Oct 28 / Luiz Fernando G. Roque

Market Call - Corn and Wheat - Highlights

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"Summary of the main points highlighted in our October Call on the Corn and Wheat markets"

Corn and Wheat Scenarios Update


Macro Overview

The global macroeconomic environment continues to be characterized by volatility, uncertainty, and monetary reaccommodation. After more than two years of restrictive monetary policy, the Federal Reserve made its first interest rate cut in September, signaling the beginning of a new cycle of easing.

The market is pricing in at least two more cuts by the end of the year, which, combined with the maintenance of the Selic rate in Brazil, widens the interest rate differential between the two economies and tends to attract foreign capital flows, temporarily strengthening the real. Even so, the exchange rate found a technical floor close to R$ 5.30, reflecting caution about the fiscal scenario and the domestic political environment.

The US government shutdown temporarily halted the release of key reports (inflation, labor market, and WASDE), leaving the market "in the dark" regarding short-term fundamentals. This lack of information generates additional volatility and fuels speculative movements in the futures markets.

In the geopolitical arena, two sources of tension continue to influence commodities:

• The Russia-Ukraine conflict, which has recently reignited with new US sanctions on Russian oil companies, reinforcing risk aversion and sustaining the price per barrel.
• The US-China trade war, whose new round of negotiations may once again include agricultural commodities (such as corn and soybeans) on the agenda.

Gold has reached historic highs as a safe-haven asset, while oil remains firm amid geopolitical tensions. This backdrop reinforces investors' defensive stance and limits the recovery of agricultural commodity prices, which face technical and fundamental resistance due to abundant global supply.


Corn

Global Scenario

Corn - World - Supply and Demand

                                                                                                                                                                                                                                                                                            Source: USDA, Hedgepoint

Corn - FOB Prices - Main Origins - in USD/ton

                                                                                                                                                                                                                                                                                            Source: LSEG, Hedgepoint


China

  • Demand: steady demand sustained by pig production — corn accounts for ~80% of feed.

  • Stock/use: significant decline — stock/use ratio ~55%, while China historically operates close to 70%. This makes the country more prone to incremental imports if prices/trade conditions are right.

  • Pig margins and slaughter: pig production margins compressed throughout 2025; slaughter rate still high → steady consumption, but buyers more selective.

  • Possible trigger: a US-China agreement reducing tariffs could generate additional demand for US products.

    Risk/Opportunity: lower stock/use is a recent structural factor; however, purchases will depend on the competitiveness of the corn offered (the US is currently more competitive, but still has tariffs).

Corn - China - Supply and Demand

                                                                                                                                   Source: USDA, Hedgepoint


USA

  • Harvest/production: record harvest estimated at 427 Mt. There are signs that the USDA may make a moderate downward adjustment (yield slightly lower than initial estimate) when WASDE returns.

  • Exports: strong pace — ~25 Mt already committed through the end of September, with the potential to reach 75 Mt in the 2025/26 season. This has supported prices despite high supply.

  • Climate/harvest: harvest progressing (approximately 60% harvested at the time of presentation); forecasted rains may partially delay field work, but without risk of significant impacts.

  • Impact of WASDE report: absence of WASDE creates uncertainty; new November/December figures may generate volatility.

    Commercial implication: US offers very competitive corn; robust US exports are currently the main support for Chicago.

Corn - US – Production (M ton), Harvested Area (M ha) and Yield (ton/ha)

                                                                                                                                                                                                                                                                                            Source: USDA, Hedgepoint

Corn - US - Supply and Demand

                                                                                                                                   Source: USDA, Hedgepoint

Corn - US - Export Sales - Current Crop - in M ton

                                                                                                                                   Source: USDA, Hedgepoint


Brazil

  • 2024/25 harvest: estimates around 138–140 Mt (consolidated harvest).

  • Target exports: 42 Mt forecast for the season: current pace and international competition make this figure challenging. At the time of presentation, Brazil had accumulated ~26 Mt in exports.

  • Domestic demand: notable growth in corn ethanol — a new structural source of demand, especially in the Midwest; this sustains domestic prices and reduces local oversupply.

  • Marketing and premiums: Brazilian producers sold ~56% of the harvest (below the historical average), indicating retention and expectations for better prices; port premiums are slowing down, with the Paranaguá base approaching 5-year averages.

  • Weather risk: Rainfall in the South over the next two weeks may delay summer corn planting.

    Implication for domestic prices: if exports do not flow, final stocks will rise and exert downward pressure; however, ethanol and domestic demand will moderate the decline.

Corn - Brazil – Production (M ton), Harvested Area (M ha) and Yield (ton/ha)

                                                                                                                                                                                                                                                                              Source: USDA, Conab, Hedgepoint

Corn - Brazil - Supply and Demand

                                                                                                                    Source: USDA, Conab, Hedgepoint

Corn - Brazil - Cumulative Exports - in M ton

                                                                                                                              Source: MDIC, Hedgepoint


Argentina

  • Supply: increase in corn area (+~1 million ha) due to better margins and higher production projections — USDA 53 Mt, local consultancies up to 60 Mt.

  • Retenciones and sales: temporary cut in retenciones (9.5% to 0%) generated intense sales: ~2 Mt sold in 3 days. Even with return, retenciones remain relatively low and competitive.

  • Potential exports: exports could reach 37 Mt. This, added to the US, puts pressure on Brazil's export space.

  • Weather/La Niña: La Niña returning → historical risk for Argentine harvest; however, maps are showing a relatively normal scenario for the next 1–2 months; chances of La Niña persisting until January (~71%) or February (~55%).

    Implication: Argentina is the extra supply factor that may put pressure on Brazil's export margins and premiums; closely monitor sales pace and climate developments.

Corn - Argentina – Production (M ton), Harvested Area (M ha) and Yield (ton/ha)

                                                                                                                                                                                                                                                                                          Source: USDA, Hedgepoint

Corn - Argentina - Supply and Demand

                                                                                                                                  Source: USDA, Hedgepoint

Argentina - Sworn Declarations of Foreign Sales - Decree 682/2025

                                     Source: Subsecretaría de Mercados Agroalimentarios e Inserción Internacional.


Wheat

Global scenario

Wheat - World - Supply and Demand

                                                                                                                                                                                                                                                                                            Source: USDA, Hedgepoint

Wheat - FOB Prices - Main Origins - in USD/ton

                                                                                                                                                                                                                                                                                             Source: LSEG, Hedgepoint


Brazil

  • Production: downward trend in area due to worse margins; harvest estimated at 7.5 Mt.

  • Import dependency: increased need for imports — Argentina is a natural and competitive supplier.

  • Rio Grande do Sul: accounts for ~47% of national production; only ~10% harvested at the time of presentation; forecast rains may delay harvest, but quality does not appear to be at risk.

    Implication: domestic market sensitive to Argentine flows; domestic prices will continue to be influenced by parity and exchange rates.

Wheat - Brazil - Supply and Demand

                                                                                                                                  Source: USDA, Hedgepoint


USA

  • Production: estimated production of 52.4 Mt; area declining, but productivity recovering.

  • Exports: already at a good pace (~13.6 Mt reported), but competition from the EU and Russia limits volume and price space.

    Implication: The US remains an important player, but external pressure reduces the potential for price increases.

Wheat - USA - Supply and Demand

                                                                                                                                  Source: USDA, Hedgepoint


European Union

  • Robust harvest: estimated production of ~140 Mt — recovery vs. previous harvest (which had problems).

  • Imports: expected to fall “by half” — less need for foreign wheat.

  • Exports: increase in exportable supply, French wheat positioned as the most competitive in the market.

    Impact: increased supply is a bearish factor for international prices (Matif + influence in Chicago).

Wheat - European Union - Supply and Demand

                                                                                                                                  Source: USDA, Hedgepoint


Argentina

  • Harvest and conditions: USDA estimates production at 19.5 Mt, local exchanges at up to 23 Mt; crops in good condition and harvest beginning (5% harvested, above average).

  • Sales: temporary reduction in “retenciones” generated ~3 Mt sold in 3 days.

  • Estimated exports: 13 Mt. Brazil will absorb most of it.

    Implication: Argentina strengthens regional supply; exports should increase.

Wheat - Argentina - Supply and Demand

                                                                                                                                  Source: USDA, Hedgepoint

Argentina - Sworn Declarations of Foreign Sales - Decree 682/2025

                                     Source: Subsecretaría de Mercados Agroalimentarios e Inserción Internacional.


Ukraine

  • Production conditions: production still significantly affected by the war — levels close to ~20 Mt (well below the pre-war 30–33 Mt).

  • Logistics and mines: areas still contaminated by mines and compromised infrastructure; recovery is medium/long term.

    Implication: Ukrainian supply remains restricted — geopolitical risk factor and volatility for wheat markets.

Wheat - Ukraine - Supply and Demand

                                                                                                                                  Source: USDA, Hedgepoint


Russia

  • Production and policies: production recovering (increase vs. previous year); export taxes reduced/practically eliminated, making Russian wheat more competitive.

    Market impact: Russia is a driver of global downward pressure due to supply and competitive prices.

Wheat - Russia - Supply and Demand

                                                                                                                                  Source: USDA, Hedgepoint

Wheat - Russia - Export Taxes (USD/ton)

                                                                                                                                                      Source: Argus


Bulls and Bears

Bullish factors

  • The reopening of US-China talks may affect the grain market, especially soybeans.

  • Possible negative adjustment in US corn in the next WASDE (significant reduction in US productivity/production) — price volatility.

  • Climate risks associated with the return of La Niña, especially for Argentina and southern Brazil.

  • Structured domestic demand in Brazil (corn ethanol) absorbs significant volume, supporting local prices.

Bearish factors

  • Record harvest in the US (corn) and expanded production in the EU/Russia (wheat) — ample global supply.

  • Increased export competition: US + Argentina + Brazil in corn; US + EU + Russia + Argentina in wheat; prices with little room for appreciation.

  • Production recovery in the European Union (wheat) reducing demand for imports (direct impact on Ukrainian wheat).

  • Market awaiting official data (WASDE) — when data returns, there may be adjustments that keep prices under pressure if high supply is confirmed.

Wheat and Corn Price Index (Jan-25 = 100)

                                                                                                                                                                                                                                                                                              Source: CME, Hedgepoint


Final considerations

The current scenario indicates a global grain market in a phase of accommodation, with ample supply and downward pressures prevailing, especially for corn and wheat.

The key supporting factor is concentrated on possible productivity adjustments in the US, possible climatic impacts from La Niña, and growing structural demand for corn ethanol in Brazil.

International competition is likely to intensify in the short term, mainly between Brazil, the US, and Argentina for corn, and between the US, Russia, and the European Union for wheat.

In Brazil, attention is focused on marketing dynamics and corn distribution capacity until the end of the year, with the risk of high inventories if exports do not progress as planned.

In summary, the prevailing bias for the coming weeks is neutral to slightly bearish, with upward movements limited to climatic or geopolitical events.

Link - October's Call

To watch the full October Call on the Corn and Wheat markets, click on this link.

Market Intelligence - Grains and Oilseeds


Written by Luiz F. Roque
Luiz.Roque@hedgepointglobal.com

Reviewed by Thais Italiani
www.hedgepointglobal.com

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