The outlook for U.S. corn demand remains uncertain amid the looming impact of new tariffs, yet exports and corn-for-ethanol consumption continue to surpass USDA projections. While managed money funds still hold a significant net-long position in corn, the market appears heavily oversold. Meanwhile, Brazil’s second corn crop (safrinha) remains a critical factor, with approximately 15% still unplanted. Weather conditions in March and April will play a decisive role in determining the crop’s yield, leaving the final outlook uncertain.
The USDA’s estimate that U.S. farmers will expand corn planting by 3.4 million acres presents another bearish factor. However, uncertainty persists regarding actual seeding decisions. In the short term, December corn futures are approaching a key support range of $4.45 to $4.48, aligning with the 100-day moving average at $4.48 ¾. This suggests that the recent market downturn may slow or even reverse. Long-term trends will hinge on South American weather patterns, U.S. planting intentions, and subsequent growing conditions. With global ending stocks at their lowest in 12 years, a strong Brazilian harvest is essential.
Kansas City Wheat Faces Pressure but Support Remains
Kansas City new-crop wheat futures have also felt downward pressure due to the potential imposition of tariffs on Mexico and Canada in March. Since the U.S. exports wheat to Mexico and imports spring wheat from Canada, retaliatory tariffs could weigh on prices.
However, wheat markets, like corn, have become highly oversold. Global wheat supplies are under threat as drought conditions persist in the U.S. Southern Plains, Eastern Europe, and the Black Sea region. Additionally, potential winterkill from two major cold waves in February raises concerns about yield losses. Given these factors, wheat prices may find strong support in the $5.70 to $5.78 range for Kansas City July wheat futures.
Navigating Market Volatility Amid Policy Shifts
As farmers prepare for the upcoming planting season, they face a rapidly evolving political landscape. Tariff negotiations, budget adjustments, and potential tax reforms contribute to market uncertainty. To help producers navigate these complexities, experts will provide insights at DTN’s upcoming Ag Summit Series, “Spring Forward: Ag Policy, Weather Trends, and Market Insights,” on March 7, 2025.
