Chicago soybean, corn, and wheat futures experienced a rally on Tuesday, driven by short-covering and concerns about adverse weather conditions in South America and Russia. However, all three commodities have posted annual declines for the second consecutive year due to ample global supplies and strained trade relations with China.
Key Highlights:
Market Performance:
The most active soybean contract on the Chicago Board of Trade (CBOT) settled up 18-3/4 cents at $10.10-1/2 a bushel.
Corn futures rose 6-1/4 cents to finish at $4.58-1/2 a bushel.
CBOT wheat futures increased by 3-1/4 cents, closing at $5.51-1/2 a bushel.
Annual Declines:
Despite the recent gains, the benchmark soybean contract ended the year down approximately 22%, while corn fell by 2.7%.
Wheat futures declined by 12.2% for the year, with all three crops hitting near their lowest levels since 2020.
Weather Impact:
Beneficial rains in Brazil raised prospects for a record harvest in early 2025, but dry weather in Argentina has threatened crop yields, leading to a price surge on New Year’s Eve.
Analysts noted that Argentina, one of the world’s largest producers of corn and soy, could face further threats from hot and dry conditions in the coming weeks.
Wheat Crop Concerns:
In the Black Sea region, news was less alarming, although Russia’s state weather agency reported poor conditions that could affect wheat development in the Central and Volga regions.
Extremely cold temperatures are expected in the Northern U.S. Plains, which may also jeopardize wheat crops.
Market Outlook:
Randy Place, an analyst with Hightower Report, remarked, “This hasn’t been a good year in any of the markets,” but expressed optimism for 2025, suggesting that prices are so low that there is limited downside potential.
With U.S. President-elect Donald Trump’s inauguration approaching on January 20, uncertainty remains about how potential tariff hikes on various countries, including China, could impact trade dynamics.