seeing a historical shift in acres.

It seems like this market is going to be hard to push substantially lower..

I completely agree.

Technicals:

If you are bearish corn.. today's price action is not promising for you.

Tariffs are announced.

Every market crashes.

Corn rallies +10 cents off the lows. Now +20 cents or so higher since the USDA announced we would be seeing 95 million acres.

Doesn’t feel like bearish price action..

Once again, we had a bear trap below the 200-day MA.

Everytime we fall below it gets bought up fast.

Still key support.

To the upside, once we break this new downtrend, the next upside objective is $4.80 (old support and gives back 50% of the sell off)

To confirm the trend is shifting back higher, we need to close above $4.70 and the 100-day MA.

I know I have a lot going on the chart, here is a closer look as well if you are struggling to see details.

Looking at Dec-25 corn.

The 100-day MA (purple line) crossed over the 200-day MA (pink line) for the 1st time in over a year. Good indicator looking long term.

Next upside objective is still $4.60

Soybeans

Fundamentals:

Trade war aside, the soybean situation is shifting friendly in the US.

Prices have sucked, which is going to lead to less acres and the potential for the US new crop balance sheet to get tight.

We are projected to have a new crop carryout of less than 300 million WITH a record 52.5 bpa yield. (Carryout was 380 last year).

Last year the LOW in beans was $9.50.. we will plant far less acres and should have a much tighter US situation.

Yes. The global situation is still bearish. Yes. Brazil has a big crop.

Both have been known for several months and are the reason beans have sucked.

Technicals:

Before Trump ruined the party, the soybean chart was looking poised for a breakout.

We had closed above the 100-day MA which is a pivotable spot.

We smacked below it on today's sell off.

But ultimately, the chart still isn’t bearish as long as the key support holds.

I'd be concerned if we dropped below $10.00 convincingly, but until then the chart looks fine.

Still holding support. Still have a massive inverse head & shoulders pattern.

First big picture target is still $11.29 (61.8% of the May 2024 highs and also the Feb 2024 lows).

Exact same set up in Nov beans.

That first big picture target is $11.11 instead.

Wheat

Fundamentals:

Just like corn, we got all of these tariff headlines yet wheat managed to trade higher for most of the day.

When the market gets bearish news but trades higher it is a good sign for bulls. It just means that it might be hard to push this market drastically lower.

Like corn, there is a lack of reasons to be bearish.

If you're bearish what is your next catalyst?

The global wheat situation is incredibly friendly vs past years.

Acres are down.

Impossible to get overly bearish wheat at these levels.

Technicals:

First is Chicago wheat.

This is the continuous chart.

We have held this support box for over a year.

Big spot to hold. Would like to think we continue to bounce here just like we have done countless times.

For KC wheat, simply finding support in the support box once again.

We are just trapped in a big range from the lows to the highs.

So anything in between doesn’t matter much.

Break the lows, we make a leg lower.

Break the highs, it opens the door much higher.