Porto Alegre, January 28th, 2025 – The year 2025 began with many variables. It is not only the climate in South America and US exports that are receiving seasonal attention from the market. New conflicts are beginning to emerge, based on the social correction now imposed by the new US government. At this point, some countries start being challenged with positions contrary to these US decisions and intensify conflicts in commercial and social spheres. Following “normal” market events, that is, based on fundamentals, weekly US exports once again showed a large number. During the week, they hit 1.66 mln tons, well above the normal average of 1.0 mln tons a week. Now, accumulated corn exports have reached 42 mln tons, just 20 mln tons below the USDA projection of 62 mln for the business year that will end only in August.
Therefore, corn prices approached USD 5.00/bushel last week and tend to either keep in line with this weekly flow of US exports to a deviation above USD 5.10/bushel, new resistance, or seek a new slowdown.
As we have pointed out in our editions, the international corn market has a different outlook for 2025. The supply from global exporters is not comfortable in the first half of the year. Ukraine has little availability for exports after the small 2024 crop, Brazil will not have large volumes for exports in the first half of the year until July, and Argentina is still defining its crop, with its supply only about to emerge after March. Therefore, the United States is alone to meet global demand in larger volumes this semester. For this reason, the flow of weekly sales appears to be very strong.
The profile of the new US government, correcting social distortions and calling on allied countries to contribute to this correction, may bring some important variables to international trade. The first clear conflict has been with Colombia. By refusing to accept its deportees, it has created a conflict with the United States. Colombia is one of the largest exporters of coffee and a traditional importer of US corn. The imposition of 25% tariffs on goods and services from Colombia could lead to sharp highs in coffee prices and a shift of corn purchases to other sources, in this case limited to Brazil and Argentina. Even if Colombia backs down on its decision, we have an example of the profile of events for 2025.
As of February 1, the United States is expected to announce 25% tariffs on Mexico, the largest importer of US corn, as well as on Canada, a partner in the global supply of wheat. Could Mexico have to seek corn from South America to offset its supply if it taxes US corn at the same rate? An additional 10% tax is also expected to be announced, in addition to the 40% tariff in 2018, provided that China does not present a project to control the flow of “fentanyl”, a drug that is devastating American society and, according to the government, China is the largest supplier.
The United States seems to be clearly attempting to reindustrialize its economy to maintain jobs and taxes. This is a slow process that requires time, in addition to maintaining the population’s income. Changing from an importing to an exporting framework will have many impacts on the local and global economy.
The third factor to pay attention to at this time is the Argentine crop. Safras & Mercado estimates 50.5 mln tons. This is still a good production number and will allow Argentina to export 34 mln tons in this business year, 25/26. The issue is that the international market will depend heavily on this supply from Argentina in the first half of the year. There may be unprecedented demand from Mexico and also from Colombia in the first half of the year. Brazil will not have volume to meet this international demand at least until July. Therefore, close attention must be paid to the Argentine crop.
The weather in Argentina has been gradually improving. Between January 10 and 20, the rain was very good in the western part of the country, mainly in Córdoba, as well as in the entire northern part, including areas of Santa Fe, greatly helping the soybean crops and early-planted corn. The main concern is in the region from central Buenos Aires to southern Santa Fe. Last weekend, the rains solved all the problems in the west and began to improve in Buenos Aires.
The European model predicts a week of good rain for Argentina. Basically, rain stabilizes prices, at least for this variable, while losses may bring more support to CBOT in the case of corn. At the end of the week, Argentina announced a measure that surprised but was already expected for this year: the cut in retention rates, or export taxes. For corn, the government intends to cut the export rate from 12 to 9.5%. This will enhance the export competitiveness of corn and other commodities, such as soymeal.
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