Agri- Commodities: 3-7/2/25

Monday Grain markets opened on the defensive but rebounded after news broke that Mexico would delay imposing tariffs, following a last-minute agreement with Canada. This pause suggests tariffs are being used as a negotiation tactic rather than an end goal. President Claudia Sheinbaum announced that Trump agreed to suspend tariffs for a month in exchange for Mexico reinforcing its northern border. Similarly, the U.S. and Canada suspended tariffs temporarily, contingent on strengthened Canadian border security. However, China retaliated with new tariffs on U.S. coal, LNG, crude oil, and agricultural equipment, escalating trade tensions. Ukraine’s grain exports rose to 25.77 mmt, reflecting increased wheat and barley shipments, though corn exports declined. U.S. export inspections showed solid corn and soybean figures, but wheat lagged. Russian wheat prices continued their upward trajectory, while Eurozone inflation unexpectedly rose, reinforcing the European Central Bank's cautious stance on rate cuts.

Tuesday Grain prices climbed further as immediate trade war fears subsided. Chicago wheat approached three-month highs, while corn and soybeans tested recent peaks. MATIF wheat presented mixed results, influenced by a stronger EUR/USD exchange rate. The scheduled call between Trump and Xi Jinping was canceled, with Trump stating no urgency to engage, framing tariffs as an initial move in ongoing disputes. Ukraine explored establishing a logistics hub in Egypt to streamline African exports, while EU soft wheat exports increased to 12.51 mmt. The USDA reported 132k tons of corn sold to South Korea, and Bangladesh issued a wheat tender.

Wednesday Despite briefly touching multi-month highs, CBOT prices closed lower as soybean and wheat markets responded to rains in Argentina and China's decision to delay or resell wheat purchases. China redirected 600k tons of wheat imports due to strong domestic harvests, pressuring global prices. Southern Argentina received beneficial rainfall, but northern areas remained dry, with potential relief forecasted. Iran and Jordan canceled recent tenders, while Algeria’s ONAB sought new grain purchases. The USDA reported 330k tons of corn sold to Mexico for 2025/2026. Non-commercial participants significantly reduced net short positions in MATIF wheat, signaling shifting market sentiment.

Thursday Corn and soybeans held steady, while U.S. wheat prices surged to new multi-month highs, supported by cold weather forecasts in Russia. MATIF wheat rebounded sharply. USTR nominee Jamieson Greer emphasized expanding agricultural market access, focusing on India and Turkey. Mexico lifted restrictions on genetically modified corn imports for food and feed but maintained a ban on planting. Argentina’s crop ratings deteriorated, with both corn and soybeans falling to 25% and 17% good/excellent, respectively. Statistics Canada’s upcoming report was anticipated to show higher wheat stocks but lower canola and barley inventories. Tunisia and Jordan issued new barley tenders. U.S. export sales were strong for corn, solid for wheat, but weak for soybeans.

Friday Grain prices softened, except for nearby MATIF wheat contracts, but ended the week with gains. Trade wars and weather remain the dominant market drivers ahead of the USDA report and U.S. inflation data next week. Trump announced plans for "reciprocal tariffs," shifting from a universal tariff approach. Russia allocated most of its export quota, with Grain Gates securing a significant share. Tunisia purchased 75k tons of feed barley at higher prices, reflecting a bullish trend. Statistics Canada reported wheat stocks above expectations, while canola stocks fell sharply. The U.S. added 143,000 jobs in January, with unemployment dropping to 4%, suggesting the Federal Reserve will hold off on immediate rate changes. Funds increased their net long positions modestly in corn and soybeans, while covering short positions in wheat.