Global Policy, Biofuels, and Energy Interplay

Policy developments and energy market trends remained integral to the tone of the global grain market throughout the week, amplifying volatility and guiding speculative positioning, especially in the corn and soybean segments.

The U.S. Energy Information Administration (EIA) report underscored soft biofuel demand, with ethanol production for the week ending March 21 declining by 52,000 barrels per day to 1.053 million bpd — the lowest in several weeks. Ethanol stocks also rose 2.9% to 27.35 million barrels, indicating weaker demand from blending and fuel distribution networks. This data heavily weighed on corn prices, compounding concerns already stemming from sluggish export sales. Open interest in corn futures climbed, suggesting increased hedging or positioning ahead of potential policy revisions to U.S. renewable fuel mandates.

In parallel, discussions around the U.S. Renewable Fuel Standard (RFS) continued to create uncertainty. With the Trump administration facing pressure from both energy producers and environmental groups, market participants are bracing for possible changes in blending mandates or tax incentives that could reshape domestic corn and soybean meal consumption. While no formal adjustments were announced this week, sentiment across biofuel-related markets remained cautious, with traders watching for cues on government direction.

Geopolitical policy also loomed large. The fragile maritime ceasefire deal brokered in Saudi Arabia between the U.S., Russia, and Ukraine aimed to reopen safe grain shipping routes in the Black Sea. Although still unofficial and tentative, the agreement holds potential to stabilize shipping insurance rates and facilitate smoother exports from southern Ukrainian ports. Nevertheless, Russia reportedly demanded partial sanctions relief in exchange, which Ukraine firmly rejected. As a result, the corridor’s future remains uncertain, with limited short-term impact expected on global flows but heightened attention from insurers and shippers.

In terms of fertilizer policy, major global suppliers including Nutrien expressed skepticism that the Black Sea grain and energy ceasefire would substantially alter fertilizer or agricultural input logistics. Russian production remains near full capacity, but existing Western trade restrictions and financial barriers continue to hamper broader flow improvements, especially into Western-aligned markets.

Trade relations added further complexity. China’s ongoing tariffs on U.S. agricultural goods — imposed during the 2018–2019 trade war — have yet to be fully rolled back. This remains a concern for U.S. soybean exporters, particularly as Brazil continues to expand its trade footprint in Asia. Brazil's large and competitive soybean crop this year may allow it to capitalize on any shortfalls in U.S. shipments, especially if political uncertainty in Washington continues to cloud export policy direction.

Another key development on the food policy front involved the U.S. contacting Italian egg producers ahead of the Easter period due to a domestic shortage exacerbated by bird flu. Although the direct grain impact is marginal, it underscores wider concerns about food security, supply chain resiliency, and feed consumption. As the U.S. weighs lifting restrictions on using broiler chicken eggs in processed foods, this could marginally alter feed demand for corn and soymeal, depending on industrial adaptation.

Meanwhile, palm oil-related policy decisions in Southeast Asia continued to intersect with soybean oil trade dynamics. Indonesia raised its April reference price for crude palm oil to $961.54/ton and maintained an export tax of $124 and a 7.5% levy. This adjustment, amid declining domestic biodiesel consumption and rising inventories, could enhance the relative appeal of soybean oil in global markets, especially as Malaysian palm oil prices also surged (+2.5%) on the back of firm demand and tight supplies.

Altogether, this constellation of developments — from ethanol and biodiesel policy to international shipping arrangements and inter-commodity competitiveness — played a pivotal role in shaping grain and oilseed sentiment this week. The policy landscape remains fluid, and traders are expected to maintain close attention to upcoming announcements from the USDA, EIA, and international agencies in the weeks ahead.

Weather and Crop Conditions

Weather played a critical role in shaping price trends this week. In the U.S., winter wheat conditions showed improvement in Kansas (49% good/excellent) and Texas (31%), but deteriorated sharply in Oklahoma (37%) due to wind and drought. Overall, 34% of the national winter wheat crop was growing under drought stress, up from 27% the week before.

Forecasts for rains across SRW areas in the Midwest brought relief, while HRW-growing regions such as western Kansas and the Texas Panhandle remained dry. Spring planting in the U.S. South progressed steadily, with Louisiana reaching 65% and Texas 45%.

South America faced contrasting weather challenges. Argentina’s Pampas were forecasted to receive 50–70mm of rain, potentially delaying early harvests. In Brazil, localized showers in Goiás and Mato Grosso do Sul helped boost soil moisture ahead of the second corn crop’s development. Nonetheless, dryness in Rio Grande do Sul continued to cap soybean yield potential, even as central states showed improved performance.

In North America, the outlook for April moderated, offering better conditions for crop development. However, persistent dryness in the Central and Southern Plains kept winter wheat at risk. A storm system approaching the weekend brought hopes for moisture but limited reach across southwestern zones.

Price Movements and Market Sentiment

Wheat, corn, and soybean futures in Chicago all saw notable intraweek volatility, ending the week with mixed results. Wheat remained under persistent bearish pressure, driven by weaker Black Sea risk premiums and easing supply concerns in key U.S. growing regions. May 2025 Chicago SRW Wheat opened Monday at $5.58¼ per bushel and closed Friday at $5.32, reflecting a weekly decline of 26¼ cents. Kansas City HRW and Minneapolis HRS futures similarly saw midweek pressure but managed minor recoveries by Friday.

Corn faced headwinds from softening ethanol demand and sluggish export momentum. May 2025 Corn began the week at $4.64¼ and ended at $4.50, losing 14¼ cents. Ethanol production fell by 52,000 barrels per day to 1.053 million bpd, while stocks rose to 27.35 million barrels, deepening bearish sentiment. U.S. corn export sales reached 1.04 MMT for the week, but net reductions and no new crop commitments signaled weaker demand.

Soybeans stood out as the week’s strongest performer. May 2025 Soybeans opened Monday at $10.09¾ and closed Friday at $10.16¾, up 7 cents. Soymeal and soyoil markets both contributed to gains, with the latter surging as much as 163 points. Weekly soybean export sales reached 338,469 MT — down 4% from the prior week but 28.3% higher year-on-year. Mexico and China were top buyers, while Brazil’s AgroConsult lifted its crop forecast to 172.1 MMT, adding to broader bullishness.

Export Trends and Global Trade Signals

The USDA’s weekly data revealed mixed performance in exports. Wheat sales stood at a modest 100,325 MT, though an improvement over previous reductions. Japan, Nigeria, and Taiwan were active buyers, but offsetting reductions for unspecified destinations limited upside. Corn sales slipped 30.5% week-over-week and came in 13.8% below year-ago levels. However, strong buying interest from South Korea — totaling 204,000 MT — helped mitigate the decline. Soybean export volumes remained firm despite logistical uncertainties, and soyoil sales jumped 30.2% week-on-week to 44,493 MT.

Ukraine’s grain exports provided further context. The 2024/25 season has seen 32.2 MMT shipped so far, down 6% from the previous year. Corn exports fell 10%, wheat 4.4%, while barley bucked the trend with a 12% increase. The March monthly total of just 3 MMT — a third lower than last year — highlighted the country’s constrained logistics and shifting demand profile.

China’s state grain buyer Sinograin advanced with auctions to offload 160,000 MT of imported soybeans amid tight domestic supplies. However, analysts warned that upcoming Q2 Brazilian arrivals could pressure prices again. Meanwhile, Taiwan and Japan remained key buyers of U.S. wheat, signaling sustained Asia-Pacific interest in American grain.

Production Revisions and Regional Developments

Brazil dominated production headlines this week. The soybean harvest was reported at 76.4% complete, with AgroConsult revising the full-season estimate up to 172.1 MMT — slightly higher than USDA’s 169.3 MMT projection. Six states are forecasted to post record yields, buoying market confidence. The robust crop is expected to support debt repayments and may fuel stronger Q2 exports to China amid U.S.-China trade tensions.

South Africa raised its commercial corn production estimate by 4.7% to 14.6 MMT, driven by a 27% increase in white corn output and a national yield average of 5.61 t/ha. This revision enhanced global corn supply expectations from the Southern Hemisphere.

In Europe, the MARS report from the European Commission described crop conditions as generally better than last year. However, soil moisture deficits in Romania, Bulgaria, and eastern Ukraine persisted, threatening local production prospects. The EU forecasted 2025/26 soft wheat production at 126.5 MMT, a sizable increase over the prior year.

Vegetable Oils and Competing Markets

Palm oil markets remained firm throughout the week. Indonesia increased its April reference price for crude palm oil to $961.54/ton, retaining a $124 export tax and a 7.5% levy. January exports fell to 1.96 MMT, while stocks rose to 2.936 MMT. Malaysian futures also rallied, gaining 108 ringgit overnight to settle at 4,420 ringgit per ton.

These dynamics could shift competitiveness against soybean oil, which rose in tandem with soybean futures during the week. Stable rainfall in Southeast Asia supported growing conditions, though flooding risks lingered in Kalimantan.

The week closed with the global grain market caught in a dynamic balancing act — rising South American harvest optimism, conflicting trade flows, easing logistical tensions in the Black Sea, and caution ahead of the USDA’s crucial reports. Wheat and corn futures slid under mounting supply signals and lagging demand, while soybeans emerged as a resilient performer amid export strength and robust meal/oil support.

With planting intentions and grain stocks data just ahead, the market braces for potentially market-shaking revelations. Until then, traders remain focused on weather models, geopolitical shifts, and the ever-evolving pulse of international demand.