Soybeans Surge as Corn and Wheat Lag Amid Trade and Weather Challenges

The agricultural commodities market in early 2025 has seen a stark divergence in performance, with soybeans climbing higher while corn and wheat remain subdued. This split reflects a complex interplay of trade policies, weather patterns, and shifting global supply-demand dynamics. Here’s a breakdown of the key drivers and what they mean for investors.

Soybeans: Gaining Ground Amid Tariffs and Demand

Soybean futures edged higher last week, with deferred contracts showing resilience despite lingering trade tensions. The May 2025 soybean contract rose to $10.36½ per bushel, up 5½¢ from prior lows, driven by two key factors:
1. Strong U.S.-China Trade Flows: Despite a 10% global tariff and unresolved disputes, China’s March soybean imports from the U.S. jumped 12% year-on-year, signaling a partial thaw in trade relations. Analysts attribute this to Brazil’s logistical bottlenecks, which delayed its record harvest, creating a short-term supply gap.
2. Global Supply Tightening: The International Grains Council (IGC) reduced its 2024/25 global soybean output forecast by 1 million tons due to drought in Argentina and Russia, while projecting a record 31.3 million tons of Chinese imports between April and June.

However, soybeans face headwinds from Brazil’s record crop and the U.S. 10% global tariff, which limits upside potential. Investors should monitor Brazil’s export progress and China’s tariff decisions closely.

Corn: Oversupply and Trade Uncertainty Weigh Heavily

Corn futures fell despite robust export demand, with the May 2025 contract closing at $4.82¼ per bushel—a modest rebound from earlier lows but still pressured by oversupply. Key factors include:
1. Planting Progress: Warmer weather accelerated Midwest planting, with Illinois farmers finishing corn planting early. However, Northern Plains delays due to moisture and cool temperatures introduced uncertainty.
2. Export Competitiveness: While U.S. corn exports hit 1.56 million metric tons weekly, tariffs on Chinese imports and proposed U.S. port fees (potentially adding $15–$40/tonne to shipping costs) threaten future demand.
3. Global Supply Growth: The IGC raised its 2024/25 global corn production forecast by 2 million tons, citing higher yields and plantings, further压制 prices.

Corn’s outlook hinges on planting completion rates and whether China’s tariffs deter buyers. A prolonged delay in U.S. exports could push prices lower.

Wheat: Weakness Persists Amid Oversupply and Tariffs

All U.S. wheat markets closed lower last week, with Chicago SRW wheat at $5.52¼ per bushel and Kansas City HRW at $5.63¾ per bushel. The decline stems from:
1. Export Competition: U.S. wheat export sales fell to 76,497 metric tons, trailing historical averages, as Russia’s 2025 harvest is projected to hit 79.7 million tons.
2. Tariff Impacts: China’s 49% retaliatory tariff on U.S. wheat—effective April 10—exacerbated oversupply concerns. Mexico, the top buyer (18% of U.S. exports), remains tariff-exempt but cannot offset losses.
3. Weather Mixed Blessings: Central U.S. rains eased drought for wheat but slowed corn/soy planting, creating a supply-demand imbalance.

Wheat’s recovery depends on Black Sea weather and U.S. crop condition reports. Persistent drought in the Great Plains could provide short-term support.

Key Risks and Investment Takeaways

1. Trade Policy Volatility: The 90-day U.S. tariff pause on China has eased immediate pressure but left broader tensions unresolved. Investors should prepare for sudden shifts in trade flows.
2. Weather Wildcards: The IGC forecasts 2025/26 global grain stocks at 580 million tons, near decade lows. Even minor weather disruptions (e.g., U.S. Midwest flooding or Black Sea drought) could spike prices.
3. China’s Role: As the top buyer of U.S. soybeans and a key corn/sorghum importer, China’s trade policies and inventory levels (currently at three-year lows) are critical to commodity trends.

Conclusion

The divergence among Chicago grains highlights a market split between soybeans’ demand-driven resilience and corn/wheat’s oversupply struggles. Soybeans appear the strongest bet for now, backed by China’s short-term needs and supply constraints. However, investors must remain cautious:
- Corn’s recovery hinges on resolving trade tariff disputes and avoiding planting delays.
- Wheat’s upside depends on Black Sea crop failures and U.S. crop downgrades.

In the near term, soybeans’ upward momentum is likely to continue, while corn and wheat face headwinds until supply-demand balances shift. Monitor USDA planting reports and China’s trade policies closely—these will be the next catalysts for price movements.

Data sources: USDA reports, International Grains Council, and trade flow analyses.