2-Day Corn Rally: Is USDA Wrong About Demand??

Grain Markets and Other Stuff

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0:00 2-Day Corn Rally
2:55 The Funds
4:22 Russia Wheat Update
7:25 Mexico to Negotiate
8:50 World Food Prices
🌽 Corn Futures Rally on Friday 📈
Corn futures rallied on Friday, with the most heavily traded March 2025 contract gaining 5 cents per bushel and posting its best daily close since November 20th. The rally is attributed to strong demand for US corn, particularly from both exports and ethanol production, which have outperformed expectations 🌱. Farmers remain tight holders of their 2024 bushels, and end-users have had to increase basis bids to secure the corn they need 🌾. Private estimates suggest that fund traders were net buyers of 11,000 contracts of corn on Friday 📊.
📊 CFTC Data: Funds Reduce Net-Long Position in Corn 🌽
According to the CFTC’s Commitment of Traders data, large money managers were net sellers of 11,000 corn contracts last week 📉, indicating a reduction in their net-long position in the market. However, funds were net buyers of 13,000 soybean contracts 🌱 and net sellers of 10,000 contracts of SRW wheat 🌾 during the same week. This shift in positions may signal potential changes in market dynamics for the coming weeks 🧑‍💼.
🌾 Russian and Ukrainian Wheat Crop Projections 📊
Russia’s 2025 wheat crop is projected to remain unchanged from this year, with an estimated 81.5 million metric tons (mmt), slightly up from this year's 81.3 mmt 🌾. Dry conditions that reduced this year’s crop production also led to a reduction in planting for next year’s crop, with damaged winter wheat likely to be replanted with spring wheat 🌱. Meanwhile, Ukraine’s wheat crop is projected to increase by 6%, with the 2025 crop estimated at 23.7 mmt, up from 22.4 mmt in 2024 📈.
🇲🇽 Mexico Responds to Trump's Tariff Threats 📉
Mexico is seeking to negotiate in response to President-elect Donald Trump’s tariff threats 🌎. Trump’s proposed 25% tariffs on Mexico and Canada are aimed at curbing illegal immigration and drug trafficking. In response, Mexico has cracked down on drug smuggling from Asia, detained thousands of migrants, and seized a record amount of fentanyl 💊. Additionally, Mexico is planning to adopt an investment screening approach similar to the US, offering incentives for manufacturing investments, including the production of batteries for regional supply chains ⚡.
📈 Global Food Prices Surge to 18-Month High 🌍
Food prices have climbed to their highest level in over a year and a half, according to the United Nations Food and Agriculture Organization 📊. The food price index averaged 127.5 points in November, marking a 0.5% increase from October and a 5.7% increase from last year 🌾. The rise is largely driven by an increase in vegetable oil prices, which saw a 7.5% jump from the prior month, the largest increase since July 2022. Cereal prices declined by 2.7% due to a drop in global wheat prices 🌾.