Corn prices have moved up slowly in recent months, but there is a warning, in a world of trade turbulence, that volatility remains a risk, especially as the market is affected by the international trade policy environment.

The U.S. Grains Council in its Market Perspectives for Dec. 20 noted: “Cash corn prices in the U.S. are trending higher amid strong export demand and quiet farmer selling. Futures have been unable to sustain a significant rally since November’s G-20 meetings, but cash basis levels have strengthened substantially.”

The Council reported a 2.5% fall in March corn futures during the previous week “as bears have been aggressive sellers on rallies.”

“Fundamental news has been somewhat light, as is typical for this time of year, leaving the market to lean more heavily on technical indicators for direction,” the UGC said. “Still, some demand-side fundamentals remain supportive for the contract going forward.”

A week earlier, the USGC described the December World Agricultural Supply and Demand Estimates report as “expectedly uneventful with modest additions to world ending stocks not exerting much influence on the corn market.”

Cash prices at that time were up by 13% in comparison with the same date a year earlier.

“Without strong U.S. exports or a supply shock somewhere in the world, it seems March corn futures will continue their sideways trend, slowing grinding higher,” the Council’s note concluded.

Rabobank, in a report called “Outlook 2019: Trade War Turbulence, With Softs Landing,” said CBOT corn prices remained stubbornly low throughout 2018, despite tightening inventories across both the United States and globally, making it “the second consecutive year of tightening since record 2016-17 world stocks.”

“Acres fell out of favor in 2018 U.S. summer plantings, while Brazilian 2017-18 safrinha faced a challenging drought after late plantings,” Rabobank said. “Volatility has heightened on CBOT corn in the past 12 months … amid record demand, emerging global trade tensions, and record U.S. yields.

“This volatility sets a precedent for the 2018-19 season, making risk management increasingly vital. Arguably the largest single factor across the agri-commodity spectrum is Chinese tariffs on U.S. imports, including corn and soybeans, which are anticipated to remain in the medium term. This factor alone drives distortions into the global agri-markets, including corn prices, which are expected to be felt more dramatically in 2019-20.”

In its Grain Market Report at the end of November, the International Grains Council (IGC) reported a month-on-month fall in U.S. corn futures of 2%.

“Traders have trimmed their speculative net long position in recent weeks, as harvest data confirmed prospects for ample supplies,” the IGC said. “Stiffer global export competition also weighed on sentiment.”

For barley, there had been a 4% fall in a month in the IGC’s barley sub-index, led by a sharp fall in Australia.

“Nevertheless, amid tight global supplies and solid export demand, the sub-index remains much higher year on year, by some 24%,” the IGC said. “Despite some support from poor production prospects, export quotations in Australia weakened sharply following China’s announcement that it is to launch an anti-dumping probe into barley imports from that origin.”

Sorghum prices in the United States were affected by weakness in corn, while in Australia the market in the crop was pressured by favorable weather for planting and weakness in wheat and barley.

The IGC said U.S. oats nearby futures showed little change, in mostly technical activity. Canadian export quotations were softer, although still 15% up on the year, “underpinned by reduced supply and solid demand, including from non-traditional buyers owing to limited availabilities at other origins.”

In its Feed Outlook report, the USDA’s Economic Research Service highlighted one change in the numbers on corn in the December WASDE report. The USDA raised its estimate for Ukraine’s 2018-19 corn crop to 35 million tonnes from a previous figure of 33.5 million and at the same time raised its figure for Ukraine’s exports to 28 million tonnes from 27 million.

The ERS report explained that this figure put Ukraine ahead of Brazil and Argentina, making it the second largest exporter of corn after the United States.

“Since 2010, Ukraine has more than tripled its corn production, as well as increased exports almost sixfold,” the ERS said. “Ukrainian corn is very price competitive, which facilitates expansion of export markets.”