Good morning!
Grains weaker to open the week... Corn, soybean and wheat futures traded on both sides of unchanged overnight but have weakened early this morning. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are 1 to 2 cents lower, winter wheat markets are 6 to 8 cents lower and spring wheat is 3 to 4 cents lower. The U.S. dollar index is around 135 points lower and front-month crude oil futures are about 50 cents higher.
China braces for trade war escalation... Chinese Premier Li Qiang warned the country is prepared for “shocks that exceed expectations,” as anticipation builds over renewed U.S. tariffs under President Donald Trump. Speaking at the China Development Forum in Beijing, Li emphasized the need for global cooperation and open markets amid rising economic uncertainty. Addressing international business leaders and Sen. Steve Daines (R-Mont.), Li called for greater collaboration, stating that China and the U.S. “stand to gain from cooperation and lose from confrontation.” The event featured top executives from firms like Apple, Qualcomm, Pfizer and Saudi Aramco, with reports suggesting a possible meeting with President Xi Jinping on March 28, while other reports have signaled a June confab. Daines, a close ally of President Trump, emphasized that progress on tariffs is contingent on China tackling the flow of fentanyl precursors into the United States. Daines was notably not granted an audience with President Xi Jinping — an unusual departure from past diplomatic norms. His visit yielded little progress, with looming U.S. tariffs and a potential Trump/Xi summit appearing increasingly unlikely.
USTR hearing on Chinese Maritime practices could shape future trade actions... A public hearing today by the U.S. Trade Representative’s (USTR) office could be quite significant in several ways, especially given the growing scrutiny over China’s maritime and trade practices. The hearing is expected to examine China’s maritime, shipbuilding and logistics sectors — specifically whether state-led practices have led to unfair advantages or violations of trade commitments (like WTO obligations). The inquiry was initiated in response to a petition from labor unions, including the AFL-CIO, alleging that China uses state subsidies and control over key logistics infrastructure to undercut global competitors and gain an unfair edge. The hearing and its record could form the evidentiary basis for future litigation at the WTO or support unilateral U.S. trade enforcement, like new tariffs or sanctions under Section 301.
U.S., Russia revisit Black Sea grain deal amid navigation safety talks... Russia and the U.S. are discussing a potential revival of the Black Sea Grain Initiative, a 2022 agreement aimed at ensuring safe merchant shipping and grain exports during the war in Ukraine. Kremlin spokesman Dmitry Peskov confirmed the issue was on the agenda during U.S./Russia talks in Saudi Arabia, noting past commitments to Russia were left unfulfilled under the original deal. The initiative, brokered by Turkey and the United Nations, had allowed nearly 33 MMT of Ukrainian grain exports before Russia exited the agreement in 2023, citing ongoing obstacles to its own food and fertilizer exports. While these exports aren’t under Western sanctions, Russia claims issues with payments, insurance and logistics persist. Peskov said navigation safety remains a key concern and confirmed that President Trump initiated the conversation, with President Vladimir Putin agreeing to engage. He also acknowledged a shared U.S./Russian interest in moving toward a settlement on the Ukraine conflict, though many complex issues remain unresolved.
IKAR raises Russian wheat crop forecast... Russia’s IKAR consultancy has raised its baseline 2025 wheat crop forecast to 82.5 MMT from 81.0 MMT amid improved conditions in central and southern production areas of the country. IKAR noted there are still crop concerns in the Volga region. IKAR puts a production range of 78.5 MMT to 86.5 MMT on this year’s wheat crop, depending on spring weather.
Canada bolsters farm support amid Chinese tariffs on key exports... The Canadian government has unveiled new financial support for the agriculture sector in response to steep Chinese tariffs on canola, peas, pork and seafood. Starting this year, the AgriStability payment cap will double to $6 million and the compensation rate will rise from 80% to 90%. The move addresses fallout from China’s retaliatory tariffs — 100% on canola and peas, and 25% on pork and seafood — triggered by Canada’s levies on Chinese EVs, steel and aluminum. Agriculture Minister Kody Blois called the tariffs “devastating” and pledged swift aid, with an estimated federal cost of C$108.7 million. Provincial governments may also accelerate payments under updated agreements. Premiers from key agriculture provinces, including Alberta, Saskatchewan and Manitoba, have voiced alarm over the tariffs’ potential impact on billions in export revenue.
Canada’s Carney calls April 28 snap election amid Trump trade war crisis... Canadian Prime Minister Mark Carney, as expected, announced a snap federal election for April 28, moving it up from the scheduled Oct. 20 date. Carney declared that President Trump’s tariffs represent “the most significant crisis of our lifetimes,” and said he needs a strong mandate to respond effectively. Carney was elected by the Liberal Party earlier this month to replace Justin Trudeau following his resignation. Carney also requested that Governor General of Canada Mary Simon, the representative of the country’s head of state, King Charles, dissolve Parliament and call for an election, adding that she agreed. Carney will go head-to-head with the Conservative Party’s Pierre Poilievre, Bloc Québécois’ Yves-François Blanchet and the New Democratic Party’s Jagmeet Singh.
The week ahead in Washington... Lawmakers return to Washington to work on reconciliation and tax cut decisions. Democrats on Tuesday will hold a hearing on a GOP plan to cut SNAP benefits. Federal Reserve officials are out in force this week, so some of their comments could be market sensitive. On Thursday, the final estimate of U.S. fourth quarter GDP will be released. On Friday, the core personal consumption expenditures (PCE) price index for February will be released. This is the Federal Reserve’s preferred measure of inflation. Key agricultural reports this week include Tuesday’s Food Price Outlook and Cold Storage Report from USDA. The Hogs & Pigs Report will be released Thursday afternoon.
Cruz pushes sanctions over Mexican water shortfall... Sen. Ted Cruz (R-Texas) is leading a push against Mexico over alleged violations of a 1944 treaty mandating water deliveries to U.S. farmers. Cruz is backing legislation to cut U.S. aid to Mexico by 15% if the country doesn’t meet its obligations, claiming south Texas farmers are suffering as a result. The issue prompted the State Department to withhold U.S. water shipments to Mexico for the first time and spurred USDA Secretary Brooke Rollins to announce $280 million in aid. While Cruz welcomed the support, he emphasized that “the real answer is to get our damn water,” blaming Democratic inaction and praising Trump’s hardline approach as the key to enforcement.
China’s central bank to further erode role of medium-term loan rate... The People’s Bank of China (PBOC) said it will change the way it sells its medium-term loans, a move that market participants say may further erode the significance of role of such a bond instrument in guiding monetary policy. Starting this month, medium-term lending facility loan operations will be carried out by adopting a fixed-quantity, interest-rate bidding and multiple-price bidding method. The adjustment will “keep banking system liquidity reasonably ample,” PBOC said in a statement, “and better fulfill differentiated funding needs at different institutions.” PBOC will also cut banks’ reserve requirement ratio and interest rates at the “appropriate time” and strengthen the resilience of its forex market. The central bank wants its monetary policy to be more forward-looking and targeted.
Euro zone business activity accelerates to seven-month high in March... HCOB’s preliminary composite euro zone purchasing managers index compiled by S&P Global rose to 50.4 in March. This marked the third consecutive month of modest expansion in business activity across the bloc, with growth reaching its fastest pace since last August. Manufacturing output returned to expansion for the first time in two years, recording its strongest increase since May 2022, while service sector growth eased to a four-month low.
U.S. sharply increases Brazilian egg imports, considers other sources amid shortage... U.S. egg imports from Brazil in February increased by 93% from a year earlier, the Brazilian Animal Protein Association said, amid a domestic egg shortage. The U.S. Food and Drug Administration told Reuters it is reviewing a petition from the National Chicken Council to allow sale for human consumption of eggs laid by chickens that the council’s members raise for meat. Currently, broiler chicken producers destroy millions of those eggs because they lack sufficient refrigeration to meet an FDA food-safety requirement. While none of the Brazilian or broiler chicken eggs would wind up on grocery shelves, they could be used in processed foods such as cake mixes, ice cream or salad dressing, freeing up more fresh eggs for shoppers.
Supportive Cattle on Feed Report... USDA’s Cattle on Feed Report showed the March 1 feedlot inventory down 2.1% from year-ago ag 11.577 million head, as placements plunged 17.8% from year-ago during February and marketings dropped 8.9%. The data should be supportive for cattle futures, though some of the bullishness was already built into prices ahead of the report.
Cash hog fundamentals in pause mode... The CME lean hog index continues to hover just below the $90.00 level, with the latest quote down 32 cents to $88.88 as of March 20. The pork cutout firmed $1.00 to $96.86 on Friday, holding in the recent mid- to upper-$90.00 trading range.
Weekend demand news... Taiwan purchased 65,000 MT of corn to be sourced from the U.S., Argentina, Brazil or South Africa and tendered to buy 100,000 MT of U.S. milling wheat.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
· 10:00 a.m. Weekly Export Inspections — AMS