Geopolitical Developments Impact Trade Outlook

Following a visit from U.S. Secretary of State Marco Rubio, Panama has decided not to renew the Silk Road Deal with China. The Panama Canal plays a critical role in global trade, reducing transit times by approximately 27 days when fully operational. In addition, Panama has pledged free passage for U.S. warships, a move seen as a direct challenge to China's influence in the region.

Meanwhile, tensions between the U.S. and China continue to escalate beyond agricultural tariffs. China has launched an anti-monopoly investigation into Google and imposed export controls on critical metals, further complicating trade relations.

Macroeconomic Snapshot: U.S. Labor Market Shifts

The latest JOLTS job report revealed a weaker-than-expected labor market, with 400,000 fewer job openings than anticipated. The biggest declines were observed in:

• Professional & Business Services (-225K)
• Private Education & Health Services (-194K)
• Financial Activities (-166K)

While layoffs fell slightly to 1.7 million, new hires rose to 5.46 million, and voluntary resignations increased to 3.2 million. The U.S. unemployment rate is projected to remain at 4.1% in Friday’s upcoming report, though analysts are watching for potential impacts from the Los Angeles fire crisis and recent public-sector job reductions.

Agricultural Weather Outlook: Mixed Conditions

• Winter Wheat Conditions: Kansas saw an improvement in crop ratings, rising from 47% to 50% good-to-excellent, but conditions deteriorated in Oklahoma, Nebraska, and Colorado. Nebraska’s topsoil moisture levels declined sharply, with the percentage rated “very short” jumping from 58% in January to 78% today.
• Argentina: Strong storms are forecasted for Buenos Aires and southern Cordoba, bringing 1 to 4 inches of rainfall. While beneficial in terms of drought relief, high winds and potential flooding could damage late-season crops.
• Brazil: Dry weather is expected in key soybean and second-corn planting regions, allowing harvest activities to progress. However, analysts have reduced Brazil’s total corn production estimate from 127 MMT to around 123 MMT due to earlier weather challenges.

Markets are currently responding to a mix of weather, export demand, and geopolitical events. While wheat and soybeans saw strength on Tuesday, corn held firm amid steady export interest. Key upcoming events include the U.S.-China trade discussions, Friday’s U.S. unemployment report, and further clarity on South American crop conditions. Traders should remain alert to shifting fundamentals as volatility remains high in global markets.

Wheat Market Rises as Global Demand Holds Firm

Wheat futures closed Tuesday with notable gains across all three major U.S. exchanges. Chicago SRW wheat rose by 10 to 11 cents, while KC HRW futures added 6 to 9 cents in the front-month contracts. MPLS spring wheat also finished higher, gaining 5 to 6 cents.

Weather conditions remain a key factor for wheat markets. The U.S. Plains are expected to see limited precipitation over the next week, whereas Soft Red Winter (SRW) wheat regions could receive 1-2 inches of rainfall.

On the export front, Japan has issued a tender for 96,725 metric tons (MT) of wheat, including 62,545 MT sourced from the U.S. and the remainder from Canada. South Korea has also announced a tender for 50,000 MT of U.S. wheat, with offers due by Wednesday.

In the broader global market, SovEcon revised its Russian wheat export estimate for the 2025/26 season to 38.3 million metric tons (MMT), a 1.9 MMT increase from the prior estimate. Meanwhile, EU wheat exports for the marketing year (as of February 2) stand at 12.5 MMT, significantly lagging last year's 19.76 MMT.

Tuesday’s Closing Prices:
March 2025 CBOT Wheat: $5.77/bushel, up 10 1/4 cents

Soybeans Rally Amid Chinese Tariff Exemptions

Soybean futures saw technical buying on Tuesday, gaining 10 to 17 cents. Traders reacted positively to the fact that soybeans were omitted from China’s latest list of retaliatory tariffs.

Soymeal prices also surged, with futures climbing $10.30 per ton, while soyoil faced some pressure, closing 75 points lower. Dry conditions expected in key Argentine growing regions helped support meal prices, as the country enters a critical growth stage for its soybean crop.

Meanwhile, geopolitical tensions remain in focus. On Saturday, President Trump signed an executive order implementing a 10% tariff on Chinese imports, effective Tuesday. While the U.S. postponed tariff actions against Canada and Mexico, China responded overnight with retaliatory tariffs of 15% on coal and LNG, and 10% on crude oil, agricultural machinery, and automobiles. President Trump and Chinese President Xi are expected to meet this week, with discussions likely to influence trade policy for the coming months.

Tuesday’s Closing Prices:
March 2025 Soybeans: $10.75/bushel, up 16 3/4 cents

Corn Market Stabilizes as Export Demand Holds

The corn market moved higher on Tuesday, adding 2 to 6 cents as traders repositioned amid easing trade tensions. With tariffs on Mexico and Canada delayed for another month, risk appetite among long traders returned. National average cash corn prices also strengthened, rising 9 cents to $4.54 1/4 per bushel.

Export demand remains supportive. The USDA reported a private export sale of 132,000 MT of corn to South Korea on Tuesday morning. However, traders are awaiting the latest ethanol production data from the Energy Information Administration (EIA), set for release Wednesday. Recent reports have shown declining production levels as inventory builds.

Tuesday’s Closing Prices:
March 2025 Corn: $4.94 1/2/bushel, up 5 3/4 cents