Grain Market Outlook – January 23rd, 2025
By John Simpson
In my opinion, the grain markets continue to display solid performance across the board, with various futures contracts showing strength despite some mixed signals in certain areas. Here’s a closer look at the key markets I’ve been watching closely.
Corn:
In my opinion, the March corn futures market has shown strength and is approaching a key resistance level at $4.93. If the market breaks through this level, my next target for corn is $5.10. Demand remains strong, particularly from the ethanol and livestock sectors, and weather conditions seem favorable heading into spring. On the downside, I see support at $4.60. This area should act as a cushion if the market experiences a pullback, but overall, I remain optimistic about corn’s prospects.
Soybeans:
I’ve been bullish on the soybean market, and I recommended being long at $993.00 as of January 2, 2025. Since then, soybeans have continued to show strength, surpassing my previous levels of $10.55 and $10.63. Now that these levels have been taken out, I believe the next move could bring soybeans to my $11.00 target in the near term. The global demand for soybeans, especially from China, combined with tight supplies and ongoing biofuel requirements, has created a strong foundation for higher prices. As long as demand remains robust and weather conditions stay stable, I expect soybeans to continue their upward trajectory, with resistance at $11.00. I see solid support around the $10.50–$10.60 range, and if the market holds above these levels, we could see further upside potential.
Soybean Oil:
In my opinion, soybean oil remains one of the stronger performers within the grain complex. Tightening supplies, coupled with growing biofuel demand, have supported soybean oil prices. I continue to believe that soybean oil could push toward $50.00, especially as global biofuel policies continue to drive demand. This market has strong upside potential as supply concerns remain a key factor.
Soybean Meal:
My outlook on soybean meal has changed recently. Initially, I recommended a short position in soybean meal, but once the market broke through the $303 level, I advised reversing the position and placing a buy stop at $303. Since that reversal, the market has surged, now trading at $318 in the March futures.
In my opinion, this strong upward move is driven by continued robust demand for livestock feed, tight global soybean supplies, and increasing export activity. With the market now at $318, my price target for soybean meal is $335. I believe there’s still room for further upside, provided the market continues to show strength. Support for soybean meal now looks to be at $303, which is the level where the reversal occurred. I remain optimistic about the continued upward momentum toward my $335 target.
Wheat:
My outlook for wheat has also changed recently. The March wheat futures market has turned bullish as of January 22, 2025, when the market broke above the $4.43 level. This shift in sentiment marks a potential reversal in the longer-term trend for wheat. The recent price action suggests a change in the broader fundamentals, supported by tighter global wheat supplies and ongoing weather concerns in key production areas, such as the U.S. and Europe.
Given the recent move above $4.43, I now believe wheat could continue its upward trajectory. My near-term target for wheat is $5.10, and if the bullish trend holds, I see potential for further gains beyond this level, depending on weather conditions and supply-demand dynamics.
As the market builds strength, I would expect support to be established around the $4.43 level, which is now key for any future pullbacks or corrections. The trend has shifted, and I’m now more optimistic about wheat’s outlook in the medium to long term, especially as global production concerns persist.
External Factors:
The softening of the U.S. dollar has played a role in supporting agricultural commodities, including grains. In my opinion, a weaker dollar makes U.S. exports more attractive, further boosting demand for corn, soybeans, and other grains. Additionally, investor sentiment in the broader financial markets, particularly the stock market, remains strong. This has likely spilled over into the commodities market, providing additional support for grains. As long as the global economy continues to recover and inflation concerns persist, I expect agricultural commodities to remain attractive to investors.
Conclusion:
In my opinion, the grain markets are positioned for continued strength, particularly in corn and soybeans. With solid support from global demand, favorable weather conditions, and a softer U.S. dollar, I believe we will see further upside potential in these markets. Soybeans, in particular, have shown impressive strength, surpassing my initial targets, and I expect them to continue rising. Soybean meal, after its breakout, has shifted to a bullish trend, and I’m closely monitoring the market for any further developments. Wheat has recently turned bullish, and I am optimistic about its potential as the market builds strength.
Overall, the grain markets are in a favorable position heading into the remainder of the winter and early spring. As always, I will be watching for any changes in supply and demand fundamentals, weather developments, and broader economic conditions that could impact these markets.
Sources:
Market data from CME Group, USDA grain report, and general market analysis.
As always, this is just my opinion and should not be considered as financial advice. Market conditions can change rapidly, and it’s essential to stay informed and manage risk accordingly.
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John S. Simpson Jr. Senior Market Strategist Walsh Trading
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