March 11 – Wall Street remains subdued by recession fears this morning, with stock futures posting new lows for the move prior to stabilizing overnight. Traders continue to fear a recession amid the plethora of tariffs implemented and / or threatened in recent days by the Trump Administration. U.S. officials are in Saudi Arabia today meeting with Ukrainian officials to seek a path to peace in the Black Sea Region. The VIX is trading near 28 at this hour, after spiking to a fresh seven-month high just below 30 on Monday. The dollar index continues to slide, trading near 103.4 as it falls to nearly five-month lows. Yields on 10-year Treasuries are trading near 4.24%, while yields on 2-year Treasuries are trading near 3.91%. Crude oil prices are 1.5% higher today after finding some semblance of support near the $65 per barrel area, while the grain and oilseed markets are mixed.
China imposed 25% tariffs on pork imports from Canada today, along with 10% tariffs on pork coming from the United States. The tariffs will impact roughly 11% of China’s frozen pork imports. That’s a volume that China can replace with pork from alternative sources – most likely from Brazil and / or Europe. Pork consumption in China is currently suppressed by its own economic woes. China’s frozen pork imports dropped by a third in 2024 due to declining demand. China has been very selective in its retaliatory steps, picking areas that will minimize the impact on its struggling economy. Media reports still indicate that President Trump is likely to visit China as early as next month to hold face-to-face talks with Chinese President Xi Jinping, but no talks are likely if their negotiators have not made more progress in reaching at least some level of agreement. Thus far, those talks are said to be stuck at lower levels, raising doubts on whether the visit will happen so soon.
China’s Belt and Road Initiative continues to be an avenue for it to broaden its economic reach while increasing the dependency of a rising number of countries on China’s well-being. However, it’s also getting increased scrutiny from the West for that very reason. As such, China appears to be changing the language, referring more to “the Global South.” The Global South is a term used for a group of countries largely described as developing, less developed, or underdeveloped that are typically in Africa, Asia, and Latin America. It’s also often referred to as the “Group of 77,” which is a group of developing countries formed in 1964. Ironically, this also comprises the majority of the countries in China’s Belt and Road Initiative. Chinese Foreign Minister Wang Yi mentioned the Global South 22 times in a press conference held on the sidelines of its Two Sessions policy meeting over the past week. That highlights the likelihood that top level leaders discussed the new image they wanted to present in those meetings. Analysts believe that China wants to strategically leverage the dependencies of the BRI countries during this time of growing geopolitical pressures from the West.
U.S. negotiators are meeting with representatives from Ukraine in Saudi Arabia today to discuss possible paths toward peace in the Black Sea Region. Ukraine set the table for those discussions with its largest attack to date on Moscow earlier in the day. Hundreds of drones were used in the attack, with at least 91 downed in and around the Moscow area. The United States is pressing Ukraine to follow a path to peace that would yield ground seized by Russia, while also giving up its hope of joining NATO. It’s desired security pledge that membership in NATO would provide would come from U.S. resources on the ground mining rare earth minerals across the country. Russia is not likely to attack Ukraine if a) it no longer worries about it being a part of NATO, and b) U.S. citizens are scattered across the country. Russia does NOT want a direct war with the United States, but that’s exactly what could be expected if Russia were to kill U.S. citizens while attacking Ukraine at a later date. We’re still far from an agreement, in all appearances, but hope is rising that an agreement can be reached to end the conflict. U.S. access to Ukraine’s rare earth minerals would also reduce leverage China currently has on the States, as would U.S. access to rare earth minerals currently present in Greenland. Peace in Ukraine would also open the door for more dialogue between Russian President Putin and President Trump, which raises fears in China that the two could isolate Xi. Geopolitical lines are being redrawn around the world, which will impact trade going forward.
Grain and oilseed prices stabilized following the second pause of tariffs on Canada and Mexico, but few people in the trade would call the situation stable. We’ve seen some end user buying at these low levels, but the foundation still feels somewhat shaky as this global realignment takes shape. The most critical nation relative to the commodities is Mexico. We’ve been losing China for the past 10 – 15 years as Brazil expands production of major commodities, and it’s production will be cheaper to China than U.S. commodities as long as Brazil’s currency is cheap. However, Mexico is the growing demand base that we cannot afford to lose. Fortunately, Mexico cannot afford to lose us as a source either. As such, there’s still a sense that this will be resolved sooner rather than later.
