4 Catalysts Ag Futures Markets Traders Should Watch This Week

This week finds an extra crowed plate of supply and demand information for the grain futures markets, as well as cotton, to digest. This comes after last week’s price action in the grain futures markets that began to suggest that sellers are exhausted and that near-term market price bottoms may be in place.

Ag market traders will also continue to be tuned in to the latest machinations coming out of Washington, D.C., regarding U.S. tariffs. It seems the still-very-fluid tariff situation will be most sensitive for the ag futures markets — likely until the USDA planting intentions and quarterly grain stocks reports that come out at the end of March.

The Latest on U.S. Tariffs

President Donald Trump’s administration suspended the 25% tariffs on goods covered by the U.S.-Mexico-Canada Agreement (USMCA), effective March 7. The temporary 30-day suspension of tariffs on goods covered under the USMCA offers only limited relief, according to trade experts cited by the Wall Street Journal. The tariffs have raised concerns among U.S. farmers due to increased costs for imported goods like potash. Approximately 85% of U.S. potash comes from Canada and higher costs could affect agricultural production.

Canada last week responded with retaliatory tariffs on U.S. goods and is considering further actions. The situation remains volatile, with both countries seeking more stable trade conditions. Outgoing Canadian Prime Minister Justin Trudeau ominously predicted: “We will continue to be in a trade war that was launched by the United States for the foreseeable future.” That prompted U.S. Treasury Secretary Scott Bessent to call Trudeau a “numbskull” at an Economic Club of New York event. 

Trump suggested in an interview on March 7 that tariffs on Mexico and Canada could rise above the 25% rate when they resume. While he paused the tariffs until April 2 for goods under the USMCA agreement, Trump hinted that higher tariffs might still come, stating, “The tariffs could go up as time goes by.” The move follows a market selloff and concerns about the economic impact of the largest U.S. tariff increase in a century.

What to Expect from Tuesday’s Monthly USDA WASDE Report

Tuesday’s USDA monthly supply and demand report (WASDE) for March is expected to produce no major surprises for the grain and cotton futures markets.

In corn for the 2024-25 marketing year, a survey of analysts from Bloomberg showed the consensus forecast for U.S. ending corn (ZCK25) stocks of 1.518 billion bushels, compared to the USDA reading of 1.540 billion in the February report. U.S. corn exports are pegged at 2.46 billion bushels compared to 2.45 billion in the February USDA report.

U.S. soybean (ZSK25) ending stocks are seen at 380 million bushels — the same as in the February report. U.S. soybean exports are pegged at 1.821 billion bushels compared to the 1.825 billion seen in the February report.

U.S. wheat (MWK25) ending stocks are seen by the Bloomberg survey at 845 million bushels compared to 850 million in USDA’s February report.

Global ending stocks for corn, soybean and wheat are all seen virtually unchanged from last month’s USDA report.

The Bloomberg survey also showed Argentina and Brazil corn and soybean production numbers virtually unchanged from the February report.

For cotton (KGK25), USDA is likely to show U.S. production this year at 14.41 million bales. U.S. exports are forecast at 11.02 million bales and ending stocks at 4.93 million bales. Those numbers are the same or very close to numbers seen in the February WASDE report.

Stats Canada Planted Area Report Out on Wednesday

On Wednesday, Feb. 12, Statistics Canada will release is principal field crop areas report. The Canada crops planted area report includes wheat, oats (ZOK25), barley (H1K25), rye, flaxseed, canola (RSK25), corn for grain, soybeans, sunflower seed (HLK25), dry beans, dry field peas, lentils, mustard seed, canary seed and chickpeas. Grain traders will pay closer attention to the wheat and oilseeds data from Stats Canada.

Watching the Greenback

The U.S. Dollar Index ($DXY) last week hit a four-month low and prices are trending down. Grain and cotton traders are watching this situation closely. It’s one significant positive in an overall bearish atmosphere for the grains and cotton markets at present. 

A weaker U.S. dollar on the foreign exchange market makes U.S. ag exports cheaper to purchase in non-U.S. currency. Most global ag products are priced in U.S. dollars on the world trade markets. It’s important to note that price trends in the currency markets tend to be stronger and longer-lasting than price trends in other markets. That suggests the depreciation of the U.S. dollar could continue in the coming months.