Technically Speaking

Although there is plenty of uncertainty regarding the impact of the upcoming tariffs on U.S. corn demand, our exports and corn-for-ethanol use continue to exceed USDA projections. Granted, managed money funds remain net-long a still sizable position in corn. However, the market has become extremely oversold and there is a long way to go in Brazil's second corn crop (safrinha) growing season with roughly 15% of the crop yet to plant. March-April weather will be key to the size of the Brazilian corn crop and the jury is still out.

The USDA projection that U.S. farmers are likely to plant an additional 3.4 million acres of corn is also bearish. However, there is plenty of uncertainty on that front as well. On a short-term basis, December is fast approaching what should be an area of solid support at $4.45 to $4.48 and that coincides with the 100-day moving average at $4.48 3/4. Expect, at least in the short run, for this bearish swoon to slow if not reverse course. Longer term it depends on South American weather and U.S. seeding intentions and the weather to follow. With world ending stocks at the lowest level in 12 years, a solid Brazilian corn crop is demanded.

Kansas City new-crop wheat futures have also been bearishly impacted by the threat of the March tariffs to be imposed on both Mexico and Canada. As the U.S. sells wheat to Mexico and imports spring wheat from Canada, any retaliatory tariffs enacted against the U.S. would theoretically be bearish for prices.

As in corn, wheat markets have reached an extremely oversold condition. World wheat markets are not without risk as not only is the U.S. Southern Plains winter wheat area becoming drier, but so too are wheat areas in eastern Europe and the Black Sea. Add to that the potential for some winterkill from the two major cold blasts in February, and there is reason to be optimistic on wheat prices from the current price level. Expect solid support to emerge in the $5.70 to $5.78 area on KC July wheat.

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Farmers face a rapidly changing political environment as they gear up for spring planting. The news around tariff negotiations, budget cutting efforts and potential tax reform may keep the markets guessing, but our experts will help farmers put the news into perspective. Join us March 7, 2025, for DTN's next Ag Summit Series: "Spring Forward: Ag Policy, Weather Trends and Market Insights" by registering at https://dtn.link/….

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Dana Mantini can be reached at Dana.Mantini@DTN.com

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