U.S. corn futures plunged nearly 3% on Monday as mounting trade tensions and abundant South American harvests drove commodity funds to liquidate their substantial net-long positions, traders reported. The downward trend in corn futures also weighed on soybean and wheat markets.
On the Chicago Board of Trade (CBOT), corn futures Cv1 closed down 13-1/4 cents at $4.56-1/4 per bushel, hitting their lowest level since January 9 at $4.54-1/2 during the session. Soybean futures Sv1 dropped 14-1/4 cents to $10.11-1/2 per bushel, while wheat futures Wv1 fell 8 cents to settle at $5.47-3/4 per bushel.
Trade War Fears Shake Markets
Investor sentiment soured after U.S. President Donald Trump confirmed that 25% tariffs on imports from Mexico and Canada would take effect on Tuesday. The announcement heightened fears of a full-scale trade war in North America, sending ripples across global financial markets.
Compounding the uncertainty, China signaled plans to target U.S. agricultural exports in retaliation for new U.S. tariffs, according to China’s state-backed Global Times. China remains the world’s largest soybean buyer, while Mexico is a key purchaser of U.S. soybeans, corn, and wheat.
South American Harvest Adds Pressure
Further weighing on prices, Brazilian farmers are nearly halfway through harvesting what is expected to be a record-large soybean crop, adding more supply to the global market.
“(South American) supplies are set to overwhelm the global marketplace regardless of any localized crop concerns, and the trade is reflecting that export issue right now. Lingering tariff talk just adds more fuel to that fire,” said Matt Zeller, senior market analyst at StoneX, in a client note.
Commodity Funds Liquidate Long Positions
With commodity funds holding a hefty net-long position in CBOT corn futures, the market remains vulnerable to long liquidation sell-offs. Traders largely ignored the U.S. Department of Agriculture’s announcement of 114,000 metric tons of U.S. corn sales to Mexico, as broader market concerns overshadowed the news.
Adding to the bearish outlook, Australia raised its estimate for the 2024/25 wheat crop to 34.1 million metric tons, up 2.2 million metric tons from its previous forecast in December—further reinforcing expectations of abundant global wheat supplies.
