I recently discussed the changes in agriculture that have been observed since late August 2024, indicating a shift in outlook, thinking and market psychology. Despite negative media reports, corn prices continued to rise until the USDA Ag Outlook Forum in February projected ending stocks for next year at 1.9 billion bushels — an increase of nearly 400 million bushels from this year. That led to a quick decline in July corn futures by 60¢.
The long-term weekly uptrend from August to February ended with my first weekly sell signal since the positive signal five months earlier. Media lacked optimism regarding the continuation of the bull market, but after a snap-back rally above the February monthly low, questions arose about whether corn could reestablish the broken uptrend.
Concerns over tariffs and their impact on exports are prevalent in current discussions. Media explanations for price volatility often lack credibility, leading to recommendations for purchasing expensive put options to “put a floor” under a rising market. Government policy and higher-than-expected prices in 2025 continue to be examined through both fundamental and technical research.
Tariff Talk
Colombia responded swiftly to fend off tariffs, while Japan announced investment in the U.S. and interest in increased ethanol imports. The Mexican Peso traded at higher levels that had not been seen since last October as cooperation seemed reasonable, but the Canadian dollar approached 2025 lows and support levels dating back to November/December. That is until Canada rescinded tariffs on electricity imported to the U.S. Diplomatic actions may be inferred from these developments.
President Donald Trump stated Europe avoids purchasing U.S. agricultural products and autos while benefiting from selling wine and autos to the U.S. Countries might consider political cues and proactively cooperate on tariff issues for the remaining three years of his term, but so far initial responses have been in the form of threats of retaliatory tariffs.
Alternative Perspective
The supply and demand table includes historical data and projections by Gulke Group, Inc., of what it would take to keep hope alive. Export loadings this year indicate corn leaving the country in the first six months of the marketing year is ahead of last year by more than 8 million metric tons, equating to more than 320 million bushels. USDA projects exports to increase by 160 million bushels compared to last year, which saw an increase of 630 million bushels over 2022/23. In 2020/21, 2.75 billion bushels were exported. The trend might yet be unappreciated.
What Would It Take?
The supply and demand table reflects some yet-to-be-realized optimism. Corn export estimates for this year might be underestimated by an additional 100 million bushels and ethanol by 25 million bushels. Yield might be no better than last year’s based on the current weather forecast (changes in blue). The March WASDE likely deferred any further bullish demand news to the May WASDE in case corn acres increase significantly. Continued good demand into 2025/26 is likely as any positive tariff results wouldn’t end in one year — potentially sustaining the corn bull market.
I recognize my outlook might look optimistic, and an acreage above 95 million acres would keep pressure on 2024/25. Risk management protocols of market signals should be maintained and respected while maximizing profit in the extreme volatility we are expected to navigate. The weekly sell signals mentioned above ended the uptrend unless prices can rally above February lows, which coincides with the important Jan. 10 report low. Any positive demand responses to tariffs look to take place after we are well into planting season — too late for acreage shift responses.
