New tariffs and counter tariffs put pressure on the markets last week as traders continue to be on edge wondering what’s next. May futures ended the week 11 lower while July and December futures finished 8 and 3 lower respectively. The funds ended the week long 116,412 corn contracts and short 3,922 soybean contracts.

President Trump put a 25% tariff on EU steel and aluminum and the EU came back hours later with their own tariffs.  The EU put tariffs on 28 billion dollars’ worth of US goods including soybeans, grain, beef and poultry.  The EU believes they can source imported food from other locations.  Europe is reliant on imports to boost domestic supplies. It was the second largest export destination for US soybeans in 2024, buying some $2.4 billion worth, according to data from the US Department of Agriculture.

Relations between Canada and the US were back and forth last week. The US said it is willing to increase tariffs on steel and aluminum to 50% if Canada is going to tax energy into the Northwest US at 25%.

Traders were hoping the March WASDE report was going to be the bullish headline in the markets last week, but the US numbers were largely unchanged. Global ending carryout levels were lowered on corn and beans and raised a decent amount on wheat.

USDA 2024/25 US Carryout (Billion Bushels)

USDA 2024/25 World Carryout (Million Tons)

USDA 2024/25 South American Production (Million Tons)

South American weather continues to be favorable resulting in improved crop conditions for both corn and soybeans. The USDA left production unchanged in both corn and soybeans this month, but overall production for corn is up 6 million tons for corn and more than 16 million tons for soybeans.

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The combination of more acres in corn and wheat, first notice day and the threat of tariffs starting on March 4^th gave traders plenty of reason to exit their long positions last week. With a lack of buyers and motivated sellers March corn futures lost 38 cents during the week while May and July closed 35 and 34 cents lower respectively. The funds ended the week long 255,843 corn and are now short 3,286 soybean contracts.

Brazil’s first crop is 35% harvested which is near the five-year average. The second crop plantings have accelerated the last two weeks coming in at 67% complete which puts the progress equal to the 5-year average. Concerns about the crop being planted outside of the prime window have diminished with this recent pace. Brazil’s forecast continues to have most of the grain belt under a light accumulation over the next 10 days.

Trump put Mexico and Canada on notice regarding tariffs restarting March 4th and now has traders awaiting their response. President Trump, after discussing pushing the tariff pause off to April 2nd, stated that he will be starting the 25% tariffs against Canada and Mexico on the 4th of March. Trump stated the decision to do so was made because of a lack of action against drug trafficking by Mexico and Canada. Trump is also doubling China’s tariffs on March 4th to 20%. Trump’s Administration is also starting to apply special tariffs to companies it feels China is using as transship fronts to avoid tariffs. One company singled out is owned by China and ships aluminum out of South Korea. China has yet to respond to the declaration.

On Thursday the USDA Ag Outlook Forum released their balance sheet for corn, beans and wheat.  The USDA used 94 million acres of corn, 84 million acres of beans and 47 million acres of wheat.  Total acres of 225 million is only behind the 227.8 used back in 2023.  Carryout in corn moves close to 2 billion and beans sit at 320 million.  The USDA is using record yields of 181 for corn, 52.5 in beans and less than a record 50.1 wheat.  Keep in mind that these numbers are not from a survey but are a starting point that traders will use in the markets. The March plantings survey is taking place now that will be released March 31^st and will carry more weight than the outlook forum.

With first notice day behind us, it will be interesting to see if the funds return to the market this week or continue to take money out of the market. As I stated last week, this market has been demand driven since late last year and demand markets need to be fed, or they run out of steam. Favorable weather in South America has helped push the markets lower, but the US continues to be competitive in the world market. Farmer sales of corn have dried up the last couple weeks, which is resulting in stronger basis levels across the country. Look for basis to remain strong heading into spring planting as producers focus shifts to field work and less on marketing.

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After selling off early in the week with the implementation of tariffs, the markets rebounded to end the week unchanged on news the tariffs were being delayed. May, July and December futures all ended the week unchanged following the funds buying more than 50,000 corn contracts on Thursday and Friday. The funds net long position did drop below 200,000 contracts early in the week but ended the week long 251,844 contracts of corn and long 475 soybean contracts.

On Thursday President Trump suspended the 25% tariffs he had imposed earlier in the week on most goods from Canada and Mexico, the latest twist in a fluctuating trade policy that has whipsawed markets and fanned worries about inflation and growth. The exemptions for the two largest U.S. trading partners, expire on April 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all U.S. trading partners.

In response, Canada has delayed a planned second wave of retaliatory tariffs on $125 billion of US products until April 2. Mexican President Claudia Sheinbaum has not implemented any reciprocal tariffs on the US as she continues to negotiate with the US.

20% tariffs do remain in place for goods from China as the two countries have yet to negotiate following Tuesday’s implementation. China implemented a 15% tariff on Corn and Wheat from the US and a 10% tariff on soybeans from the US.

Crop conditions in South America continue to improve with recent rainfalls. The first 5 days of March have already brought half the months average rainfall and temperatures are projected to stay mild through mid-month. This is a significant turnaround from the dry January and early February they experienced. Planting progress of Brazil’s second crop is ahead of the five-year average setting the stage for a potentially large crop.

These tariffs and other items are all fluid and there are no publicly announced thresholds that countries like China, Mexico, or Canada can go by to understand when the tariffs will be lifted or under what conditions. We have to assume that is what is being discussed when the leaders are talking with each other. It appears that the US has plenty of wiggle room and is willing to negotiate. The toughest part of the on and off talk is the inability of the market to have any solid direction. We have been in the “Risk Off” mode more recently and could stay that way until these tariffs are clear or in place.

Tariffs or not, seasonally the markets trade lower in early March before bouncing heading into April and the US planting season. The graph below illustrates where July futures have traded over the last 10 years. May, September and December graphs would all show similar patterns.

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Corn found strength early last week, reaching new yearly highs before trading lower at the end of the week on bearish weather and tariff news. March futures failed to reach the $5.00 resistance level again this past week, setting the stage for another run at it this week. March futures ended 6 cents higher while May and July both closed 8 cents higher for the week. The funds are long 334,531 corn contracts and 62,756 soybean contracts.

Reports on Friday that President Trump was planning to pursue reciprocal tariffs on “many countries” this week sent the markets lower. The story was second hand from sources that said the President made the statement in meetings with Republican lawmakers on Thursday. While they are merely rumors for now, traders were hesitant to enter the weekend without taking some profits.

The Argentina Rosario grains exchange reported late last week that it is confident the recent rains will save the crop from the recent heat.  Northern and central Argentina will be hot and dry through early this week, increasing crop stress, but the second week of the forecast still looks wet. Brazil saw rains in central crop areas over the weekend and coverage looks strong for the next several days, with the heaviest amounts falling in the north before shifting into southern regions in the 6–10-day time frame.

The USDA will release their February S&D numbers on Tuesday the 11^th @ 11:00 AM. Most are looking fora downward revision to 2024-25 U.S. corn stocks while increasing soybeans and leaving wheat unchanged. Argentina corn and soybean production could be revised lower by 2 million tons each.

US Ending Stocks (Million Bushel)

Brazil Production (Million Metric Tons)

Argentina Production (Million Metric Tons)

World Ending Stocks (Million Metric Ton)

USDA’s February S&D report tends to be a non-event compared to other monthly updates, at least for the U.S. balance sheets, but with maturing crop and harvest underway across South America the USDA may address Brazil and Argentina soybean and corn production. We could see traders focus & pricing moved by the South American numbers on Tuesday unless the USDA increases U.S. corn and soybean exports.

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After eight strait weeks of higher trade the markets finally relaxed and closed lower this past week thanks to fund movement at month end and imposing tariff talk. March futures closed 5 cents lower on the week while May and July closed 4 and 1 cent lower respectively. The funds ended the week long 354,789 corn contracts and 72,035 soybean contracts.

On Saturday President Trump announced that he would hit both Mexico and Canada with 25% tariffs while adding an additional 10% tariff on China. How the whole thing plays out is going to be critical not just for Agriculture but the economy as a whole and Trump is not taking on small targets this time as Canada and Mexico are the top two trade partners of the US. Mexico, Canada and China account for 50% of the US Agriculture export destinations. President Trump was also quoted as saying the tariffs could increase to as much as 50% if Mexico and Canada decided to retaliate. As of this writing, Canada has levied tariffs on imported U.S. fruit and alcohol and Mexico was planning on retaliating but had not named specifics.

As expected, the corn market saw pressure from the expectations of Saturdays announcement resulting in corn trading lower to end the week. Day one of the tariffs will be Tuesday, February 4^th. The trade will be waiting to see if there are material changes in the global balance sheets or a shift in trade flows from the tariffs before moving too much. For now, expect choppy markets over the short term amid headlines of trade.

Weather continues to play a big role in South American corn/soy production. Weather models are unchanged in their 10-day outlooks, while the 11-15 period is wetter for Argentina. There will be a point when the Trade loses patience in what could happen and will start trading what has happened.  For now, the chance of rain and a big crop is still alive.

Tariff concerns will hang over the grain markets until the trade has a handle on U.S. policy with Mexico, Canada, and China. Trade flows may shift, but I do not think this will be long-lasting, so don’t discount the trade interpreting this as business as usual. There are a lot of unknowns going forward, but I think the trade is better prepared than the first time around.

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