Agri- Commodities: 27-31/2/25

Monday The week began on a bearish note as grain prices extended their previous session’s losses. Argentina’s move to lower export taxes, coupled with favorable weekend rains, added downward pressure. Trade tensions between the U.S. and Colombia heightened concerns about potential disruptions in grain exports, particularly for corn, as Colombia had been the third-largest importer of U.S. corn in 2024.

The U.S. government backed down from imposing a 25% tariff on Colombian goods after securing an agreement on migrant deportations. Meanwhile, Russian wheat prices saw a slight increase, with 12.5% protein wheat quoted at $236.5 per ton FOB for February shipment. USDA reported private sales of 139,000 tons of corn to Mexico, while wheat export inspections reached a four-month high. Broader financial markets also weighed on sentiment, with oil prices falling 2% and natural gas plunging 6%.

With looming tariffs on Mexico, Canada, and potentially China, the risk of trade disruptions in major U.S. agricultural export markets continued to cast a shadow over the grain complex.

Tuesday Grains rebounded in a classic “Turnaround Tuesday,” with wheat leading the charge following its recent correction. However, market uncertainty remained elevated with U.S. tariff decisions on Mexico and Canada expected by the end of the week, alongside the Federal Reserve’s policy announcement later that evening.

The White House confirmed that February 1 remained the target date for new tariffs on Canadian and Mexican goods. European wheat prices found support as Tunisia launched a tender for 200,000 tons of wheat, while Jordan secured 50,000 tons of milling wheat at a lower price than the previous week. U.S. corn exports also remained active, with a 132,000-ton sale to South Korea. Meanwhile, EU soft wheat exports climbed to 12.18 million tons, though they remained significantly below last year’s levels.

Wednesday Wednesday brought strong gains for wheat and corn, largely driven by fund activity and weather concerns. Russian government comments about a potential 20% drop in grain exports, despite earlier assessments of strong winter crop conditions, added bullish sentiment.

In the physical market, Tunisia completed its wheat purchases at competitive prices, while Jordan canceled its tender for 120,000 tons of feed barley. Speculative positioning in European markets showed limited adjustments, with funds slightly reducing their net short in MATIF milling wheat. The Federal Reserve, as expected, held interest rates steady, signaling a cautious outlook amid persistent inflation concerns.

Thursday Markets saw mixed performances on Thursday, with wheat posting gains while corn and soybeans slipped due to position squaring ahead of the weekend’s trade policy uncertainty. Wheat futures in the U.S. and Europe continued to find support as funds sought to reduce risk in short positions.

U.S. weekly export sales came in strong for wheat and corn but disappointed for soybeans. Meanwhile, the European Central Bank cut interest rates once again in response to stagnation in the eurozone economy. South American weather remained a concern, with Argentina’s crop conditions deteriorating further, though the pace of decline slowed following recent rains. The next ten days were expected to bring continued dryness in Argentina and excessive rainfall in Brazil, delaying soybean harvesting and corn planting.

Friday Grains closed the week on a negative note as markets braced for potential trade disruptions. Over the weekend, those fears materialized, with President Trump confirming the imposition of steep tariffs: 25% on Mexico and Canada, 10% on China, and a lower 10% duty on Canadian energy exports to mitigate fuel price shocks. In retaliation, Canada and Mexico announced their own tariffs on U.S. goods, while China vowed countermeasures to safeguard its interests.

The European Union issued a strong warning against additional U.S. tariffs, highlighting the risk of escalating trade conflicts. Currency markets reacted swiftly, with the EUR/USD exchange rate falling at the open, which could offer some relief to MATIF wheat prices.