The CBOT grain market is under pressure as funds significantly increase short positions.

Market Overview: Escalating Trade Uncertainty Pressures CBOT Grain Prices

On Wednesday (March 5), the CBOT grain market showed a downward trend under the dual influence of changing global supply and demand dynamics and trade policy uncertainties. Recently, commodity funds have continued to increase short positions in corn, soybeans, wheat, soybean meal, and soybean oil, indicating market pessimism about short-term price trends. As a result, the prices of major agricultural futures were generally under pressure, with market sentiment leaning towards caution.

Corn Market: Surge in Short Positions, Prices Continue to Fall

CBOT corn futures prices have recently fallen sharply, with the May contract hitting a low point not seen since 2025, at $4.42 1/2 per bushel on March 4th, before slightly rebounding to close at $4.51 1/2 per bushel. Data shows that in the past 30 trading days, funds have increased net short positions by 59,000 contracts, with 77,000 new short contracts in the last five days, highlighting rising bearish sentiment towards corn prices.

Fundamentally, domestic corn demand in the United States remains weak, with farmers reluctant to sell, while improved production expectations in South America continue to add supply pressure to the market. Additionally, trade tensions sparked by the Trump administration's tariff policies have raised concerns about potential restraint on U.S. corn exports. Although the USDA's previous supply and demand report indicated tight inventories, trade policy uncertainties have undermined this positive factor.

In the short term, corn prices may continue to be pressured unless there is an easing in trade tensions or increased weather risks in South America, which could offer a rebound opportunity for the market.

Soybean Market: Breaks Key Support, Weak Demand Weighs

On March 4th, CBOT soybean futures for the May contract broke below the crucial psychological threshold of $10 per bushel, closing at $9.99 per bushel. Commodity funds have increased net short positions by 24,500 contracts over the past 30 trading days, with an additional 35,000 contracts in the last five days, reflecting heightened bearish sentiment towards soybean prices.

Trade policy uncertainty is the primary bearish factor for the soybean market. The Trump administration's tariff policies have led to expectations that global demand for soybeans will turn more towards South America, especially Brazil, further exacerbating market oversupply pressures due to Brazil's bumper harvest expectations. While domestic soybean crushing demand in the United States remains solid, it is insufficient to offset the drag from weak exports.

In terms of the basis, there has been a slight weakening in the U.S. Gulf soybean spot basis recently, indicating continued low export demand. In the short term, soybean prices may oscillate around $10 per bushel, but if trade tensions worsen or South American supply grows more than expected, prices could continue to dip.

Wheat Market: Hits New Low, Ample Global Supply Limits Rebound

The wheat market is also facing tremendous pressure, with the May contract of CBOT wheat futures dropping to a historical low of $5.30 per bushel on March 4th, closing at $5.36 3/4 per bushel. Over the past 30 trading days, funds have increased net short positions by 11,000 contracts, with 27,500 new positions in the last five days, showing a generally pessimistic market attitude towards wheat prices.

Despite recent improvements in U.S. wheat exports, such as South Korea purchasing 130,000 tons of white wheat, ample global supply and uncertainty in trade policies continue to suppress prices. In addition, the stable domestic wheat basis in the U.S. indicates that farmers are still inclined to hold onto their crops, while the improvement in market demand has not yet driven a price rebound.

In the short term, wheat prices may continue to fluctuate at low levels, but if the Russia-Ukraine situation deteriorates or global demand significantly warms up, the market may see a phase of rebound.

Soybean Meal Market: Ample South American Supply, Price Pressure Remains

On March 4th, CBOT soybean meal futures prices dropped by $4.7 per short ton, with the May contract closing at $293.3 per short ton. Over the past 30 trading days, funds have increased net short positions by 15,000 contracts, with an additional 19,000 contracts in the last five days, indicating growing pessimistic expectations towards soybean meal prices.

The main bearish factor comes from supply pressure in South America. Enhanced expectations for Brazil's soybean bumper harvest have boosted market confidence in South American soybean meal supply, thereby reducing demand for U.S. soybean meal. Meanwhile, the stable domestic soybean meal basis in the U.S. reflects relatively stable crushing demand, but has not reversed the overall market's bearish sentiment.

In the short term, soybean meal prices may continue to be influenced by supply pressures, but if abnormal weather or a rebound in global demand occurs in South America, the market might see a rebound opportunity.

Soybean Oil Market: Weak Demand, Price Pressured by Tariff Policies

On March 4th, CBOT soybean oil futures for the May contract closed at 36.50 cents per pound, with a significant decline during the day. Over the past 30 trading days, funds have increased net short positions by 9,500 contracts, with an additional 23,500 contracts in the last five days, reflecting strong bearish sentiment towards soybean oil prices.

Similar to other agricultural products, trade policy uncertainties are the main bearish factor in the soybean oil market. Tariff policies have led to concerns about hindered U.S. soybean oil exports, while ample South American soybean oil supply has added further pressure on prices. Moreover, the slight weakening in the U.S. domestic soybean oil basis reflects the reality of poor export demand.

In the short term, soybean oil prices may remain under low-level fluctuations, but if trade tensions ease or demand for biofuels grows, the market may see a corrective rebound.

Market Outlook: Short-term Pressure Remains, Policy and Weather Are Key Variables

Overall, the CBOT grain market is currently facing tri-fold pressure from ample global supply, increased fund short positions, and trade policy uncertainties. In the short term, market sentiment remains cautious, with prices of corn, soybeans, wheat, soybean meal, and soybean oil likely to remain under pressure.

However, the market should pay attention to the latest developments in trade negotiations, as any news regarding tariff policy adjustments could have a direct impact on market sentiment. Additionally, weather conditions in South America remain a key variable—if abnormal climate conditions reduce supply, it could provide market support. In the coming weeks, investors should closely monitor policy trends, global demand changes, and adjustments in fund positions to gauge potential turning points in market trends.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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