Monday February 3, 2025

Markets are starting off the week in the green.
On Saturday evening Trump followed through with his threat and signed a declaration placing 25% tariffs on goods from Canada and Mexico and 10% on China.
- One exception was that Canadian crude oil will only be taxed at a 10% rate.
- Canada immediately released a long list of retaliatory tariffs at the same 25% rate.
- This morning it is being reported that Mexico president Sheinbaum had a good conversation with Trump. Mexico will take measures to secure the boarder. It sounds like the tariffs on Mexico will be paused for a month.
What do these tariffs mean for the grain market? No one has a solid answer, the market is currently trying to sort out the impact of the tariffs. Though the tariffs are expected to be bearish for CBOT futures, the weather story in South America seems to be pushing things higher as solid gains are posted across the board.
Extreme Northern Argentina and Southern Brazil will be drier with episodes of extreme heat. Crop stress will be acute in the areas that missed the rain last week. Rain is set to return in the 10-14 day forecast.
- Northern Brazil will see a few more days of widespread rainfall.
Fridays CFTC report showed managed money as heavy buyers of corn last week. Their long position was at 350k contracts as of last Tuesday, this is the longest the funds have been since May 2022. Managed money also added to their long bean position putting it at their longest since November of 2023.
- It will be interesting to see how many fund managers will be willing to hold long positions heading into the spring planting season.
Last week we saw a $14 cash price for new crop soybeans and got up to a $6.25 cash price for old crop corn. New crop corn is still lingering under the $6 mark.
- As of this morning we are still above $14/bu for new crop beans