Speculative price fluctuations in grains and oilseeds will increase due to uncertainty about tariffs and harvests in South America

Corn, wheat and soybean futures on the Chicago Board of Trade rose yesterday despite strong fundamental pressure as traders focused on Trump's possible imposition of a 25% tariff on imports from Canada and Mexico starting February 1. The Mexican president said she did not believe the US would impose tariffs, which supported corn prices.

Corn futures rose to a 15-month high, wheat to a 6-week high, and soybeans to a six-month high amid delays in soybean harvesting and corn planting in Brazil.

March futures rose:

• by 3.2% to $206.7/t for soft winter SRW wheat in Chicago,
• by 3.4% to $213.2/t for durum winter HRW wheat in Kansas City,
• by 2.7% to $225.5/t for durum spring HRS wheat in Minneapolis,
• by 2.4% to $195.7/t — for corn in Chicago,
• by 1.5% to $389.7/t for soybeans in Chicago.

White House press secretary Carolyn Leavitt confirmed Trump's intention to impose tariffs on goods from Canada and Mexico starting February 1, and plans to impose new tariffs on products from China. The tariffs could trigger trade wars and mirror measures, as well as facilitate the conclusion of new trade deals.

StoneX experts believe the main question now is whether the US and China will conclude an agreement that will facilitate agricultural trade, when this might happen, and how it will affect demand.

Drought in Argentina could lead to reduced corn and soybean yields, which will be offset by record yields in Brazil if weather allows for accelerated harvesting there in the coming weeks.

Analysts note that funds are somewhat optimistic about corn, as global supplies remain tight and they see it as a good hedge against inflation. At the same time, the outlook for soybeans is less optimistic, and wheat remains in deficit.

US ethanol production fell 7% from the previous week, while stocks rose 6% from a year earlier. According to the US Food and Agriculture Organization, corn consumption for ethanol production will reach 139.7 million tonnes in 2024/25, exceeding the 139.2 million tonnes in 2023/24 and 131.5 million tonnes in 2022/23.

Without the Trump administration's support for green energy programs and industry development, domestic corn processing in the US will continue to decline, and a possible reduction in exports to Mexico will collapse corn prices in Chicago.

Forecasts of rainfall in Argentina and dry weather in Brazil next week could also change speculative sentiment for soybeans and corn.

A possible reduction in the US harvest due to drought and low temperatures is contributing to the rise in wheat prices, but they may fall based on USDA reports on the condition of crops that received sufficient precipitation in the winter and were not damaged by short-term frosts.

In February, traders will focus on estimates of corn and soybean planting areas in the US, but now it is more profitable for farmers to sow corn, which will contribute to an increase in the area under it and, accordingly, a decrease in prices.