The grain trade awaits talks between the US/Mexico today.

The overnight grain trade was mostly higher on further short covering from Wednesday’s positive session. The trade retreated gains this morning before the close as the market awaits Pres. Trump’s talks with Mexican President Sheinbaum.

The market is anticipating that there will be modifications to the 25% US tariffs that will prevent retaliation against US agricultural products. Mexico, the world's largest corn importer, gets the bulk from the US. Mexico is unable to move any sizable amount of corn from Argentina or Brazil because their seaports are too clogged for that. Mexico has always been set up to import large quantities from the US through their rail system, and retaliatory tariffs would only hurt its own livestock producers.

China indicated on the X platform that “if war is what the US wants, be it a tariff, a trade war or any other type of war, we are ready to fight till the end.” China went on to state that using fentanyl as an explanation for imposing US tariffs is a flimsy excuse, which implies that there is no indication that China is set to engage in US trade talks at this time.
China has not been buying corn and has canceled numerous wheat purchases from Argentina and Australia. Mexico's nonexistent retaliatory tariffs against US corn, along with a sustained tariff on annualized 8 MMTs of Canadian coral oil imports, will encourage a further grain recovery price. Soy oil gains will lift US crush margins.

However, it is also supportive that the Brazilian interior corn and soybean FOB values continued to rise on Wednesday. For June, Paranagua soybeans are offered at $0.75 over July futures, the same as the US Gulf. For July, US FOB soybeans are five cents/Bu cheaper than Brazilian offers, which have risen $0.80 over. The rally in Brazilian FOB soybean basis has occurred amid a record-large soybean crop of 170 MMT and harvest nearing 50% complete. Also, spot shortages of corn is lifting design corn values to levels not seen since 2023. It’s this Brazilian basis gains that are now supporting both corn and soybeans.

Adding support to corn is the current dryness that remains consistent in eastern and northern Brazil for the next 7-9 days within again longer-term models in the 9-14 day window that try to bring improve showers. Confidence in the eastern Brazilian rain that far out has not been reliable, as forecast models have been pushing rain backward every trying it sees it and not pulling it forward. Temperatures look to average near to above normal, but no extreme heat is anticipated at this time. Highs will be in the 80s to mid-90s. The decline in soil moisture raises the stakes in April rainfall for Brazil’s second corn crop which is its largest crop in the exportable one. Meanwhile, Argentina is also entering a near-to-below normal rainfall pattern following nearly 3 weeks above normal totals. For now, localized flooding is in retreat. There is another chance of showers on the weekend, followed by an extended period of sunshine.

Limited rainfall is anticipated for the Plains, which will raise winter wheat concerns following the recent gusty winds. Also, black sea dryness looks to worsen into late March, and rains will be needed in April.

On Wednesday, it was a sharply higher day for live and feeder cattle in the recovery of recent losses. Hoped for modifications of US tariffs provided short covering and a lift in values. The outlook for the cattle opening this morning is mixed, with the Dow off 400 points and worry of a US recession that will look to limit further gains in the near term. Mexican feeder cattle movement across the US border is improving with reports suggesting that an average of 3200 head/day developed on Monday and Tuesday. The pace is expected to improve as Mexico looks to push back clogged feeders into the US, with weekly totals likely to rise to 15,000 head in early April.

A light cash test was reported yesterday in Kansas at $197, but most feedlots past. Following the rally on the board, owners are now pricing cattle at $199/201.