One of the more interesting “outside market” news to affect grain prices in recent days is speculation on the impact of the presidency of Donald Trump. It is interesting to watch international and domestic reaction to the election of a new president.
It interests me that we are seeing big reactions to Trump rhetoric — that is, political and business leaders seem to believe that he will do what he has said he will do.
Tariffs
Much of the interest is in the effect that potential tariffs may have on the grain trade. I have heard of no specifics as far as agriculture is concerned.
What we seem to be seeing is a reaction to what could come of Trump’s use of tariffs to drive conversation or influence changes in trade.
We have also seen other signs that financial and equity markets are reacting positively with record price levels. Business leaders believe that the new presidency will bring fewer regulations and a business-friendly economy.
The current example of how Trump may operate is his threat to Canada, Mexico and China regarding illegal immigration and drug interdiction. He threatened, shortly after the election, to slap tariffs on the three countries for all imports to the U.S. if illegal border crossings and drug running are not stopped.
The threat is being taken seriously, as evidenced by the pictures on the news of Canadian Prime Minister Justin Trudeau going to meet with Trump and talking for three hours. Fox News reported that Trudeau said the proposed tariff would cost $100 billion, and they could not stand it. Trump was reported to have answered him (humorously, I presume) that the choice would be to make Canada our 51st state.
I confess to being ignorant as to why he was threatening Canada when our attention is on the southern border. Today, I learned that we are seeing huge increases in those entering the country illegally through Canada into New England.
So, politics are a concern for farmers, but we don’t know exactly why or how, just that we need to worry about the unknown nature of things.
Weather concerns
Meanwhile, there are actual events in the world that are directly affecting our grain prices right now.
There is severe weather in the snow belt along Lake Erie, but it is too late to affect markets. The eight- to 14-day forecasts say that we will get greater-than-normal moisture in the Plains states. That should help the wheat crops and hurt their prices.
Moisture is almost always short in the hard-wheat areas of the country.
Favorable weather is said to be returning to South America, where smaller crops had been predicted because of dryness that limited planting.
Now, we are told that the weather is good, and Brazil will raise another record crop. That would be a good reason that soybeans and bean products have all been lower as of late.
Crop reporters are saying that 91% of the Brazilian soybeans are planted, up from the 85% in the ground this time last year.
Corn futures were actually up Dec. 2. There was news that could have caused that. Our corn exports for the last reporting week were reported at 36.1 million bushels, at the high end of trader estimates. We have now booked 435.8 million bushels of corn exports for the crop year 2024-2025, which is higher than last year.
Interestingly, our biggest customer was Columbia, so it is possible that our Mexican friends did not want to lead exports after the tariff threats.
The spec funds gave us some indication of the mood of traders. They added (long) a net 7,500 contracts of corn, but shorted an additional 4,000 contracts of soybeans, shorted 3,000 more contracts of soybean meal and shorted 1,000 contracts of Chicago wheat.
Numbers
Looking at some numbers, we see current trading of March corn futures at $4.33 3/4, up 1 1/4 cents. If we look way back, we see March corn futures at $5.08 1/4 on May 15.
The big break from there was fairly steady until the $4.16 1/2 low on July 15. From there, we had a high July 25 at $4.37 3/4 and then a low of $4.03 3/4 on Aug. 26. By Aug. 26, we had a high of $4.52 1/4. After two cycles more, we were trading near that at $4.34.
The January soybeans trading at $9.89 1/2 the evening of Dec. 2. The big high was again in May, at $12.32 3/4. By the middle of August, we were down to $9.73 1/2. We rallied by the end of September to $10.87 1/2, but dropped to $9.78 1/2 by the end of October.
The wheat has perhaps been the most volatile crop, and I am not sure why. There, the big high came at the end of May at $7.72 3/4. We fell to $5.96 1/4 by the end of June, and to $5.42 by Aug. 27, a loss of $2.30 from the top. In early October, we were back to $6.39, but it hasn’t lasted. We were at $5.51 3/4 the evening of Dec. 2.
The Australian wheat crop is now looking big, at an estimated 1.172 billion bushels. That is 23% above last year. It is also 20% above the 10-year average.
It confounds me that the corn and wheat crops out of Ukraine are actually increasing. It is estimated that they will ship 330 million bushels of wheat in the crop year 2024-2025. They will also export 283-5 million bushels of corn.
