Facts:
- U.S. farmers intend to plant the most corn since 2020.
- Weather prospects ahead of U.S. planting are improving.
- Weekly export data for corn showed the lowest sales in 7 weeks.
Trade: short position at market price
- TP1: 455
- TP2: 435
- SL: 510
Justification:
U.S. farmers intend to increase corn plantings to the highest level in 5 years, but at the same time, they intend to reduce soybean plantings. Plantings are expected to be 94 million acres in 2025, which is higher than the 90.6 million acres in 2024. U.S. farmers are still under pressure after the recovery of production in Ukraine and Russia following the 2022 invasion. Additionally, a major uncertainty factor for corn is tariffs. The imposition of tariffs on Mexico and Canada may lead to retaliatory tariffs, which will reduce the export potential for U.S. grains. It is also worth remembering that grain exports, including corn, are also threatened in the context of the ongoing trade war with China. The U.S. president has announced the imposition of additional tariffs at the level of 10% on Chinese products, in addition to what was introduced in early February. It is also worth noting that the latest WASDE report showed U.S. ending stocks remaining unchanged, which had been falling month after month since March 2024. This means that the relative deficit in the market may have ended. Weekly export data showed the lowest data in 7 weeks. The soybean-to-corn price ratio may show that corn prices have become excessively cheap, although they slightly missed the level of 2, which has been an important turning point in recent years. Oil prices remain low, which may also be an important factor from the perspective of continuing the recent sell-off.
