Mar 28
/
Ignacio Espinola
Corn, Soybean and Wheat update
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• USDA prospective plantings in the market spotlight
• US corn area to increase in 2025, while soybean area to decrease
• Funds have been very active on futures, especially on Wheat Chicago and Matif.
Prospective plantings for the 2025/26 US crop should point to an increase in the corn area and a drop in the soybean area.
The expected prospective plantings report for the new US crop, the 2025/26 season, which will be released by the United States Department of Agriculture (USDA) on March 31, should focus the market's attention over the next few days, with players digesting the figures.
This important report traditionally provides the first official estimates of the area to be planted in the new North American season, indicating the first trends for the US production potential. As a result, this report is considered to be one of the most important of the year for players in the agricultural markets, with the potential to bring great volatility and changes in direction to the prices of futures contracts in Chicago.
US producers usually make their soybean and corn acreage choices based on conditions related to costs and market prices. In the US, most soybean and corn areas compete with each other. In other words, when producers choose to increase their soybean acreage, for example, the acreage destined for corn naturally tends to decrease, given that the opening up of new areas is not usually significant in the US and there is a kind of "rotation" between soybean and corn in the same areas. In the same way, when producers choose to increase their corn areas, the areas destined for soybean end up decreasing.
Given this, it is important to note that at the moment, due to costs and the price situation for soybean and corn on the Chicago Board of Trade, the trend is for US producers to increase their corn areas and reduce their soybean areas for the 2025/26 season. One market indicator that helps support this sentiment is the soybean and corn price ratio. When we divide the price of soybean in the November futures position against the price of corn in the December futures position, we arrive at an indicative value for what is more favorable to be planted, taking into account cost, price and, consequently, profitability. The reference value of 2.4 is used for this. When the result of this calculation is below 2.4, we have a more favorable scenario for corn, which indicates a tendency for corn acreage to increase and soybean acreage to decrease. When the value is above 2.4, the scenario is reversed, indicating a trend towards an increase in soybean area and a decrease in corn area.
At the moment, the result of this calculation is around 2.25, pointing to a probable increase in the area planted with corn and a consequent decrease in the area planted with soybean in the new US crop, which would increase the productive potential of the cereal and decrease that of the oilseed.
Bloomberg's survey of several US analysts points to an average area estimate of 94.4 million acres for corn and 83.8 million acres for soybeans, which would result in an increase of 3.8 million acres in corn and a decrease of 3.2 million acres in soybeans regarding the areas planted in 2024. If these areas are confirmed, we could see a negative bias for corn futures contracts in Chicago and a positive bias for soybeans, given the production potential of these areas. In the case of corn, such an area would bring record production potential for US production, of more than 15,400 billion bushels.
Soybean vs Corn prices ratio - CBOT
Soybean vs Corn prices ratio - CBOT
Source: CME, Hedgepoint
US Planted Area – Corn and Soybeans (M Acres)
US Planted Area – Corn and Soybeans (M Acres)
Source: CME, USDA, Bloomberg, Hedgepoint
Wheat market situation
Over the last weeks the wheat market has been very active, especially when it comes to the future’s activity.
On the physical market, the last export sales reported sales of 100k Mt which where on the low side of the expectations range of 0-500k Mt for the 24/25 campaign, leaving the US export program at a 92% (20.9Mmt) considering the last update from the WASDE report for a total of 22.7Mmt. Regarding the 25/26 campaign, the sales were only 11.2 k Mt while the expectations were between 100k Mt and 300k Mt.
US Wheat Export Sales in Kmt
Source: USDA
On the Black Sea side, the last news brings a scenario of uncertainty, especially for the Russian market where stocks at the ports are low, export margins are not healthy and, even though the last WASDE report came with 45M mt on the export side, local agencies are expecting 40.6Mmt, which is a 10% less versus the WASDE number.
Russian Wheat SnD
Source: USDA
Funds activity: soybean, corn and wheat
On CBOT, the funds have maintained their bearish view and added 14k contracts into their short positions, leaving a final number of 54k contracts.
On the corn side, the funds have completely wiped out their long corn position, taking it from 200k long contracts on the 4th of March into a short of 14k contracts, significant decrease which shows a directional ahead of the acreage report of next Monday and the uncertainty of the new tariffs that trump announced for the 2nd of April. On the MATIF side, funds have kept a close to zero position.
Finally, on the wheat side, funds have maintained almost unchanged their SRW position, leaving it at 96k contracts short while they have added 6k contracts more into their short HRW position up to a final 53k contracts short position.
On the Matif Side, they have a 216k contracts short position, reduced in 2k versus previous week 218k contracts which was the lowest position in over a decade.
Soybean CBOT Non-Commercial (Spec) position in lots.
Source: CFTC, Reuters
Corn CBOT Non-Commercial (Spec) position in lots.
Source: CFTC, Reuters
SRW CBOT Non-Commercial (Spec) position in lots.
Source: CFTC, Reuters
HRW CBOT Non-Commercial (Spec) position in lots.
Source: CFTC, Reuters
MATIF Wheat Non-Commercial (Spec) position in lots.
Source: CFTC, Reuters
Written by Ignacio Espinola
ignacio.espinola@hedgepointglobal.com
ignacio.espinola@hedgepointglobal.com
Reviewed by Luiz Roque
Luiz.Roque@hedgepointglobal.com
Luiz.Roque@hedgepointglobal.com
www.hedgepointglobal.com
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This page has been prepared by Hedgepoint Schweiz AG and its affiliates (“Hedgepoint”) solely for informational and instructional purposes, without the purpose of instituting obligations or commitments to third parties, nor is it intended to promote an offer, or solicitation of an offer of sale or purchase relating to any securities, commodities interests or investment products. Hedgepoint and its associates expressly disclaim any use of the information contained herein that directly or indirectly result in damages or damages of any kind. Information is obtained from sources which we believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. The trading of commodities interests such as futures, options, and swaps involves substantial risk of loss and may not be suitable for all investors. You should carefully consider wither such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results. Customers should rely on their own independent judgement and/or advisors before entering in any transaction.Hedgepoint does not provide legal, tax or accounting advice and you are responsible for seeking any such advice separately.Hedgepoint Schweiz AG is organized, incorporated, and existing under the laws of Switzerland, is filiated to ARIF, the Association Romande des Intermédiaires Financiers, which is a FINMA-authorized Self-Regulatory Organization. Hedgepoint Commodities LLC is organized, incorporated, and existing under the laws of the USA, and is authorized and regulated by the Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association (NFA) to act as an Introducing Broker and Commodity Trading Advisor. HedgePoint Global Markets Limited is Regulated by the Dubai Financial Services Authority. The content is directed at Professional Clients and not Retail Clients. Hedgepoint Global Markets PTE. Ltd is organized, incorporated, and existing under the laws of Singapore, exempted from obtaining a financial services license as per the Second Schedule of the Securities and Futures (Licensing and Conduct of Business) Act, by the Monetary Authority of Singapore (MAS). Hedgepoint Global Markets DTVM Ltda. is authorized and regulated in Brazil by the Central Bank of Brazil (BCB) and the Brazilian Securities Commission (CVM). Hedgepoint Serviços Ltda. is organized, incorporated, and existing under the laws of Brazil. Hedgepoint Global Markets S.A. is organized, incorporated, and existing under the laws of Uruguay. In case of questions not resolved by the first instance of customer contact (client.services@Hedgepointglobal.com), please contact internal ombudsman channel (ombudsman@hedgepointglobal.com – global or ouvidoria@hedgepointglobal.com – Brazil only) or call 0800-8788408 (Brazil only).Integrity, ethics, and transparency are values that guide our culture. To further strengthen our practices, Hedgepoint has a whistleblower channel for employees and third-parties by e-mail ethicline@hedgepointglobal.com or forms Ethic Line – Hedgepoint Global Markets.Security note: All contacts with customers and partners are conducted exclusively through our domain @hedgepointglobal.com. Do not accept any information, bills, statements or requests from different domains and pay special attention to any variations in letters or spelling, as they may indicate a fraudulent situation.“HedgePoint” and the “HedgePoint” logo are marks for the exclusive use of HedgePoint and/or its affiliates. Use or reproduction is prohibited, unless expressly authorized by HedgePoint. Furthermore, the use of any other marks in this document has been authorized for identification purposes only. It does not, therefore, imply any rights of HedgePoint in these marks or imply endorsement, association or seal by the owners of these marks with HedgePoint or its affiliates.