Geopolitics and Global Trade Shake Confidence in Key Export Corridors

This week marked a significant escalation in geopolitical tensions that are directly influencing the structure and functionality of global grain supply chains. As the world’s largest grain exporters and importers reassess their trade strategies, logistical capacities, and alliances, the volatility in policy and diplomacy is increasingly intertwined with grain market fundamentals.

A key turning point came with China’s decision to impose severe retaliatory tariffs on Canadian agricultural products. Starting March 20, the Chinese government implemented 100% tariffs on over $1 billion worth of Canadian canola oil, meal cakes, and peas, as well as 25% duties on pork and seafood. These measures came in response to Canada’s recent tariffs on Chinese electric vehicles and steel, and reflect a broader shift in China’s trade posture toward Western democracies. Canada, being the top global supplier of canola to China, is expected to suffer disproportionately, especially since many Canadian farmers have already invested in inputs for spring planting. The disruption to this major oilseed trade route may have knock-on effects on alternative vegetable oil markets, including soybean oil and sunflower oil, as China seeks replacements​.

The United States is also at the center of escalating trade measures. President Donald Trump confirmed that a new wave of tariffs will begin on April 2, combining reciprocal tariffs — designed to mirror other countries’ trade barriers — with sector-specific tariffs targeting automobiles, steel, aluminum, microprocessors, and pharmaceutical products. This dual approach is part of a broader economic nationalism strategy that is straining traditional alliances and redrawing supply lines. The proposed tariffs will also include Canadian goods, although a temporary 30-day exemption was granted to imports that meet USMCA requirements. Importantly, U.S. agricultural exporters fear retaliatory action from trading partners, including China, Mexico, and Canada, especially if grain and oilseed exports become politically targeted​.

One of the most destabilizing proposals is a new tariff regime targeting China-linked shipping vessels. The White House is considering a plan to impose up to $1.5 million in port fees on ships built in China or owned by fleets containing Chinese-manufactured vessels. This could have sweeping consequences. Major exporters, including U.S. coal, grain, and energy traders, warn that these tariffs are already discouraging vessel owners from engaging with U.S. ports. In some sectors, shipping bids are being canceled or withheld, creating immediate uncertainty. Agriculture, which relies heavily on cost-effective, high-volume bulk carriers, is especially vulnerable. If enacted, this tariff structure could slow exports dramatically within 60 days, just as U.S. grain shippers gear up for the seasonal surge​.

China’s position as the world’s largest soybean importer remains a focal point of trade dynamics. In January and February, its imports of U.S. soybeans soared by 84% year-over-year, driven largely by preemptive buying in anticipation of new tariffs under the Trump administration. However, as retaliatory duties on U.S. soybeans have been reinstated, traders expect future shipments to shift back toward Brazil, despite the latter’s harvest delays. China's overall import strategy now appears to be pivoting toward diversifying suppliers while ramping up domestic oilseed output. The USDA’s Beijing attaché now projects China's 2025/26 soybean imports at 106 million metric tons, while local production is expected to decline slightly. A strategic shift in protein consumption — away from pork and toward more feed-efficient poultry and fish — is also moderating demand growth for imported oilseeds​.

In Europe, wheat export dynamics reflect both logistical and geopolitical stress. EU soft wheat exports for the 2024/25 season fell by 35% year-on-year through mid-March. Despite continued shipments to North Africa — particularly Nigeria, Morocco, and Algeria — competition from Black Sea exporters and freight bottlenecks have reduced EU competitiveness. Meanwhile, Ukraine’s export corridor through the Black Sea remains functional but fragile. Political and military tensions continue to create insurance risks and shipment delays. At the same time, Ukrainian winter wheat crops remain in decent condition, though analysts are closely watching soil moisture levels and planting delays in conflict-affected regions​.

Adding further to market anxiety, Brazil’s agricultural sector is showing signs of financial stress that could have global implications. The country’s agricultural input sector experienced an 80% spike in bankruptcy filings in early 2025. A combination of lower commodity prices, high interest rates, and weak farmer liquidity has made it increasingly difficult for companies to recover accounts receivable. Agrogalaxy, one of Brazil’s top farm supply chains, recently filed for judicial recovery. Such developments not only undermine farm-level production capacity but could also disrupt the country’s crucial grain export machine. Brazil is the world's leading soybean exporter and a growing corn exporter. Any threat to input access or logistical operations can have immediate ripple effects on global grain supply and pricing​.

Another emerging theme is infrastructure strain. In Brazil, soybean and corn harvests are accelerating in the Center-South, but concerns over export logistics are mounting. Producers and traders cite chronic port congestion, rail bottlenecks, and a shortage of trucking capacity as serious threats to smooth flow. These inefficiencies could widen basis levels and reduce the pace of shipments to China, the EU, and other key markets in the coming weeks​.

Taken together, these developments mark a transformative week in global grain logistics and trade relations. The convergence of protective trade policies, logistical disruption, retaliatory tariffs, and financial distress in major export regions has increased risk premiums across futures markets and added a layer of complexity for both producers and buyers. With major USDA reports due next week, and tariff deadlines looming in early April, market participants are bracing for further volatility and possible shifts in global grain flow structures.

Weather Extremes Continue to Influence Planting, Harvest and Price Volatility

Weather remained a dominant theme this week, impacting production in both hemispheres. In the U.S., unseasonably warm and dry conditions persisted across key wheat-producing areas. While this benefits early planting of corn and soybeans, it raises alarm about moisture deficits in the Soft Red Winter (SRW) wheat belt. Although parts of the Midwest and Southeast received up to 30–50mm of above-normal rainfall, most of the HRW-producing regions — notably Kansas and Texas — remain critically dry. Dust storms, wildfires, and isolated snowstorms compounded these challenges, delaying spring fieldwork in the Central Plains​​.

The Northern Plains fared no better, with drought conditions deepening. Soil moisture levels in the Dakotas and parts of Minnesota are alarmingly low, increasing risks for spring wheat and early corn seeding. The Midwest saw erratic precipitation, ranging from blizzards in the northwest to flooding in the east. While beneficial to some parched areas, the excess rainfall may hamper early planting efforts​.

In South America, Brazil’s Central-West is entering a drier spell just as the second corn crop enters a critical development stage. Soy and corn harvest progress in southern regions has been slowed by rains, and forecasts suggest wetter weather ahead for the Pampas in Argentina and the south of Brazil — a double-edged sword. While heavy rainfall earlier this month damaged crops in Argentina’s Buenos Aires province, this past week brought a respite, with less than 10mm of precipitation. This has enabled a recovery in soybean and corn conditions, and harvest activity is expected to accelerate heading into April​.

Futures Performance and Speculative Activity: A Week of Divergence

The futures market displayed mixed momentum as it grappled with uncertainty. For the week ending March 22:

• Corn futures for May gained 9¾ cents, settling at $4.64¼ per bushel. This marks a continuation of modest strength in the corn market, driven by tight domestic stocks, export demand, and optimism for planting. However, speculative interest declined sharply. Managed money funds reduced their net long exposure by over 39,000 contracts, indicating caution ahead of the USDA’s Prospective Plantings report due March 31​.
• Wheat saw varied gains across classes. SRW rose 1¾ cents, HRW added 1½ cents, and HRS gained 3½ cents. Year-to-date, HRW remains the top performer (+5.1%), benefiting from strong domestic demand and rising concerns over soil moisture. However, weak global export demand and ongoing trade tensions have capped broader bullish momentum.
• Soybeans ended on a softer note. May futures closed at $10.09¾ per bushel, down 3¼ cents on the day and 6¼ cents for the week. Soymeal was also down $5.60, while soyoil managed to post a modest gain. Speculators expanded net short positions in soybeans by over 6,000 contracts, reflecting caution amid increasing Brazilian supply and tepid Chinese demand.

Despite soybean weakness, the U.S. remains a competitive exporter. Export sales for the week ending March 13 confirmed China as the top buyer for U.S. soybeans (270,000 tons). Corn sales were led by Japan (503,000 tons), while Guatemala topped wheat imports with 175,000 tons — figures that underscore continued international appetite for U.S. grains​​.

Supply Fundamentals and Outlook by Crop

Corn fundamentals tightened this week. U.S. domestic cash prices averaged $4.29¾, with robust export activity supporting futures. In Brazil, the ESALQ/BM&FBovespa Index rose to BRL 89.88 per 60kg bag — the highest since April 2022. This reflects strong domestic demand and logistical constraints. Conab’s March report raised Brazil’s corn production forecast to 122.76 million tons, while the USDA held its estimate at 126 million tons. The second crop remains key to meeting this target. Globally, corn production is projected at 1.21 billion tons, but ending stocks have declined, pushing the global stock-to-use ratio down to 23.4%, from 25.7% last season​​.

Wheat market fundamentals were less optimistic. U.S. wheat export commitments remain below average, though up 14% from the same period last year. French soft wheat held steady at 74% good to excellent. Still, low soil moisture across the U.S. and Ukraine poses a risk. In Ukraine, most winter wheat remains in fair condition, but poor soil moisture and rising temperatures could affect yield potential. In the U.S., SRW planting remains stable, but freeze risks persist should a late cold snap follow the current warm spell​​.

Soybeans faced the most pressure. Brazilian production estimates were lowered slightly by Abiove to 170.9 million tons, while the USDA maintains a more optimistic 169 million-ton forecast. China’s soybean imports from the U.S. rose 84% in January-February, due to early buying ahead of tariff hikes, but analysts expect future volumes to shift back toward Brazil. CEPEA data showed declining prices in Brazil’s key soy regions, with increased harvest pressure and fears over logistical bottlenecks. Argentinian production was cut to 48.6 million tons due to regional drought. Globally, the USDA projects record soybean production of 420.76 million tons this year​​.

Planting Intentions and Global Acreage Forecasts

Ahead of the March 31 USDA Prospective Plantings report, S&P Global has forecast that U.S. corn acreage will rise to 94.3 million acres, while soybean area is expected to fall to 83.3 million acres, down 3.8 million acres from last year. Wheat acreage is projected at 46.6 million acres. These projections, if realized, would mark a strategic shift toward corn due to better profitability and strong demand, especially from ethanol producers and overseas buyers​.

In Brazil, the second corn crop remains a wild card. Conab expects it to reach 95.51 million tons, but weather, logistics, and price competitiveness will determine its market impact. In Argentina, both corn and soybeans are entering harvest with lingering uncertainty from prior flooding. Still, forecasts remain relatively stable at around 49 million tons for each crop​.

High Stakes and High Volatility Ahead

As March draws to a close, the global grain market faces a precarious balance. On one hand, resilient export demand, reduced global corn stocks, and strong planting intentions for U.S. corn offer bullish support. On the other hand, weak wheat exports, a bearish speculative tone in soybeans, and intensifying geopolitical risks raise red flags.

With major USDA reports on the horizon, evolving weather conditions, and pending tariff implementations, market participants must brace for elevated volatility. Strategic risk management and agile decision-making will be essential in navigating the uncertainties of the 2025 growing season.