Markets Buckle Under Tariff Turmoil as Ag Searches for a Bullish Spark

The holiday shortened week started with a volatile trade that ended with a mixed trade in corn while beans and wheat were lower as the world markets reacted to President Trump’s threat to levy additional tariffs on our European NATO allies that do not support his plan to buy Greenland. The world equity markets collapsed on international selling of US stocks in retaliation for the tariff threats as gold and silver rallied sharply to new all-time highs while US Treasuries were also sold which pushed interest rates modestly higher. While the grain markets are normally more insulated from political turmoil, the tariff threats against key allies and trade partners adds another unwanted wrinkle in an industry just looking for any bullish news. Ag specific news will be limited this week as Brazil’s bean harvest rolls along and Chinese bean purchases have been completed to meet the trade deal requirements.

News and Notes:

• Argentina continues to just get enough rain to keep any intense stress off their corn crop, but the next 7-10-days are dry, and rain will be needed in early February to keep high yield potential in place. Brazil’s weather is dry in north where harvest passed 10% over the weekend with enough rain and normal temperatures on the rest of the crop that is still growing. US weather is brutally cold this week with a major snowstorm taking aim on the Midsouth this weekend.
• The daily March bean chart is on Page 2 and shows the difficulty rallies are facing after failing to clear overhead technical resistance at the 200 (black line) and 20 (light blue) moving averages. The head and shoulder formation is becoming more pronounced and points toward a continued downtrend in price. The funds are short over 100 MBU and heading deeper into trade turmoil and Brazil’s harvest, could get aggressive to adding to their bearish position.
• The rest of the world spoke with their investments today by selling US stocks and bonds in protest of President Trump’s increased aggressiveness to buy or take over Greenland for US security interests. The never-ending stream of threats against China, Mexico, Venezuela, and NATO make predicting where the markets may be going this year nearly impossible as every asset class is experiencing massive volatility and little certainty.
• The Sales Targets were updated for 2025 and 2026 corn and 2026 beans. After the January USDA report disaster, targets were lowered to address the report and the accelerating Brazilian bean harvest. Please look at the updates and call me if you have any questions.
• The Supreme Court again did not release a decision on the legality of President Trump’s tariffs which is neither a good nor bad signal but will keep the market on edge when the decision is finally released. If they rule against the President authority to implement the tariffs without Congressional approval, the world importers may quickly come back to purchase US bushels as the US Dollar has fallen sharply since the trade war began and this makes low prices even lower for buyers.

While most administrations like calm drama-free diplomacy and negotiation, this administration is cut from an entirely different cloth and aggressively chases confrontation and uncertainty as a negotiation tool. With the equity markets seeing 1-2% swings almost daily and the flight to non-US assets like gold and silver seeing record highs and massive 5-7% daily market move as the US intentionally or unintentionally further distances ourselves from the rest of the world. With Brazil finishing their 12 MMT bean purchase requirements, the US bean export pace will stop as the world shifts to lower priced newly harvested Brazil beans. A quick bullish reversal is not looming if our trade policy remains so contentious, which makes patience an important habit to practice for eth rest of the winter.