Global Trade Policies and Market Sentiment

The global grain market spent much of the week under intense pressure due to escalating trade tensions and shifting tariff regimes. The most pivotal event came at the start of the week, when U.S. President Trump announced sweeping new tariffs under the “Liberation Day” campaign — a broad protectionist move aimed at reinforcing U.S. trade leverage. These new tariffs include a 10–34% increase on imports from key agricultural trade partners, such as China (34%), Japan (24%), South Korea (25%), and Colombia (10%), while notably excluding Mexico and Canada.

By midweek, China retaliated with its own set of duties, slapping a 34% tariff on all U.S. goods. The retaliation sparked immediate concerns among exporters and traders, particularly in the soybean market where China is the largest importer of U.S. beans. Soybean futures reacted with steep declines midweek and closed the week in the red, as market participants reassessed U.S. competitiveness in Asia. The aggressive tone of the tit-for-tat measures has reignited fears of a broader trade war that could derail global commodity flows and shift long-standing bilateral trade relationships.

These developments come at a time when U.S. farmers are gearing up for spring planting, adding layers of uncertainty to their forward-selling strategies. Exporters also voiced concern over administrative delays and sudden licensing uncertainties, especially regarding shipments to Asian destinations. The tariffs further complicate contract negotiations for new crop sales and may prompt buyers to increasingly turn to South American suppliers, particularly Brazil, for both corn and soybeans.

In parallel, trade flow dynamics shifted noticeably. U.S. soybean shipments to China were reclassified from “unknown” in the USDA’s weekly report, suggesting that Chinese buyers may have been attempting to obscure their sourcing strategy amid the geopolitical backdrop. Meanwhile, Mexico reaffirmed its role as a crucial U.S. trade partner, with soybean import forecasts rising 1% year-on-year, driven by growing domestic crushing and feed demand. Only 8% of Mexico’s soybean consumption is met domestically, underscoring its dependence on North American supply chains.

Russia, another major grain player, concluded the distribution of its 10.6 MMT wheat export quota across 24 companies. This move was closely watched as it could reintroduce greater volume into global wheat channels at a time when EU wheat exports remain subdued. Russia’s internal wheat production estimate was also revised slightly upward to 79.8 MMT, though dry conditions continue to threaten spring wheat yields.

Elsewhere, Brazil was in discussions to finalize a new agreement with China for the export of corn-based dried distillers grains (DDG). This development is seen as a strategic diversification of Brazil’s export portfolio and could potentially open lucrative opportunities for the Brazilian corn and ethanol sectors, directly challenging U.S. market share in Asia’s high-protein feed segment.

At a broader level, the market sentiment was clouded not only by the direct impact of tariffs but also by the anticipation of secondary effects — including higher input costs, currency volatility, and shifts in trade routes. Traders braced for potential disruptions in vessel traffic and port congestion in key exporting regions, as exporters scrambled to redirect supply chains. The U.S. dollar’s continued strength relative to other major currencies, particularly the euro and Brazilian real, also weighed on competitiveness for U.S. origin grain, especially wheat.

The culmination of all these geopolitical shifts fueled high levels of futures market volatility, widened basis spreads, and prompted fund managers to reassess their exposure to agricultural commodities. Managed money positions shifted slightly bearish toward soybeans and neutral to defensive on corn and wheat, reflecting the cautious stance adopted by speculative traders amid ongoing uncertainty.

In summary, this past week marked one of the most geopolitically volatile periods in recent months for global grain markets. The intersection of policy risk, trade retaliation, and realignment of export flows will continue to dominate sentiment in the near term, with major consequences for global supply chains, farmer incomes, and pricing trends well into the second quarter.

Weather and Production Outlook

Weather developments played a secondary but still significant role in shaping market direction this week. North America was hit with heavy rainfall, particularly across the Delta, Midwest, and Southern Plains. While moisture helped ease drought in some areas, it raised the risk of severe flooding elsewhere, potentially delaying early spring planting and damaging fields.

Argentina’s Pampas region experienced continued dry weather, which supported corn harvesting efforts but introduced early frost concerns that could threaten yields. The soybean harvest there was delayed due to earlier rains, although the overall crop outlook remained stable at 48.6 MMT. In Brazil, weather was mixed — while conditions supported steady soybean harvest progress (with March exports reaching 16.09 MMT), seed piracy remained a major concern, with 11% of the soybean area reportedly planted using pirated seeds.

In India, the USDA projects a record wheat crop of 115 MMT in 2025/26 due to increased acreage and optimal conditions. Despite this, export bans are expected to remain in place to safeguard domestic supply and tame inflation. Russia, meanwhile, revised its 2025 wheat production estimate slightly up to 79.8 MMT, distributing its remaining 10.6 MMT export quota across 24 companies, led by Grain Gates.

Export Trends and USDA Reports

Despite political headwinds, export data during the week was relatively positive, offering brief moments of support for prices. The USDA’s weekly export sales report (for the week ending March 27) revealed that U.S. corn sales totaled 1.173 MMT, a 12.9% weekly increase and 23.8% higher than the same period last year. Soybeans posted 410,172 MT in sales, with 285,900 MT purchased by China—mostly reclassified from unknown destinations. Wheat exceeded expectations with 339,986 MT in sales, led by demand from Ecuador and Japan.

However, U.S. Census trade data showed a steeper decline in soybean exports, down 41.17% month-over-month in February and at their lowest level for February since 2020. Soybean meal and oil exports also disappointed, declining sharply and highlighting weakening demand in the oilseed segment.

May Futures Market Performance

Wheat futures showed modest losses over the week. May 2025 Chicago SRW Wheat opened the week at $5.28½ and closed Friday at $5.36 per bushel. Despite midweek resilience, the contract faced pressure from French milling wheat weakness, falling EU exports (down 36% YoY), and tariffs limiting U.S. competitiveness. Kansas City HRW wheat posted slight daily gains through the week but was generally rangebound, while Minneapolis spring wheat remained under mild selling pressure.

Corn futures experienced more muted movement, opening the week at $4.45 and closing Friday at $4.57½ per bushel. Bullish export data and ethanol production provided temporary support midweek. February corn exports hit 6.03 MMT, the third-highest for that month on record. Ethanol production increased to 1.063 million bpd, while inventories declined to 26.612 million barrels. Despite early-week losses tied to trade fears, the corn market showed relative strength by week's end.

Soybeans were the hardest hit over the week. May 2025 Soybeans opened at $10.13¼ and closed Friday at $10.11½ per bushel, after plunging on tariff-related news. Friday alone saw an intraday drop of 22 to 25 cents. USDA’s sales data offered modest relief, but low meal and oil sales, coupled with the worst February soybean export figure since 2020 (3.07 MMT), deepened the bearish tone. Brazil’s production estimate was slightly revised to 167.5 MMT, and while March exports were strong, global soy markets remain under strain.

Vegetable Oils and Palm Oil Markets

Palm oil saw considerable price volatility during the week. Malaysian and Indonesian production estimates were trimmed due to Ramadan holidays and poor weather, but weak global demand pulled prices down 3.56% overnight to 4,329 ringgit/ton by Friday. Ongoing logistical constraints and high export levies remain in place, offering partial price support.

India's edible oil imports showed mixed trends: palm oil imports rose 13.2% month-over-month to 423,000 tons, but remained below seasonal norms due to pricing. Soyoil imports jumped 24% to 352,000 tons, while sunflower oil imports fell 15.5%. Total edible oil imports grew 9.3% on the month to 968,000 tons.

Outlook for the Coming Week

With trade tensions remaining at the forefront and tariff implementation dates looming, global grain markets are expected to remain volatile. Market participants will closely watch for retaliatory moves, updates on North American planting progress, and weather developments in Brazil and Argentina. In the absence of fresh bullish news, the tone for corn and soybeans could remain heavy, while wheat will likely continue struggling against weak export competitiveness and a strong U.S. dollar.

The week ahead will also bring new USDA reports and further clarity on export commitments, offering opportunities for corrections or confirmations of current market trends.