Wheat futures opened Monday with a strong rally, reversing some of last week's losses. The May 25 CBOT Wheat contract started the day at $5.69 per bushel, up 12 ½ cents from Friday’s close. Traders are closely monitoring continued dryness across the U.S. Southern Plains and the Black Sea region, which could limit global wheat production. FranceAgriMer maintained its soft wheat crop rating at 74% good-to-excellent, while Strategie Grains slightly lowered its EU wheat production estimate to 127.5 million metric tons (MT) due to dry conditions in Eastern Europe. The market is also digesting speculative positioning data, which showed managed funds reducing their net short positions by 4,987 contracts last week, signaling a potential shift in sentiment.

Corn futures also opened higher on Monday, with the May 25 CBOT Corn contract at $4.63 ½ per bushel, gaining 5 cents. The market is finding support from strong wheat prices, as well as ongoing export sales. The USDA reported private export sales of 218,604 MT of corn to an unknown destination on Friday. Meanwhile, hedge funds cut 73,211 contracts from their net long positions as of March 11, reflecting growing caution amid uncertain demand prospects. In South America, Brazil's second corn crop is now 97% planted, according to AgRural, but dry weather in Goiás, Mato Grosso do Sul, and Paraná could negatively impact yield potential. Analysts are also monitoring logistics constraints as harvest pressure builds.

Soybeans opened Monday with modest gains, following last week’s price action. The May 25 CBOT Soybean contract started at $10.17 per bushel, up 1 cent from Friday’s close. The soybean market remains supported by strong export demand, with China leading purchases and USDA reporting private sales of 20,000 MT of soybean oil last week. Traders are also focused on production adjustments, as Safras & Mercado revised Brazil’s soybean crop estimate down to 172.45 million MT, a decrease of 2.43 million MT from prior forecasts. Argentina’s crop outlook, however, has improved, with 32% of the crop now rated excellent, up from 24% last week. Traders are also awaiting NOPA’s February crush data, which is expected to show 185.229 million bushels crushed, marking a 7.6% decline from January.

Key Developments Impacting Global Grain Markets

President Donald Trump reaffirmed his commitment to imposing broad reciprocal and sector-specific tariffs starting April 2. The policy shift includes tariffs on steel, aluminum, and automobiles, with agricultural goods also facing potential new levies. The move is expected to escalate trade tensions, particularly with China and the European Union. China has already responded by halting soybean imports from three major U.S. agricultural entities, shifting further toward Brazilian supplies. Brazilian soybean export premiums have surged 70% this week as Chinese crushers intensify demand.

The European Union announced its intent to impose tariffs on $28.2 billion worth of U.S. goods, including soybeans, corn, and beef, in response to U.S. trade restrictions on European steel and aluminum. European feed industry leaders have raised concerns that higher costs for imported soybeans could disrupt livestock feed supply chains. Analysts warn that increased feed costs may lead to lower European meat production, boosting demand for alternative protein sources such as rapeseed meal and sunflower seed meal.

China's demand for Brazilian corn continues to grow, with Brazilian corn shipments to China surging 84% year-over-year. The shift away from U.S. supplies reflects ongoing geopolitical tensions and China’s efforts to diversify its grain sourcing. Analysts warn that this trend could have long-term consequences for U.S. corn exporters, particularly if the Biden administration enacts new tariffs on Chinese technology.

The wheat market is closely watching dry conditions in southwestern Russia, which are limiting soil moisture availability. Despite some precipitation over the weekend, analysts remain concerned about the impact of drought on wheat yields. Meanwhile, Ukraine continues to face logistical challenges in its grain exports, with ongoing Russian attacks on agricultural infrastructure potentially restricting trade.

In the United States, winter wheat conditions remain mixed. The Southern Plains saw strong winds and wildfires last week, exacerbating dryness, while the Midwest experienced severe storms and blizzard conditions. Additional snow is forecast for the Northern Plains this week, but analysts say more precipitation is needed to alleviate long-term drought concerns.

In South America, rainfall is expected to boost Argentina’s corn and soybean crops, while drier conditions in Paraguay could impact late-season soybean development. Meanwhile, Central-West Brazil is expecting well-timed rains, which should support the second corn crop’s critical growth stages.

The NOPA soybean crush report, set to release today, is expected to show a decline in crushing activity, reflecting weaker soymeal demand and colder weather disruptions. Analysts expect February's soybean crush to total 185.229 million bushels, down 7.6% from January. Soybean oil stocks, however, are projected to have increased to 1.386 billion pounds, an 8.8% rise from January’s levels.

Brazil’s soybean harvest is now 70% complete, well ahead of last year’s 63% pace. Conab revised its national soybean production estimate to 167.37 million tons, while the USDA holds its forecast steady at 169 million tons. However, exports are 30.4% lower than last year, reflecting logistical issues and transportation bottlenecks.

Brazil’s corn stocks remain historically low, with initial 2024/25 season inventories at just 2.04 million tons, down from 7.2 million tons in 2023/24. The tight supply situation has pushed domestic corn prices close to BRL 90 per 60-kilo bag, a level last seen in April 2022. Market participants expect higher domestic demand to continue supporting prices.

Indonesia’s crude and refined palm oil exports surged 62.2% in February, reaching a four-month high following a reduction in export taxes. The move allowed Indonesian palm oil to outcompete Malaysian supplies, driving Malaysia’s exports to a four-year low. Analysts say higher palm oil exports could keep global edible oil prices elevated.

Potash prices have strengthened due to uncertainties over new tariffs, particularly in the United States. Prices at New Orleans (NOLA) rose to $310-$315 per short ton, while Corn Belt prices increased to $345-$360. The fertilizer market remains volatile, with demand surging ahead of the spring planting season.

Market Outlook

As trade tensions escalate and weather conditions remain unpredictable, the global grain markets are expected to see heightened volatility throughout the week. Traders will be closely monitoring U.S.-China trade negotiations, European tariff decisions, and South American crop progress. The upcoming USDA export sales report and the next WASDE report will be critical in shaping price direction in the near term.