SINGAPORE: Chicago corn futures slid almost 2% on Monday, dropping to their lowest in three weeks, while soybeans and wheat lost ground after U.S. President Donald Trump imposed tariffs on Canada, Mexico and China, triggering fears of a broad trade war.
The most active corn contract on the Chicago Board of Trade (CBOT) fell 1.8% to $4.73-1/2 a bushel as of 0338 GMT, the lowest since Jan. 13. Wheat lost 1.1% to $5.53-1/4 a bushel and soybeans shed 0.9% to 10.32-1/4 a bushel.
Asian stock markets slumped and U.S. equity futures pointed sharply lower after Trump, on Saturday, ordered tariffs of 25% on Mexican and most Canadian imports and 10% on goods from China, starting on Tuesday.
“We are likely to see retaliatory tariffs on U.S. agriculture products which could distort trade flows,” said Dennis Voznesenski, an analyst at Commonwealth Bank in Sydney.
“Still, questions remain regarding how long the tariffs will remain for and if exemptions for certain products will come on a case-by-case basis.”
Canadian Prime Minister Justin Trudeau said Canada would respond with tariffs and Mexican President Claudia Sheinbaum said she was instructing her economy minister to implement retaliatory tariffs. China’s Commerce Ministry did not specify its planned countermeasures.
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While Mexico is the biggest importer of U.S. corn, China is the No. 1 market for U.S. soybeans. Mexico, Canada and China import several agricultural goods from the U.S., including wheat.
India is set to see above-average temperatures in February after a warmer-than-normal January, the weather office said, posing a risk to key winter-sown crops such as wheat, rapeseed and chickpeas.
Large speculators raised their net long position in CBOT corn futures in the week to Jan. 28, regulatory data showed.
The Commodity Futures Trading Commission’s weekly commitments of traders report showed that non-commercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and raised net long position in soybeans.
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