Grains & Sugar - Weekly Recap

Market Update????

#corn #soybeans #wheat #sugar

Joran Haugens , Portfolio Manager

Corn

Corn futures faced early-week pressure as traders digested Argentina’s export tax reductions and recent rainfall in South America. However, the weakness was short-lived. Buying interest from funds, end users, and speculative traders quickly drove prices higher, pushing the March 2025 contract through recent highs to test $5.00. Open interest surged to record levels before paring back as traders locked in profits ahead of the weekend.

South American weather remains the key market driver. Conditions in Argentina and southern Brazil continue to deteriorate as moisture stress intensifies, despite scattered rains providing temporary relief. Production estimates are gradually declining, with traders closely monitoring updated forecasts to assess further yield risks. In Brazil, second-crop corn planting is progressing slowly due to early-season delays, adding uncertainty to supply expectations.

On the demand front, U.S. export sales remained strong, with two new sales announcements this week. However, as global supplies increase in the coming months, U.S. corn may face greater competition in the export market.

With fundamentals in flux, technical factors are dictating near-term price action. Psychological resistance at $5.00 remains firm, with the Relative Strength Index (RSI) briefly exceeding 70 before profit-taking triggered a pullback. Traders remain focused on tariff developments and geopolitical headlines, which could influence market sentiment in the coming weeks.

Key Levels: We see upside resistance at $5.00, with additional resistance likely around $5.10 & $5.25. Support is likely near $4.80 & $4.65, with major downside levels seen at $4.50.

Soybeans

Soybean futures tested key resistance at the 200-day moving average last week but failed to break through, leading to choppy, high-volatility trading. Prices swung double digits daily, driven by shifting trade sentiment and concerns over tariffs.

Midweek, futures sold off sharply amid weak export sales figures and reports of President Trump’s renewed tariff threats on Canada and Mexico. The drop quickly triggered a test of the 20-day moving average before prices stabilized and rebounded into the weekend.

South American weather remains a key fundamental factor. Argentina’s crop ratings further declined, and production estimates were revised lower. Brazil’s harvest is moving at one of the slowest paces in years, delaying global supply availability. While South American production remains in question, traders view overall world supplies as adequate, keeping rallies in check.

With limited fresh input, technical levels are in control. The March 2025 contract faces increased resistance at the 200-day moving average, with an upside target at $11.00. Support is seen building at $10.35 and $10.20, while $10.00 remains a key psychological level.

Key Levels: We see resistance at $10.75 and then $11.00; with support around $10.35–$10.00.

Wheat

Wheat futures broke out of their downward trend early in the week, gaining momentum before running into resistance. March 2025 contracts briefly tested the recent low at $5.26 before bouncing back as strength in row crops and fresh headlines out of Russia sparked additional buying.

Conflicting reports out of Russia added uncertainty. One report suggested that 38% of Russia’s winter wheat crop is in poor condition, while another from Russia’s Agriculture Ministry claimed 82% of the crop is in good shape. The region’s warm winter has left crops vulnerable to freeze damage due to the lack of snow cover which typically insulates the crop.

Export demand for U.S. wheat improved this week, as importers shifted attention to more reliable suppliers amid ongoing uncertainty in the Black Sea region.

Technically, wheat futures appear stuck in a range. The March 2025 contract tested resistance at the 100-day moving average ($5.72 ?) before fading into the weekend. Support has shown up near $5.50, with the 20- and 50-day moving averages providing stability. With RSI just above 50, any fresh catalyst could trigger a move in either direction.

Key Levels: We see resistance at $5.75, then $6.00; and support at $5.30, then $5.00.

Sugar

Sugar futures extended last week’s rally, recovering from oversold conditions as technical factors dominated the trade.

Fresh supply concerns emerged from Thailand and India, where production estimates have been revised lower. Thailand’s industry faces additional setbacks from disease and burnt cane issues, slowing processing at mills. These supply-side concerns, coupled with end-user buying, helped stabilize the market after prices hit multi-year lows earlier in January.

Futures climbed back into the expected range of $0.1900–$0.2000, reclaiming key technical levels. The March contract pushed above the 20-day moving average and the 23.6% Fibonacci retracement but encountered resistance near $0.1950.

Traders are closely watching price action near $0.2000, where the 50-day and 200-day moving averages, along with the 38.2% Fibonacci retracement, provide strong resistance. Sugar remains highly reactive to fresh headlines, with any fundamental shift likely to trigger a sharp move in either direction.

Key Levels: We see resistance at $0.1950 and then $0.2000; with support at $0.1850 and $0.1800.