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This fact gives us a bit of perspective amid this maelstrom of volatility and cyclothymia in which the markets have been immersed. At the beginning of the year, we predicted that tweets would drive the market in 2025, and once again the entire market is waiting for the 280 characters posted by President Trump on the social network X.
Let's gain some perspective with two charts. In the first, we see the evolution of corn futures on the Chicago market. The red arrow points to Trump's inauguration on January 20.
As we can see, during the first weeks of this administration, the futures market continued with the upward trend that had been developing over the past few months. Suddenly, the start of the trade war and the imposition of tariffs began to generate fear in the market, causing fund liquidations that drove the price down.
Now let's look at the evolution of the EUR/USD exchange rate.
In this second graph, we can see the evolution of the EUR/USD exchange rate. The first red arrow shows the date of the U.S. elections, November 5, 2024. As we can see, the euro continued its downward trend against the dollar. The second red arrow indicates Trump's inauguration, and as we can see, since the publication of several tweets announcing the imposition of tariffs, the dollar has been devaluing significantly. Tariffs have been announced, paused, and re-imposed... on Canadian and Mexican products as well as on European and Chinese products.
To clarify, a bit of macroeconomic theory: the imposition of tariffs in the short term generates a price increase (inflation), and the local industry has to buy more expensive products (due to the cost of the tariff) or less efficient ones (the local ones that until recently were more expensive) to be able to continue with their production. In short, the cost is borne by the final consumer. On the other hand, protectionist policies devalue currencies. The underlying idea is that this long-term devaluation will favor local industrialization and production (in this case, the United States), which will ultimately mitigate the negative effects of tariffs. In the short term, for the moment, we can say that uncertainty and fear have knocked down a good part of last year's gains in indices such as the sp500 or the Nasdaq.
The consequences at the local level have been felt through a drop in the prices of imported products in Spanish ports, due to the impact of both the currency (the fall of the dollar, since it is the international trading currency) and the liquidation of funds in the futures markets. In short, downward prices in corn, wheat, barley, and soybean meal. At the local level, the lack of consumption by feed producers has also contributed to the drop in local prices. Although this is a seasonal trend typical for the end of January and February, this year consumption has suffered to a greater extent. Local buyers have also had the advantage of having offers of both wheat and corn of national origin that are cheaper than the restocking price at the ports. For example, it has been possible to buy corn destined for Lleida at 240 €/t when the price at the port was 238 €/t. In short, everything has favored the downward trend of prices until today.
Still, there remain many unknowns on the horizon. At the time of writing this article, “peace talks” are underway under the auspices of Saudi Arabia to put an end to the war between Russia and Ukraine. All in all, this year has had a busy start and it seems that this will be the trend for the next few months, so we will have to gather our strength to deal with the day-to-day news! As a reminder, today is “only” the 70th day of the year 2025.
