Can Grain and Oilseed Prices Higher?

Globe and Mail

24-04-2025

I concluded my Q1 Barchart analysis of the grain and oilseed futures markets with the following:
As the grain and oilseed sector heads into Q2, the 2025 crop year begins with the planting season. The weather across the fertile plains in the U.S. and other growing regions will determine the path of least resistance of prices over the coming months during the planting and critical growing seasons.
I favor the upside in grain and oilseed prices because of the current low price levels. However, another year of bumper crops that satisfy worldwide requirements could send prices lower. Meanwhile, low prices tend to cure those low prices in commodity markets. Risk-reward dynamics favor the upside for prices after the bearish price action since the 2022 highs.
The current risk-off action caused by tariffs could impact grain and oilseed, and all agricultural commodity prices over the coming days, weeks, and months.
Corn, soybean, and CBOT wheat futures have increased since March 31, 2025, but they are not running away on the upside.
The April WASDE was not bearish
I contacted Jake Hanley at the Teucrium family of agricultural commodity ETF products for his opinion about the USDA's April 10 World Agricultural Supply and Demand Estimates Report. Jake told me:
Grains overall have been holding up relatively well amid the chaos in outside markets.
We've seen this movie before. The Teucrium Agricultural Fund Index is 8 for 8, outperforming the S&P 500 in every stock market correction going back to 2012.
There is not necessarily a bullish story in grain markets, but rather at current levels most of the bearish news appears to be priced in. It's a good reminder that sometimes to outperform simply means to lose less.
As it relates to the WASDE, the trade of the day goes to corn. The market has been waiting for the USDA to revise exports higher and today we got what we were waiting for. 100 million bushel increase to exports when combined with some other adjustments brought '24-'25 US ending stock projections down to 1.465 billion bushels. The U.S. corn stocks-to-use ratio now sits at 9.6%—a psychologically significant level that reinforces a bullish setup. Although expectations for a record corn crop this upcoming season remain high, the market is working off a much tighter beginning stocks number than anticipated just six months ago.
Globally, the corn balance sheet also tightened. Ending stocks came in at 287.7 million metric tons, just below the average analyst estimate of 288 million. The global stocks-to-use ratio now stands near 23%, down from 25% last year and below the 26% range held since the pandemic. This signals a fundamentally bullish shift toward tighter global supplies.
It was a rather friendly report for soybeans too. US ending stocks came in below the average analyst guess and at 375 million bushels are 7 million bushels lower compared to the March WASDE. US farmers are expected to reduce the number of soybean acres planted this year by 3.7 million acres. Plugging in the USDA's earliest forecast from the February Ag Outlook forum and plugging planted acres (83.5 million) and beginning stocks (375 million bushels) we're staring at a potential stocks/use for the '25-'26 crop of 6%. That assumes a record yield! For reference the last time we saw a stocks/use below 7% soybean futures were trading north of $12 per bushel. However, the global balance sheet presents a stiff headwind. The global stocks/use ratio is around 30%. It's likely that we would need to see the global stocks/use below 28% to even give beans a chance at taking on $12.
The 2024/25 U.S. wheat outlook shows larger supplies, slightly reduced domestic use, lower exports, and higher ending stocks. Imports are raised by 10 million bushels to 150 million—the highest since 2017/18. Domestic use is trimmed 2 million bushels on reduced seed use, and exports are cut by 15 million to 820 million. Ending stocks rise to 846 million bushels, slightly above the average analyst estimate of 826 million.
The domestic stocks-to-use ratio climbs to 42.9%, the highest in three years— the U.S. has plenty of wheat. Globally, the balance sheet continues its tightening trend. Ending stocks were reported at 260.7 million metric tons, just above the 260.4 million average trade guess. That puts the global stocks-to-use ratio around 32%, above the key 30% psychological level but still trending lower for the fourth time in five years—a long-term bullish signal, though not yet likely to ignite significant buying interest near-term.
Grain and oilseed prices have moved mostly higher since the end of March. The full text of the April WASDE report is available through this link.
Corn rallies
CBOT corn for May delivery settled at $4.5725 per bushel on March 31, 2025.
The daily chart shows the 3.23% gain to $4.7200 on April 23. U.S. and global corn stocks declined in the April WASDE report, supporting the coarse grain's price.
Soybeans edge higher
Nearby May CBOT soybean futures closed at $10.1475 per bushel on March 31, 2025.
The daily soybean futures chart for May delivery shows a marginal 2.51% gain to $10.4025 per bushel on April 23. U.S. soybean inventories fell in the April WASDE report, while global stocks increased slightly.
Wheat is slightly lower but has made higher lows
CBOT soft red winter wheat futures settled at the $5.37 per bushel level on March 31, 2025.
The daily CBOT May wheat futures chart shows the marginal 1.63% decline to $5.2825 per bushel on April 23. According to the April WASDE Report, U.S. wheat stocks increased, while global supplies are 3% below the previous year and at the lowest level since 2015/2016.
The outlook for the 2025 crop year
Corn, soybean, and wheat futures have made higher lows and higher highs since March, and have moved into short-term bullish trends, which is no surprise in April 2025. The prices are low, compared to the levels reached in 2022, when CBOT wheat rose to a record high, and corn and beans rallied to the highest prices since 2012.
The grain and oilseed markets are in the heart of the planting season in mid-April. The weather conditions over the 2025 growing season will determine the crops and the path of least resistance of prices.
The growing worldwide population means that each year's supplies must rise to keep pace with the increasing demand. Meanwhile, U.S. tariffs are trade barriers that will create a surplus in some regions and potential shortages in others, impacting prices.
The bottom line is that the weather and tariffs can potentially move the soybean, corn, and wheat prices over the coming months. The current price levels could limit the downside potential, while the upside could become explosive if any surprises impact supplies.
The most direct routes for risk positions in the grain and oilseed markets are the futures and futures options on the CME's CBOT division. The Teucrium family of agricultural ETFs offers CORN, SOYB, and WEAT ETFs that track the price of three actively traded futures contracts, excluding the nearby contracts to minimize roll risks. The Teucrium products tend to underperform the nearby futures on the upside, as most speculative activity occurs in the front-month futures. The ETFs often outperform on the downside for the same reason.
As the grain and oilseed markets move from the planting to the growing season, we will better understand the 2025 crop levels that will determine the path of least resistance of prices.