CORN HIGHLIGHTS:

• Corn futures extended their decline as concerns over tariffs and retaliatory actions fueled additional long liquidation. May corn futures, at their session low, traded 76 cents below the most recent high from February 19.
• May futures are now testing key support at the 450 level — if this level fails to hold, the market could be vulnerable to a further drop toward the August low of 420, as sellers maintain control.
• U.S. tariffs of 25% for Canada and Mexico and an additional 10% tariff on Chinese goods were triggered last night as the potential for a trade war has increased. China countered with a 15% tariff on U.S. agriculture goods, including U.S. corn imports, and a 10% tariff on soybeans. In addition, China will stop receiving soybeans from three U.S. exporters. Mexico will announce a retaliatory plan on Sunday unless an agreement can be reached.
• The impact of tariffs could curb demand as U.S. goods become more expensive for affected countries. However, other markets not involved in the tariff dispute may benefit from lower U.S. prices, especially with the U.S. dollar trending downward.
• The market will be watching to see if demand picks up at these lower price levels. Demand has been the driver in the corn market, and old crop corn supplies remain tight until South American harvest later this spring into early summer.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower for the fifth consecutive day after President Trump announced that tariffs on Canada, Mexico, and China would indeed go through. Funds continued to sell across the ag complex today, bringing May soybean futures to close below $10.00. Both soybean meal and oil ended the day lower as well.
• In response to Trump’s announcement to double tariffs on Chinese goods to 20%, China stated it would halt soybean imports from three U.S. entities, suspend lumber imports, and impose a 15% tariff on other U.S. agricultural products.
• The USDA’s January soybean crush report showed 211.1 million bushels crushed, aligning with trade expectations but down 3% from December’s 217.7 million bushels.
• StoneX is expected to cut its forecast for Brazilian soybean production, citing weather related issues that could hinder output. They maintain that the South American supplies will overwhelm the global market.

WHEAT HIGHLIGHTS:

• All three US wheat classes posted losses again today in tandem with corn and soybeans. The continued threat of tariffs and a trade war has pushed ag commodities lower so far this week. Most notably, China has pledged to retaliate with tariffs on US goods, including 15% on wheat imports.
• Winter wheat crop condition updates showed mixed results across key states. Kansas improved by 4% to 54% good to excellent, while Texas declined by 3% to 34%. Colorado saw a notable 10% improvement, whereas South Dakota conditions fell by 9%.
• According to Rusagrotrans, Russia’s wheat exports in February totaled 1.9 mmt, which is the lowest figure for that month since 2020. Furthermore, they are estimating March exports will be around 1.5-1.7 mmt, which would be the lowest March export figure since 2021.
• In Australia, ABARES projected a 25/26 wheat harvest of 30.5 mmt, down 10% from the previous season but still 15% above the 10-year average. They also raised their estimate for the 24/25 harvest by 7% compared to their December report.

DAIRY HIGHLIGHTS:

• The spot cheese block/barrel average fell 8.375c lower on Tuesday as the market reacted to 25% tariffs added to Mexico and Canada today. This brings the block/barrel average to $1.75125/lb.
• Spot butter fell 9.50c on the news and closed down at $2.25/lb on 3 loads traded. This is the lowest close for butter since December 2021.
• Tuesday’s Global Dairy Trade auction was pretty decent. The index was down 0.50%, but both butter (+2.70%) and cheese (+1.10%) moved to extreme premiums to the US market.
• Class III milk futures were sharply lower, as these weak spot prices point to even lower fair value milk. March Class III fell 42c to $18.12 while March Class IV fell 21c to $18.73.
• The second month Class IV milk contract finished at its lowest level since December 14, 2023.

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Author

Brandon Doherty