Weekly Grain Market Recap 

It was an exciting week in the grain markets, with considerable follow-through from last Friday’s friendly USDA report. Demand remains strong as Monday’s inspections showed a top-line beat for corn shipped and three consecutive soybean flash sales to China. Argentinian weather concerns remain a tailwind for grain prices for the time being. However, rains have re-entered the medium-term 6-10 day forecasts. Current Argentinian soil moisture conditions are rivaled by only 2022, and much-needed rain could pressure grain prices in the short term (more on this topic in the corn supply-side overview). 

Chinese trade relations are, and will continue to be, a primary driver in grain prices. During Thursday’s confirmation hearing, Treasury Secretary nominee Scott Bessent commented that China has not made good on its purchases of American agricultural products over the past four years. Moreover, if confirmed, Bessent said that one of his first actions would be to demand China to fulfill its obligations that went unenforced under the Biden administration. The initial Phase I trade agreement penciled China in for $40 billion annually in American ag products. While China never entirely held up that agreement, they did come close by accruing $38.1 billion in imports in 2022. Since then, China has been increasingly absent from the American markets in favor of Brazilian corn and soy. Relations with China remain the most potent uncertainty in the market right now. Long-held expectations are that both sides will dig their heels in and trade relations worsen. However, recent discourse between China and the incoming Trump administration has been amicable. In fact, Xi Jinping stated recently that he will send a representative to the inauguration. If the Trump administration can reach an agreement with China that even resembles the terms of the Phase I agreement, it would be a significant victory for the American producer. 

Corn

Futures Price Overview

March corn was able to parlay last Friday’s momentum into a productive week, ultimately settling at $4.84 ¾ – up $15 cents on the week. While prices fell on Thursday and ultimately retested our pivot pocket between 469 ¼-471 ½, March corn bounced back Friday and traded up all the way up to 484 ¼ – the highest price recorded on the contract since June 17th. Breaking through our 3-star resistance pocket between 479 ¾-480 ½ was a win for bulls, and the next significant test will come at our 4-star pocket between 487-488 on its way to ultimately test the 500 handle.

Futures Money Flow Overview

Much has been made about the net-long position that managed money has amassed in corn futures & options. It makes sense – funds are holding their most prominent net-long position since November of 2022. As of now, it sits at 292,228 contracts across futures & options. That leaves the market subject to long-liquidation risk, which could materialize if/when Argentina garners some much-needed rains. However, commercials simultaneously hold an enormous net short position of X contracts between futures and options. Over the last 10 years, commercials have only been in this ballpark a couple of times – 2020/21 and 2021/22. While there’s still some room for commercials to add, they may be nearing maximum capacity. Once commercials are maxed out, it opens the door for managed money to take the reigns and continue driving prices higher.

Corn Supply-Side Overview
Argentina’s Rosario Grains Exchange trimmed their Argentinian corn production estimates to 48 MMT from prior forecasts between 50 and 51 MMT on Wednesday, citing extreme temperatures, low relative humidity, and high levels of solar radiation. Soil moisture levels there are extremely low, mirroring only 2022’s conditions as displayed by the chart below:   

Check out our charts and the entire article at: https://bluelinefutures.com/2025/01/17/grains-finish-the-week-strongly/

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