By: Andrew Catsimanes, Copywriter • Production
Key Takeaways
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The global grain market may not be in crisis yet, but the cracks are showing. Corn and wheat exporters outside the U.S. are running tight on supplies, leaving less room for error.
During his February Market Outlook, StoneX Chief Commodities Economist Arlan Suderman told listeners the market is stable, at least for now. Suderman sees no need to ration demand with higher prices currently, but he cautions that could change in the weeks or months ahead. Weather, politics, and demand shifts could all throw the grain markets a curveball, and if that happens, the delicate balance may not hold for long. The real question: Is the market ready for what comes next?
While Brazil churns out a massive soybean crop, China is scooping up supply at a discount. That currency advantage makes Brazilian beans cheaper, and makes life harder for U.S. exporters.
U.S. soybean exports tell the story, having started strong this marketing year, but momentum has slowed. Suderman doesn’t think that is a short-term blip, but rather part of a longer trend.
“The U.S. is losing ground. China’s shifting more of its buying to Brazil, and unless something changes, that’s going to be the story for a while according to Suderman.”
Currency shifts don’t just impact exchange rates, they reshape global trade flows, as this comparison makes clear.
Source: StoneX.com, USDA
And while inflation has been a tailwind for commodities, the trade has become more crowded of late. Managed money has stacked up long positions in a clear bet on rising prices. But if macro conditions shift – if the Fed signals more rate hikes or if economic data softens – those bets could unwind fast.
“We’ve seen this before,” Suderman says. “Funds pile in, and when sentiment shifts, the exits get crowded.”
With grain markets already showing signs of strain under non-commercial selling, if inflation expectations start cooling off, he believes we shouldn’t be surprised to see some fast moves lower.
Weather models are hinting at a tricky growing season ahead, telegraphing that La Niña is still in play. That’s a real concern for farmers west of the Mississippi as historically, weak La Niña years bring heat and dryness.
“Six out of ten years with this setup have led to some level of production stress,” Suderman points out. “That’s not a guarantee, but it’s a risk the market can’t ignore.” Subsoil moisture levels are already low, and planting windows could be narrow. If the season gets off to a rough start, watch for supply risks to get priced in fast.
The historical trends are clear: weak La Niña years often bring challenges for farmers, and current models suggest 2025 could be no exception.
Source: StoneX.com, NOAA, NCEI
And it’s not just fundamentals moving the market. Headline risk is here to stay. The Trump administration is back, and trade policy uncertainty is climbing. Recent tariff moves on Mexico and Canada were put on hold, but that doesn’t mean they’re off the table. “Trump likes using tariffs as leverage,” Suderman says. “If trade negotiations stall, those 25% tariffs could come back fast.”
China is another question mark. Relations have cooled, and while a trade agreement is possible, it’s not a given. “Xi Jinping is playing the long game,” says Suderman. “He’s willing to make short-term compromises, but the bigger strategy hasn’t changed.”
Grain markets aren’t on fire, but the risks are stacking up.
This isn’t a market for passive positioning. Traders and producers need to stay flexible, because the next shift could come fast. This article is based on insights shared during Arlan Suderman’s February 2025 Commodity and Economic Outlook webinar. Watch the full episode here .
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---Written by: Andrew Catsimanes
---Expert: Arlan Suderman, StoneX Chief Commodities Economist
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Dry soil is slowing winter wheat planting in Russia and Ukraine, with a third of Ukraine's area in moisture deficit. Lost export revenue and costly diesel add a second risk to the size of the next Black Sea wheat crop.
September 23 – The Nasdaq hit another fresh all-time high yesterday, with the S&P 500 close to doing so as well, though stock futures are pointing to a quietly lower start to today’s session after surging higher to start the week as optimism surrounding this week’s various diplomatic pushes abounds. That optimism continues to be reflected in the VIX, continuing to hang around roughly three-week lows, trading at 14.3 this morning. The dollar is surging higher, adding to the week’s gains, as it nears the 101 mark for the first time in nearly two months. Treasury yields are off to a higher start, with 2-year yields back up to 4.80%, 10-year yields at 4.99%, and 30-year yields just above 5.32%. Crude oil prices are looking to hold their ground after a steady decline since late last week, with nearby WTI up 1.3% to trade near $91 and nearby Brent up 1.4% to trade near $100.65 at the time of writing. The ags are mostly lower to start the day, likely influenced in part by managed money selling off some existing length amid hopes for improvement regarding commodity flow through the Black Sea as part of this week’s diplomacy blitz.
September 22 – The Nasdaq and S&P 500 both closed within 1% of their all-time highs yesterday, with stock futures pointing to a quietly higher open at the time of writing. Diplomacy continues to be the theme of the week, with markets pricing in optimism, particularly in the tech sector following encouraging results from the weekend’s meeting between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. It’s also worth noting that Bessent yesterday announced the two sides would be meeting again to discuss AI safety and communication protocols in Shenzen, China in about two months, another potential sign of cooperation instead of escalation. The VIX continues to reflect optimism regarding this week’s various diplomatic pushes as it hovers near its lowest level since early September, starting the day trading just below the 14.7 mark. The dollar is sitting just above unchanged, near 100.46 at the time of writing, touching a fresh two-month high earlier this morning. Treasury yields are quietly lower to start the day, also helping bring some calm to Wall Street, with 2-year yields at 4.747%, 10-year yields at 4.949%, and 30-year yields at 5.279%. Crude oil prices continue their push lower, with nearby WTI down another 1.8% to trade near $90.30 and nearby Brent down 1.6% to trade near $98.70, both roughly two-week lows. The ags are looking at a turnaround Tuesday to kick off the session with most of the complex in the red at the break, led down by the wheat complex. Improving forecasts for planting conditions for the U.S. winter wheat crop are likely having some influence, but I’d also point out the signs of potential increasing U.S. pressure on Ukraine, which we’ll dive into in more depth below, possibly spooking out some managed money length.
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