Corn, Wheat Rally on Supply and Black Sea Risk as Soybean Oil Caps Beans

Updates on U.S./Iran | China and U.S. sanctions | PCE report | U.S./Mexico border reopening | U.S./Canada trade clash

Link: The 90-Day Beef Import Window Lands on the Fall Calf Run
Link: Moscow Visit Revives Ukraine Diplomacy Hopes, But
         Black Sea War Rolls On
Link: Dolly Parton Dies at 80, Leaving a Legacy Rooted in Farm Country
Link: USDA Trims 2026 Food Inflation, Cuts 2027 Grocery Outlook
Link: Canada’s Agriculture and Food Counter-Tariff Breakout

Link: Canada Targets $20 Billion in U.S. Goods as Trade War Deepens
Link: EPA Waiver Risk Puts $1 Billion in Soybean Revenue on the Line
 

Link: Video: Wiesemeyer’s Perspectives, Aug. 22
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Link: Audio: Wiesemeyer’s Perspectives, Aug. 22

UP FRONT

■  TOP STORIES

— Oil risk premium cracks as Iran/Oman Hormuz talks gain traction: Brent retreats as prospects for a temporary shipping corridor and less-aggressive U.S. sanctions reduce the geopolitical premium, though actual Hormuz traffic remains severely constrained.

— China draws a red line around U.S. Iran sanctions ahead of Xi visit: Beijing warns against sanctions that materially disrupt Chinese commerce, raising potential risks for oil, trade and U.S. agricultural purchases ahead of the Sept. 24 Trump/Xi meeting.

— Mexican cattle flow holds near Douglas cap, but lighter weights matter: Roughly 600 cattle crossed Tuesday, adding feeder supplies but offering little immediate relief for tight U.S. beef production because the animals are lighter and need more time on feed.

■  FINANCIAL MARKETS

— Equities today: Global markets are subdued ahead of Nvidia earnings, July PCE inflation data and Fed Chair Kevin Warsh’s Jackson Hole speech, with falling oil providing some support. U.S. Dow opened down around 40 points.

— Equities yesterday: The Dow rose 0.30%, Nasdaq gained 0.66% and the S&P 500 advanced 0.32% Tuesday.

— July consumer spending cools, but sticky PCE keeps Fed on guard: Real consumer spending stalled in July while headline PCE inflation held at 3.7% and core at 3.3%, keeping the Fed focused on persistent inflation.

— Copper hits record above $6.70 as U.S. tariff risk tightens supply: Copper reaches another record as tariff-driven U.S. stockpiling drains inventories elsewhere, adding to longer-term concerns about mine supply and demand growth.

■  AG MARKETS

— USDA daily export sale: 333,000 MT soybeans to China for 2026/27: Another sizable soybean purchase reinforces China’s growing new-crop U.S. buying program.

— Wheat leads overnight grain rally as Black Sea risk deepens: Wheat gains on worsening Black Sea transportation problems, corn pushes to another contract high and soybean gains are restrained by another sharp soybean-oil decline.

— Paris grain prices firm as Black Sea risk lifts wheat; palm oil retreats: European wheat and corn remain supported by Black Sea disruption and crop losses, while Malaysian palm oil falls on weak exports, ample stocks and lower energy prices.

— Sinograin soybean auction clears 76.6% as buying appetite eases: China sold nearly 223,000 MT of reserve soybeans, with a lower clearance rate signaling more selective crusher demand as incoming U.S. soybean purchases build.

— Agriculture markets yesterday: Corn, soybeans and winter wheat advanced Tuesday, while cattle futures posted sharp losses as markets absorbed renewed Mexican cattle imports.

■  TRADE POLICY

— U.S. weighs new Canada penalties as tariff fight threatens to spiral: Washington is considering additional retaliation after Canada announced tariffs on roughly US$20 billion of U.S. goods, increasing risks for dairy, farm equipment, autos and the broader USMCA relationship.

■  POLITICS & ELECTIONS

— Trump flexes primary clout in South Carolina and Oklahoma: Trump-backed Republicans won closely fought runoffs, while Oklahoma Democrats chose a progressive Senate nominee and Georgia Democrats elected Everton Blair in a special House runoff.

■  WEATHER

— NWS outlook: Severe thunderstorms and heavy rainfall threaten portions of the Corn Belt while dangerous heat persists across the Southern Plains and Southwest.

— Heat builds as Corn Belt rainfall turns increasingly uneven: Northwest Corn Belt showers contrast with developing heat and dryness farther south and east, leaving soybeans especially vulnerable during pod fill while Texas Panhandle rains offer only partial drought relief.

■  TOP STORIES

—Oil risk premium cracks as Iran/Oman Hormuz talks gain traction

Brent slides into mid-$80s as corridor talks ease prolonged supply fears

Oil prices extended their sharp retreat Wednesday as traders increasingly concluded that the confrontation over the Strait of Hormuz may be moving — slowly and unevenly — toward de-escalation rather than another round of military escalation.

Brent crude moved into the mid-$80s per barrel, extending losses for a third consecutive session and putting the international benchmark near a two-week low. Brent was just under $86 early Wednesday, down nearly 3%. West Texas Intermediate (WTI) fell toward $80.

The immediate catalyst was progress between Iran and Oman on a temporary shipping corridor through the Strait of Hormuz. The two governments have discussed a joint navigational lane along with mine-clearing arrangements, and Omani Foreign Minister Badr Albusaidi said he was hopeful that a temporary corridor and practical arrangements for safer shipping could be announced soon. Technical negotiations are expected to continue toward a permanent corridor covering traffic management, information sharing and maritime-security services.

That is potentially a major development because the strait handled roughly one-fifth of global oil and liquefied natural gas shipments before the war began in February. Even a limited reopening could allow more Gulf barrels onto the world market and reduce the insurance, freight and security premiums that have become embedded in crude prices.

But there is an important qualification: the physical oil market has not yet normalized. Only five commodity vessels moved through Hormuz on Tuesday, according to preliminary Kpler data cited by Reuters. That compares with a 10-day average of 15 and remains far below prewar traffic. In other words, oil is falling because traders are changing their expectations about what may happen next — not because large volumes of previously stranded crude have suddenly returned to the market.

That distinction helps explain the speed of this week’s decline. Brent has lost roughly 9% this week, according to Bloomberg reporting, even though the maritime bottleneck remains largely intact. The market is effectively removing part of the geopolitical risk premium before the underlying supply disruption has been resolved.

Washington’s sanctions package was less severe than feared. The second major bearish development has been the market’s reassessment of President Donald Trump’s promised “economic D-Day” against Iran.

Treasury Secretary Scott Bessent announced sanctions on nearly 60 Iran-linked entities, individuals and vessels and broadened the types of dealings that could expose foreign entities to secondary sanctions. Washington also warned countries that they eventually could face penalties if they continue economic relations with Tehran. But markets were prepared for something considerably more disruptive.

The administration did not immediately impose secondary sanctions on Iran’s major trading partners, did not set immediate penalties against named countries and stopped short of targeting Chinese financial institutions suspected of facilitating Iranian oil trade. Bessent said countries would first be given time to wind down their relationships with Iran.
 

Table 1. Sanctions: what markets braced for vs. what was announced

Source: Treasury Dept. announcement as reported by Reuters; market expectations as characterized in Reuters and Bloomberg trader commentary.
 

For oil traders, that matters enormously. A sanctions package that immediately threatened Chinese refiners, banks or shipping networks could have removed additional Iranian barrels from the world market and pushed crude sharply higher. Instead, Washington appears to be using the threat of future sanctions partly as negotiating leverage. The market therefore interpreted Monday’s announcement less as an immediate supply shock and more as another component of an effort to pressure Tehran toward an agreement.

Diplomatic channels are multiplying. Several diplomatic tracks are also reinforcing that interpretation. Pakistan’s army chief, Field Marshal Asim Munir, completed talks in Tehran this week, and Pakistani officials said the discussions produced significant progress toward resolving the conflict. Qatar, which remains another important intermediary between Washington and Tehran, has said it is continuing efforts aimed at restoring negotiations and normal navigation through Hormuz.

Meanwhile, Reuters reported that Secretary of State Marco Rubio has told allies that Washington does not currently expect to launch another round of strikes against Iran, while the U.S. is beginning to return personnel to some diplomatic missions that had been evacuated or reduced during the conflict. Both signals suggest Washington sees the immediate risk of full-scale escalation as lower than it was only days ago.

None of that guarantees a peace agreement. But oil markets do not need certainty to move. They need only a change in probability.

And the probability being priced Wednesday is increasingly that the next major development could be a partial reopening of Hormuz rather than another major military confrontation.

Another bearish factor: U.S. inventories. Oil also faces pressure from traditional supply-and-demand fundamentals. The American Petroleum Institute reportedly estimated that U.S. crude inventories increased by about 4.2 million barrels last week, far above the roughly 600,000-barrel increase analysts surveyed by Reuters had expected. Official Energy Information Administration data are due Wednesday morning. If confirmed, another large inventory build would reinforce the argument that crude supplies outside the Hormuz disruption are becoming more comfortable just as geopolitical risk premiums are declining.

Bottom line:The oil market has shifted rapidly from pricing the possibility of prolonged disruption and renewed war toward pricing a possible managed reopening of the world’s most important petroleum chokepoint. That makes the Iran-Oman corridor negotiations potentially more significant for oil prices than Washington’s new sanctions — at least in the near term. Still, the decline into the mid-$80s may be getting ahead of the physical market. Hormuz traffic remains severely constrained, attacks on shipping remain a risk and there is not yet a permanent agreement governing navigation through the strait.

The next test will therefore be whether diplomacy produces actual barrels.

Table 2. What moves the remaining risk premium from here

Source: Author’s framework, drawn from the corridor, shipping, sanctions and inventory developments reported by Reuters, Bloomberg and Kpler.

If a temporary corridor opens, tanker traffic begins to rise materially and Iran and Oman agree on rules for a permanent route, Brent could lose another layer of its war premium. Conversely, a breakdown in the corridor negotiations, another serious attack on commercial shipping or a U.S. decision to enforce secondary sanctions aggressively against Iran’s largest oil customers could quickly put that premium back into the market.

For now, however, the direction has changed: oil traders are increasingly paying attention to the possibility of an exit from the Hormuz crisis rather than preparing for its next escalation.

—China draws a red line around U.S. Iran sanctions ahead of Xi visit

Beijing warns retaliation as U.S. weighs pressure on Iran’s partners

China has delivered a carefully calibrated warning to Washington: Beijing will tolerate U.S. sanctions aimed directly at Iran only up to the point that they substantially interfere with Chinese trade or financial interests. The warning comes as the Trump administration begins what Treasury calls “Operation Economic Outcast,” a broader effort to isolate Iran economically while stopping, for now, short of the most disruptive step available — sweeping secondary sanctions against major Chinese banks and refiners.

Chinese Foreign Ministry spokesman Lin Jian said Tuesday that Beijing “will do everything necessary to firmly safeguard its rights and interests,” while rejecting what China calls unilateral U.S. sanctions lacking authorization from the UN Security Council. Asked specifically whether China would alter its dealings with Iran to comply with U.S. demands, Lin said Chinese/Iranian cooperation operates within international law and “should not be disrupted.”

That wording is significant because Treasury’s opening sanctions package already includes more than a dozen smaller companies and shipping interests in mainland China and Hong Kong connected with Iranian oil movements, procurement or sanctions evasion. Treasury, for example, designated China-based Lilimoon Navigation and several Hong Kong companies and vessels associated with transporting Iranian petroleum. What Washington deliberately avoided was targeting large Chinese state banks, major refiners or China’s overall purchases of Iranian crude.

That distinction explains why financial and energy markets have so far treated the announcement with a degree of relief.

Secondary sanctions remain the real threat. It would be more accurate to say the administration held back its most powerful secondary-sanctions tools, rather than saying secondary sanctions were excluded altogether. Treasury explicitly said Monday that it was expanding the categories of Iran-related activity potentially subject to secondary sanctions, including digital assets, technology, gold, aviation and shipping. The department also said countries would be given timelines to shut down activities identified by Washington, after which Treasury could take additional action.

That creates a second stage to the sanctions campaign. The first stage attacks Iranian entities, shadow-fleet vessels, brokers and relatively small foreign facilitators. The potentially much more consequential second stage would threaten foreign companies with loss of access to the U.S. financial system simply because they continue significant business with Iran.

China is the pivotal test. China remains Iran’s most important economic partner and overwhelmingly its largest crude-oil customer. Beijing has substantial ability to keep Iranian barrels moving through independent refiners, alternative payment mechanisms and shipping networks even if Western companies withdraw. An Iran pressure campaign that does not ultimately confront that trade will therefore have limits.

But confronting it carries considerably greater risks for Washington.

The Sept. 24 Xi Summit is a restraining force. President Donald Trump has publicly said Chinese President Xi Jinping will visit the United States on Sept. 24, following their May meetings in Beijing. The White House previously said Xi would make a reciprocal Washington visit this fall, and the September meeting continues to be treated by U.S. officials and outside analysts as planned. That summit provides a powerful incentive for both governments to keep the Iran disagreement contained for at least the next several weeks.

For Trump, an aggressive move against a major Chinese bank or refinery could transform the summit from an opportunity to consolidate the U.S./China trade truce into a confrontation over extraterritorial U.S. sanctions.

For Xi, cancelling or threatening the summit carries costs as well. Beijing has an interest in maintaining trade stability, preserving access to U.S. markets and avoiding another cycle of tariffs, export controls and financial restrictions.

The result is an unusual negotiating dynamic: Washington wants China to believe secondary sanctions are credible without actually having to impose the measures most likely to provoke Chinese retaliation.

Beijing, meanwhile, wants Washington to believe retaliation is certain without specifying exactly what China would do.

That ambiguity is deliberate on both sides.

Agriculture could become collateral damage. The Iran dispute also intersects directly with agricultural trade. The agreements reached during Trump’s May visit to Beijing included Chinese commitments to purchase at least $17 billion annually of U.S. agricultural products in 2026-28, with 2026 prorated, besides earlier soybean commitments. There is no indication Beijing is preparing to abandon those commitments. But a major sanctions confrontation could raise doubts over their implementation, particularly if China sought areas where it could retaliate against Washington without directly escalating the financial fight.

Agricultural purchases have repeatedly served as both an incentive and a pressure point in U.S./China relations. Soybeans would therefore be among the markets most sensitive to evidence that Iran sanctions were spilling into the broader trade relationship.

For grain markets, the risk is less that China abruptly cancels commitments tomorrow and more that traders begin assigning a larger political-risk discount to future Chinese purchases.

Oil markets face the opposite risk. For crude oil, escalation would likely be bullish. Sanctions against individual ships and small intermediaries can raise transportation costs without necessarily removing large volumes of Iranian oil from the global market. Sanctioning Chinese refiners, banks or institutions processing Iranian purchases would be far more consequential because it could force companies to choose between Iranian barrels and access to the U.S.-centered financial system. That could genuinely threaten Iranian exports.

Analysts say Washington must therefore balance two competing objectives: maximizing economic pressure on Tehran while avoiding an abrupt disruption of Iranian supply large enough to send world oil prices sharply higher. That consideration helps explain why the first sanctions package looked formidable in headline terms — nearly 60 entities, individuals and vessels — but comparatively restrained when judged by the financial importance of the Chinese institutions left untouched.

Bottom line: China’s response should be viewed less as immediate retaliation than as a red-line warning ahead of the next U.S. sanctions decision. Beijing is effectively telling Washington that sanctions against Iran-linked shell companies and shadow-fleet operators are one matter; sanctions that interfere materially with mainstream Chinese commerce are another.

For now, both sides appear interested in preserving room for the Sept. 24 Trump/Xi meeting. That makes continued U.S. pressure on smaller Iranian networks and facilitators more likely than an immediate assault on major Chinese financial institutions.

But the stability is fragile. If Washington concludes that Iran continues moving substantial oil and revenue through China despite the new campaign, the administration eventually will face the central question behind its “Economic Outcast” strategy: Is it willing to sanction economically important Chinese institutions to make the Iran campaign work?

If the answer becomes yes, the consequences would extend well beyond Iran — potentially affecting oil prices, critical-mineral supplies, U.S.-China trade negotiations and the outlook for Chinese purchases of U.S. agricultural products.

For now, the absence of that escalation is providing relief. The risk has not disappeared; it has merely been pushed into the next round of sanctions decisions.

—Mexican cattle flow holds near Douglas cap, but lighter weights matter

Tuesday’s 600-head crossing adds supply, but finished-beef impact remains distant

About 600 head of Mexican cattle crossed into the U.S. at Douglas, Arizona, on Tuesday, the second day of livestock trade following the reopening of the U.S./Mexico border. The volume was modestly below Monday’s initial movement, while the cattle were also reported at lighter weights — a detail that may be more important to the cattle market than the daily head count.

USDA reported 692 Mexican feeder cattle entered through Douglas on Monday, the first shipments through the port in more than a year. Douglas is initially being operated at roughly 700 head per day, although its normal capacity eventually could rise toward 1,200 to 1,500 head daily. USDA plans to evaluate the operation before considering additional crossings at Santa Teresa and Columbus, New Mexico.

The key point: 600 head is not enough to fundamentally change the U.S. cattle supply situation. Even if Douglas averaged 600 head every business day, that would translate into roughly 150,000 head annually — only a fraction of the more than 1 million Mexican cattle commonly imported in normal years. Mexican cattle historically account for only a few percent of total U.S. cattle supplies.

The lighter weights are significant, however. Mexican cattle typically enter the U.S. as feeder animals, meaning lighter calves require more days on feed before reaching slaughter weight. Consequently, the reopening can increase feedlot placements relatively quickly without producing a comparable near-term increase in beef production.

That creates two market implications. First, lighter Mexican cattle could eventually help feedlots replenish inventories as domestic feeder supplies remain historically tight. Second, the cattle will consume more feed and remain in feeding programs longer, potentially producing a modest incremental boost to corn and feed demand if imports eventually return toward historic volumes.

The distinction also helps explain why the border reopening should not be viewed as an immediate solution to high beef prices. USDA’s phased approach means the additional cattle will enter gradually, and lighter animals crossing today may not reach slaughter until well into 2027. Economists have consequently cautioned that reopening Mexican trade by itself is unlikely to materially reduce retail beef prices in the near term.

Cattle futures nevertheless have treated the reopening as bearish — particularly for feeders. September feeder cattle fell $4.95 Tuesday to $319.28, while October live cattle dropped $2.65 to $210.95. Cash cattle also weakened, with some live trade around $218, roughly $7 below the previous week.

That market reaction appears considerably larger than the physical supply represented by 600 to 700 Mexican cattle per day. Traders are essentially pricing the future flow rather than today’s flow — anticipating Douglas eventually operates at higher capacity and that additional New Mexico ports eventually reopen.

But that outcome remains contingent on New World screwworm developments. USDA has made clear that the reopening is risk-based and can be adjusted or paused if conditions deteriorate in Sonora or Chihuahua. Every animal entering through Douglas is subject to extensive inspection and screwworm safeguards.

Bottom line: Tuesday’s 600-head crossing confirms Mexican cattle trade is functioning again, but it does not represent a surge in supply. The lighter weights reinforce that these cattle are primarily future feedlot inventory rather than immediate beef production. For feeder cattle prices, the larger risk comes when — and if — USDA moves from one restricted crossing to several ports handling thousands of cattle per day. Until then, the psychological impact of the border reopening is considerably larger than the actual increase in U.S. cattle supplies.

■  FINANCIAL MARKETS

—Equities today: Global markets were largely in a holding pattern early Wednesday, Aug. 26, as investors confronted an unusually concentrated set of market-moving events: Nvidia earnings, U.S. inflation data and the approaching Jackson Hole speech from Federal Reserve Chair Kevin Warsh. U.S. Dow opened around 40 points lower.

Nvidia’s problem is no longer simply beating estimates. It has to beat extremely elevated expectations and convince investors that the next leg of AI spending remains economically sustainable. Analysts expect second-quarter revenue of roughly $92.2 billion, nearly double year-ago levels, followed by third-quarter revenue guidance near $104.2 billion, up 82.8% from a year earlier. Adjusted gross margins are expected to remain close to 75%.

That makes forward guidance more important than the headline quarterly numbers. Investors will be listening for evidence that hyperscalers are continuing to expand AI capital spending, that demand for Nvidia’s Rubin generation is holding up and that rising competition and enormous infrastructure-financing requirements are not beginning to erode returns. Nvidia’s recent participation in financing platforms targeting more than $500 billion of AI infrastructure has itself intensified questions about how much capital must ultimately be committed to keep the AI expansion moving.

The options market shows just how much is riding on the report. Traders are pricing a roughly 5.4% move in Nvidia shares following earnings, equivalent to about $280 billion of market capitalization. Interestingly, that implied move is smaller than both the 6.5% expected before Nvidia’s May report and its 7.4% average earnings-day move over the previous 12 quarters. That suggests investors increasingly assume Nvidia will deliver strong numbers — which also means a merely respectable report could disappoint.

Oil is providing an important cushion. One reason global equities are not weaker ahead of Nvidia is the sharp retreat in energy prices. Brent crude dropped more than 2% Wednesday to just under $86 per barrel, extending its decline to a third day as Iran-Oman discussions raised hopes for improved shipping access through the Strait of Hormuz. Lower oil has also eased pressure on bond yields, giving highly valued technology shares some breathing room.

The recent technology selloff was not purely about concerns over AI valuations. Rising oil prices had revived inflation concerns, while long-term Treasury yields climbed sharply as investors simultaneously worried about U.S. government borrowing. Falling oil therefore attacks two problems at once: it reduces prospective inflation and takes some upward pressure off yields.

But the Hormuz relief remains fragile. Markets are pricing the possibility of increased shipping before there is evidence of a sustained normalization of traffic. A breakdown in the Iran-Oman process could quickly put energy prices and yields back on the defensive.

Nvidia is only half of Wednesday’s market test. The other major variable is inflation. They were also focused on the July PCE report. We have details on that in the next item.

A strong Nvidia report combined with softer inflation would be the most bullish combination, supporting AI earnings expectations while lowering discount rates. Strong Nvidia results accompanied by hotter inflation would be less straightforward because higher Treasury yields could offset some of the earnings-driven rally.

The most difficult outcome would be disappointing Nvidia guidance coupled with stubborn inflation. That would challenge both pillars supporting today’s equity valuations — rapid earnings growth and expectations that bond yields will eventually stabilize.

The larger message is that Wednesday is less an Nvidia earnings day than a test of the entire investment framework that has supported U.S. equities. Nvidia must demonstrate that massive AI spending is still translating into extraordinary revenue growth and margins, while inflation and oil must remain contained enough to prevent bond yields from undermining the valuation investors are willing to assign those earnings.

That explains why markets are muted rather than broadly optimistic despite falling oil. The macro backdrop has improved, but Nvidia now has to validate one of the most expensive assumptions embedded in global equity markets: that extraordinary AI capital spending can continue producing extraordinary returns.

—Equities yesterday: 

—July consumer spending cools, but sticky PCE keeps Fed on guard

Real spending stalls as inflation holds 3.7%, complicating Warsh’s message

U.S. consumers pulled back sharply in July even as incomes accelerated, giving the Federal Reserve a mixed economic signal: demand is cooling, but inflation remains too high to provide policymakers with confidence that price pressures are returning sustainably toward the 2% target.

The Bureau of Economic Analysis reported Wednesday that personal consumption expenditures (PCE) increased just $36.3 billion, or 0.2%, in July, down from a $65.2 billion, or 0.3%, increase in June. More importantly, after adjusting for inflation, real PCE was essentially unchanged, compared with a 0.4% increase in June.

That makes July considerably softer than the headline dollar figure initially suggests.

Consumers shift away from goods. The composition of spending was particularly notable. Spending on services increased $86.2 billion, but that was partly offset by a $49.9 billion decline in spending on goods.

Within goods, spending on food and beverages purchased for off-premises consumption declined by about $2.2 billion, while gasoline and other energy goods dropped roughly $14 billion. Energy spending had already plunged $48.1 billion in June.

Some of the decline in gasoline spending reflects falling prices rather than simply consumers driving less, so the numbers should not be interpreted as a one-for-one decline in physical demand. Still, the broader goods pullback fits with evidence that households have become more selective after several years of elevated prices and borrowing costs.

Services remain the consumer economy’s primary support. That means July does not yet signal a collapse in household demand. Instead, it suggests a widening split between relatively resilient services consumption and weakening discretionary and goods spending.

Income growth offers consumers some cushion. There was a more encouraging development on the income side. Personal income increased $115.1 billion, or 0.4%, while disposable personal income increased $125.9 billion, or 0.5%. After inflation, real disposable income rose 0.4%. Meanwhile, the personal saving rate increased to 3.0% from 2.7% in June.

That combination is important. Income grew faster than spending, allowing households to rebuild at least a small portion of their savings rather than immediately spending additional income.

For the broader economy, that reduces fears of an abrupt consumer retrenchment. But it also suggests households are becoming more cautious — a development the Fed will watch closely because consumer spending accounts for roughly two-thirds of U.S. economic activity.

Inflation is the bigger Fed problem. The inflation side of Wednesday’s report was less reassuring. The headline PCE price index increased 0.2% from June, reversing June’s 0.1% decline and exceeding economists’ expectations for a 0.1% increase. From a year earlier, headline PCE inflation was 3.7%, unchanged from June, versus expectations for 3.6%.

Core PCE, excluding food and energy, also increased 0.2% in July, up from 0.1% in June. The 12-month core rate held at 3.3%, matching expectations.

One terminology point: the 3.7% headline and 3.3% core figures are year-over-year rates, not annualized rates.

The Fed’s dilemma is therefore becoming clearer: economic demand is losing momentum without inflation declining quickly enough to justify easier monetary policy.

Headline PCE has now remained above the Fed’s 2% target for more than five years, while core inflation at 3.3% remains far enough above target that policymakers cannot comfortably dismiss the remaining inflation as temporary.

Warsh faces a difficult Jackson Hole message. That sets up an important speech Friday by Fed Chair Kevin Warsh, who is scheduled to deliver keynote remarks at the Jackson Hole Economic Policy Symposium at 10 a.m. EDT.

Warsh has several competing signals to reconcile. Consumer spending is slowing. Real PCE essentially stalled in July. Yet inflation remains sticky, and the Fed’s July meeting already revealed a growing hawkish faction: three policymakers favored a quarter-point rate increase, while several others indicated additional tightening could become appropriate if inflation failed to improve.

The Fed’s benchmark rate remains at 3.50% to 3.75%, where it has been since December. Markets before Wednesday’s PCE report were assigning roughly a one-third probability to a September rate increase. Wednesday’s inflation figures do little to weaken the hawkish argument.

Warsh therefore is likely to continue stressing price stability rather than signaling an imminent policy pivot. He can acknowledge softer demand and declining energy prices, but the Fed would risk losing credibility if it characterized 3.3% core inflation as sufficiently close to its 2% objective.

Agriculture and commodity implications. For agriculture, the report contains competing signals. The decline in food-at-home spending is a cautionary consumer-demand indicator, particularly for higher-priced meat and discretionary food categories. Consumers may increasingly trade down, substitute among proteins or shift purchases toward promotions if household budgets remain under pressure. Lower gasoline and energy expenditures, meanwhile, provide consumers some relief and could eventually free income for other purchases. But sustained weakness in petroleum prices can also pressure ethanol economics and the broader biofuel complex.

For grain markets, the larger macro implication may come through interest rates and the dollar. Sticky PCE inflation reduces the probability of near-term Fed easing and keeps the possibility of another rate increase alive. Higher-for-longer interest rates tend to support the dollar, increase financing costs throughout agriculture and create a potential headwind for commodity prices.

Bottom line: July delivered evidence that consumers are becoming more cautious, but not enough evidence that inflation has been defeated. Real spending stalled while incomes improved, which could help cool inflation eventually. For now, however, 3.7% headline and 3.3% core PCE inflation leave the Fed firmly focused on price stability — and put even more weight on Warsh’s Jackson Hole message Friday.

—Copper hits record above $6.70 as U.S. tariff risk tightens supply

U.S. stockpiling drains global inventories as Washington weighs new duties

Copper futures climbed above $6.70 per pound Wednesday, setting another record as tightening inventories, mine disruptions and uncertainty over possible U.S. tariffs keep the market under pressure.

A major driver is the diversion of refined copper into the United States. Traders have been building inventories ahead of a potential Trump administration tariff, creating a substantial premium for U.S. copper over London prices. Meanwhile, London Metal Exchange inventories have fallen by roughly half since mid-May after 42 consecutive sessions of declines.

The result is an unusual market: global copper supplies may not be critically short, but metal is increasingly concentrated in U.S. warehouses. That has reduced readily available supply elsewhere and magnified the rally.

Underlying fundamentals remain supportive as well. Mine disruptions, tight copper-concentrate supplies and rising demand from electrical grids, renewable energy, electric vehicles and AI data-center construction are reinforcing concerns that production growth will struggle to keep pace later this decade.

The biggest near-term wildcard is U.S. trade policy. Confirmation of tariffs could encourage another rush of imports before duties take effect. But a decision against tariffs could unwind some of the U.S. stockpiling premium and trigger a sharp correction.

Bottom line: Copper’s record above $6.70 reflects genuine long-term supply concerns, but the current rally is also being amplified by tariff-driven inventory movements. Until Washington settles its copper policy, where the world’s copper is stored may matter nearly as much as how much is produced.

■  AG MARKETS

—USDA daily export sale: 333,000 MT soybeans to China for 2026/27.

—Wheat leads overnight grain rally as Black Sea risk deepens

Corn hits another contract high while soybean oil limits bean gains

Grain futures were broadly higher overnight Wednesday, Aug. 26, with wheat taking the lead as Black Sea export disruptions again forced traders to put geopolitical risk premium into prices. Corn extended its technically powerful rally to another contract high, while soybeans posted only modest gains as stronger soybean meal was offset by another sharp drop in soybean oil.

At the morning break, December corn was up 3 3/4 cents at $5.27 1/4, November soybeans were 2 3/4 cents higher at $12.40 1/2, September soybean meal gained $3.40 to $323.70 and September soybean oil dropped 108 points to 66.44 cents. December SRW wheat jumped 12 1/4 cents to $7.15 1/2, while December HRW wheat gained 11 1/2 cents to $7.82 1/4.

•Wheat: Black Sea logistics are becoming a price issue. The strongest fundamental story overnight was wheat. The Russia/Ukraine conflict is no longer simply generating headline risk; it is increasingly interfering with the physical movement of grain.

Russian attacks have effectively blocked Ukraine’s primary Black Sea ports, forcing more exports toward the lower-capacity Danube system. Reuters reported Wednesday that 50 to 70 vessels were waiting near the Sulina Canal, with current traffic capacity into Ukrainian Danube ports down to only two or three vessels per day in some cases. Ukraine exported just 539,000 metric tons of grain from Aug. 1-21 versus 1.73 million tons during the same period last year.

Russia is encountering problems of its own. Reciprocal attacks on ports and vessels have forced delays or cancellations of cargoes, although Moscow says it is taking measures to keep exports moving.

Earlier phases of the Black Sea war frequently generated short-lived futures rallies because grain ultimately continued to flow. The present market is seeing actual reductions in logistical capacity and rising freight costs, making it harder for traders to quickly dismiss the risk premium.

December SRW wheat has now reached a four-week high and is approaching important resistance. The next major chart target is the July contract high around $7.28 1/4, while December HRW is moving toward its contract high around $7.92 3/4.

Bottom line on wheat: A move through those July highs would signal that the market is beginning to price something more serious than temporary Black Sea disruption.

•Corn: rally is shifting from recovery to breakout. Corn’s advance is increasingly being driven by a combination of smaller crop expectations and bullish technical momentum.

December corn closed Tuesday at a contract-high $5.23 1/2 and pushed to another contract high overnight. Some analysts note the market’s Monday gap higher increasingly resembles a technical “breakaway” gap, with the next major upside chart objective around $5.50.

Fundamentals are reinforcing the chart action. USDA on Monday cut the U.S. corn crop’s good-to-excellent rating three percentage points to 57%, versus 60% a week earlier and 71% last year. Soybeans slipped one point to 60% good/excellent.

That deterioration has strengthened expectations that USDA’s current corn yield forecast could eventually move lower. The market is particularly sensitive because Pro Farmer estimated the national corn yield at 173.2 bushels per acre, well below USDA’s August projection of 180.7 bpa.

Weather is not providing bulls much reason to back away. Scattered storms are crossing portions of the Midwest, but heat remains entrenched farther south and forecasts still favor warmer conditions. At this stage of crop development, the issue is increasingly kernel weight rather than pollination. Additional late-season stress could trim grain fill even where ear counts were respectable. See the Weather section below for details.

The key near-term test is whether December corn can sustain trade above roughly $5.25-$5.30. If it does, $5.50 becomes a realistic technical objective rather than merely a bullish target.

Soybeans: meal strength battles another soy oil selloff. Soybeans remain the least convincing part of Wednesday’s rally.

November futures are above $12.40, but the internal soybean complex is sharply divided. September meal climbed $3.40 to $323.70 and reached its strongest levels in several weeks, while soybean oil dropped more than a cent.

The oil weakness reflects both energy and biofuel policy concerns. Crude oil has retreated toward $80 per barrel as optimism grows that maritime conditions around the Strait of Hormuz could improve. Meanwhile, uncertainty surrounding U.S. Renewable Fuel Standard policy has knocked substantial value out of biofuel credits and soybean oil.

EPA’s decision to extend the 2025 RFS compliance deadline, combined with expectations that small-refinery exemptions could make 1.2 billion to 1.8 billion RINs available, has weakened the economic signal for biomass-based diesel production. CBOT soybean oil fell more than 7% over the three sessions through Aug. 24 amid those concerns.

Weakness is also coming from competing vegetable oils. Malaysian palm oil futures fell below 4,900 ringgit per metric ton Wednesday, pressured by weaker Chicago soybean oil, lower crude prices and reports that Malaysian palm oil exports during Aug. 1-25 fell about 20% from the comparable July period.

For soybeans, that means meal and export demand must do more of the lifting. November futures are approaching resistance near the July high of $12.56 1/2. A breakout above that level would improve the chart considerably, but continued soybean-oil weakness could make the climb difficult.

Market outlook: The overnight message is increasingly bullish for grains, but for three different reasons.

Corn is trading a tightening U.S. production story and has developed powerful upward technical momentum. 

Wheat is adding a genuine Black Sea transportation premium as physical export disruptions become harder to ignore.

Soybeans have supportive crop and demand factors, but the market’s upside is being restrained by the collapse in soybean oil’s biofuel and energy premium.

The biggest development is corn. A market that repeatedly makes new contract highs after disappointing crop assessments is signaling that traders no longer believe the August supply estimates represent the final word on U.S. production. If December corn holds above $5.25 and wheat challenges its July highs, fund buying and short covering could add another leg to the grain rally.

The principal caution is that these markets have risen rapidly. Any improvement in Black Sea shipping, unexpectedly favorable Midwest weather or renewed liquidation in vegetable oils could trigger sharp corrections. But entering Wednesday’s session, the burden of proof has clearly shifted: bears now need fresh bearish news to break increasingly well-established uptrends in corn and wheat.

—Paris grain prices firm as Black Sea risk lifts wheat; palm oil retreats

EU crop stress supports corn while palm oil demand and energy cues turn bearish

International grain markets were firmer Wednesday, Aug. 26, led by another advance in European wheat as traders continued to price uncertainty surrounding Black Sea exports, while European corn remained supported by severe crop losses. Vegetable oils moved in the opposite direction, with Malaysian palm oil extending its retreat as weak exports, rising inventories and falling crude oil overwhelmed longer-term support from Indonesia’s B50 biodiesel mandate and weather concerns. Link to our special report on the Black Sea grain conflict released late Tuesday. 

• Paris December wheat futures were up €3.00 at €239.75 per metric ton. Using an Aug. 26 euro exchange rate of about $1.1674, that converts to approximately $279.89 per metric ton, or $7.62 per bushel on a 60-pound wheat basis.

That leaves Paris wheat at a noticeable premium to Chicago. December Chicago SRW wheat closed Tuesday at $7.03 1/4 and was up another 11 3/4 cents early Wednesday, putting it near $7.15 per bushel. The roughly 47-cent Paris premium is not a direct arbitrage comparison because of differences in wheat quality, delivery location, currency and freight, but it highlights how much more aggressively European prices are reflecting regional supply risk.

The biggest source of that risk remains the Black Sea. Repeated Russian and Ukrainian attacks on ports, grain terminals and vessels have interrupted a trade corridor that normally supplies a major share of internationally traded wheat. Russia has been attempting to reroute shipments, but SovEcon recently estimated Russian grain exports at only 2.2 million metric tons in August, even as the Kremlin says it is working to restore shipping capacity. Importers in North Africa, the Middle East and Asia are increasingly looking at alternatives from Europe, Australia and North America, helping support wheat prices outside the Black Sea.

Russian wheat offered out of Baltic Sea ports at $259 per metric ton converts to roughly $7.05 per bushel. That is about 57 cents below the Paris wheat equivalent and near current Chicago SRW values. The discount underscores the unusual structure of the market: Russian grain itself remains competitively priced, but the ability to move it reliably and cheaply has become the larger issue.

The Baltic offer is particularly important because it provides Russia an alternative to increasingly risky Black Sea logistics. But moving more grain through northern ports raises freight and logistical costs and cannot quickly replace the enormous export capacity concentrated around Novorossiysk and other southern terminals. As a result, the market is increasingly distinguishing between the nominal price of Russian wheat and the cost and reliability of actually delivering it.

• European corn premium widens. Paris November corn futures were up €1.00 at €262.25 per metric ton. At Wednesday’s exchange rate, that equals approximately $306.16 per metric ton, or $7.78 per bushel using the standard 56-pound corn conversion.

That compares with December Chicago corn near $5.28 per bushel early Wednesday after closing Tuesday at $5.23 1/2 and adding another 4 1/2 cents overnight. Again, the contracts are not directly interchangeable, but the roughly $2.50-per-bushel European premium illustrates how dramatically regional corn fundamentals have diverged.

European corn supplies have been damaged by prolonged heat and drought. The European Commission’s latest crop monitoring indicated EU grain-corn yields could finish roughly 7% below the five-year average, with especially severe losses in France, Germany and Italy. Earlier estimates suggested French corn production could fall below 7 million metric tons, with the broader EU crop potentially dropping below 50 million tons.

That strengthens the likelihood of increased EU feed-grain imports during 2026-27. Ukraine would normally be one of the natural suppliers, but the Black Sea conflict complicates that solution. The result is a supportive combination for European corn: a smaller domestic crop, elevated import needs and uncertainty over one of Europe’s closest major suppliers.

For U.S. exporters, the large European premium is potentially constructive, although tariffs, biotech approvals, freight economics and competition from South America will determine how much additional business ultimately reaches the United States.

•Palm oil breaks lower after recent rally. The most pronounced weakness Wednesday was in Malaysian palm oil. October futures fell 98 ringgit to 4,761 ringgit per metric ton. At an Aug. 26 exchange rate of about $0.2484 per ringgit, that equals approximately $1,182 per metric ton, or 53.6 cents per pound in U.S. terms.

The decline came as traders returned from a holiday to a considerably less supportive outside market environment. Malaysian palm oil futures fell to their lowest level in roughly a week as the ringgit strengthened, Chicago soybean oil weakened and crude oil retreated on renewed hopes that shipping through the Strait of Hormuz could normalize. September Chicago soybean oil was down another 121 points early Wednesday, reinforcing pressure across the vegetable-oil complex.

Demand data added to the bearish tone. Intertek Testing Services estimated Malaysian palm-product exports during Aug. 1-25 at about 1.045 million metric tons, down 20% from the comparable July period. Malaysian inventories also rose to a five-month high in July, while Indonesian palm-oil exports declined 9.2% from year-ago levels in June.

Those figures have temporarily shifted the market’s attention from future supply tightness to current availability.

However, the longer-term bullish arguments have not disappeared. Indonesia plans full implementation of its B50 biodiesel mandate beginning Oct. 1, which would increase domestic palm-oil consumption substantially. Meanwhile, concerns persist that a developing El Niño pattern could reduce rainfall and eventually constrain yields in Indonesia and Malaysia.

That leaves palm oil caught between bearish near-term fundamentals and potentially bullish 2027 supply-demand dynamics.

Bottom line: Wednesday’s international markets are increasingly dividing into two stories.

Grains are adding geopolitical and weather premiums. Black Sea transportation risk is supporting wheat, while Europe’s drought-damaged corn crop is creating a sizeable regional premium and increasing expectations for imports. Russian wheat remains cheap on paper, but the critical question has shifted from price to whether exporters can move sufficient tonnage through secure routes.

Vegetable oils are undergoing a correction. Palm oil’s decline reflects weak export demand, ample Malaysian inventories, a stronger ringgit, softer soybean oil and lower crude. But the October start of Indonesia’s B50 program and possible El Niño-related production problems should make it difficult for traders to dismiss longer-term supply concerns.

For U.S. agriculture, the international price structure remains broadly supportive for grains. Paris wheat near a U.S. equivalent of $7.62 per bushel and Paris corn near $7.78 demonstrate that foreign buyers are facing substantially higher replacement costs in parts of Europe. If Black Sea disruptions persist into the autumn export season, more of that demand could eventually be forced toward North and South American suppliers.

—Sinograin soybean auction clears 76.6% as buying appetite eases

Smaller sale still moves 223,000 MT as China makes room for U.S. cargoes

China’s latest sale of imported soybean reserves produced another solid clearance rate Wednesday, although the results suggest crushers were somewhat less aggressive than during the previous two auctions. 

State stockpiler Sinograin sold 222,782 metric tons of imported soybeans, or 76.6% of the 290,794 tons offered, according to Mysteel data cited by Reuters. That equals roughly 8.2 million bushels sold from an offering of 10.7 million bushels. Reuters confirmed that the Aug. 26 auction was Sinograin’s smallest offering in the current sequence.

The 76.6% clearance rate is noteworthy because it slipped from 85.2% on Aug. 19 and 89.3% on Aug. 12, even as Sinograin reduced the size of the offering. That suggests the reserve-release program may be moving into a new phase: crushers still want the soybeans, but the urgency evident earlier this month appears to have eased.

A Chinese agricultural-market compilation reports an average 4,162.73 yuan/MT, with trades ranging from 4,110 to 4,200 yuan and delivery from October through January. If confirmed, that would be a meaningful change from Aug. 19: the clearance rate would fall from roughly 85% to 77%, but the average price would rise from about 4,132 to 4,163 yuan/MT. That is not an outright bearish result. Buyers were more selective, but beans that did trade commanded a firmer average price. It suggests reserve soybeans are still valued, while China’s exceptionally large commercial stocks reduce the urgency to take every lot.

The lower clearance rate points mainly to price resistance: crushers are willing to buy reserve beans but are becoming more selective after several weeks of purchases.

Five auctions have now moved nearly 1.6 million tons. Including Wednesday’s auction, Sinograin has offered approximately 2.174 million metric tons of imported soybeans since July 31 and sold approximately 1.572 million tons, for a cumulative clearance rate of about 72.3%. That means roughly 57.8 million bushels of reserve soybeans have been transferred into commercial channels in less than a month.

The progression is revealing:

July 31: about 49% sold.

Aug. 5: about 66% sold.

Aug. 12: about 89% sold.

Aug. 19: about 85% sold.

Aug. 26: 76.6% sold.

Analysts say the latest decline should therefore be watched, but it does not yet constitute a collapse in demand. Three-quarters of a government offering clearing after more than 1.3 million tons had already been purchased during the preceding four auctions still represents substantial commercial interest.

The larger story remains U.S. soybean arrivals. The auctions are best viewed as part of Sinograin’s inventory rotation and warehouse-management strategy rather than simply as sales caused by weak soybean demand. Sinograin is clearing imported beans from reserve storage as China prepares for incoming U.S. soybean shipments. China has accelerated purchases of U.S. soybeans following trade commitments calling for Beijing to buy 25 million metric tons annually through 2028.

That connection became even more important last Friday. USDA reported 712,000 metric tons of new-crop U.S. soybeans sold directly to China and another 720,000 tons sold to unknown destinations on Aug. 21. The latter cannot automatically be attributed to China, but the combination underscored the surge in export business as the U.S. harvest approaches.

China already had reportedly purchased about 7 million metric tons of U.S. soybeans by mid-August, before the latest large sales announcements.

Market implications: For CBOT soybeans, Wednesday’s auction result is mixed but probably not bearish enough by itself to reverse the broader China-demand story. The decline from an 85%-89% clearance rate to 76.6% says processors are becoming less aggressive. But Sinograin also cut the auction from more than 500,000 tons earlier this month to only 290,794 tons Wednesday. Beijing is therefore releasing fewer old beans precisely as new U.S. purchases are building.

For Chinese soybean meal, the reserve auctions are somewhat more bearish. Every soybean released from government storage eventually available to crushers adds to near-term raw-material availability and can raise meal production. Repeated auctions can therefore pressure crush margins and meal basis even while they are constructive for U.S. soybean exports.

For the U.S. soybean market, the most constructive interpretation remains logistical: Sinograin has now moved nearly 1.6 million tons of older imported soybeans out of reserve storage while simultaneously buying substantial volumes of the coming U.S. crop.

Bottom line: Wednesday’s auction was not as bullish as the Aug. 12 or Aug. 19 results. Clearance fell to 76.6% despite the smallest offering of the current series, indicating that crushers’ appetite is beginning to moderate. But 76.6% is still a respectable result after five consecutive auctions, and the shrinking volume offered reinforces the possibility that Sinograin has already completed a substantial portion of its warehouse-clearing operation.

The next number to watch is the average transaction price. If it remained around 4,100-4,130 yuan per ton, Wednesday’s lower clearance rate would mostly reflect buyer resistance to elevated reserve prices. If the price fell sharply as well, the result would signal a more meaningful cooling in Chinese spot soybean demand.

For U.S. producers, however, the broader signal remains constructive: China is simultaneously drawing down older reserve beans and building its book of new-crop U.S. soybeans.

—Agriculture markets yesterday:

■  TRADE POLICY

—U.S. weighs new Canada penalties as tariff fight threatens to spiral

Ottawa’s Sept. 8 retaliation raises risks for autos, dairy and farm trade

The Trump administration is considering another round of trade penalties against Canada after Ottawa unveiled a nearly dollar-for-dollar response to the new U.S. tariffs that took effect Saturday, raising the possibility that what began as a targeted dispute could develop into a much broader North American trade war. We released several special reports on this topic Tuesday. Link and Link

A White House official told Bloomberg the administration is discussing higher tariffs and other trade actions and that a U.S. response to Canada’s latest measures is expected. President Donald Trump has already threatened a much larger step — raising tariffs on Canadian cars, trucks and auto parts to 50% beginning Jan. 1, 2027.

Canada announced Tuesday that its countermeasures will take effect Sept. 8 and cover C$27.6 billion, or roughly US$20 billion, of annual U.S. exports. One clarification to initial reports is important: Canada is not imposing a uniform 50% tariff on the entire list. Ottawa will levy duties of 15%, 25% or 50%, generally matching the corresponding U.S. rate. Steel and aluminum are among the goods receiving the 50% rate, while the broader list includes dairy products, electronics, appliances, pulp and paper products and agricultural equipment.

The scale essentially mirrors the U.S. action. Washington’s new Section 338 tariffs cover about US$20 billion of Canadian exports, roughly 5% of Canada’s shipments to the U.S. Canada says its retaliation is designed to match that action dollar for dollar.

The next U.S. escalation may be about expanding coverage, not simply raising the existing tariff rate. The administration invoked Section 338 of the Tariff Act of 1930 for the latest Canadian tariffs, an authority that allows the president to impose additional duties of up to 50% on imports from a country found to discriminate against U.S. commerce. Because many of the products targeted under the latest action are already subject to the 50% ceiling, the administration’s most consequential move under that authority could be to bring more Canadian products under the tariff umbrella rather than simply increase the rate on goods already covered. Section 338 also contains authority allowing import exclusions under certain circumstances.

That makes the White House reference to “other trade actions” worth watching. Trump has multiple trade statutes available, while the already-announced auto threat provides another major source of leverage. Autos are far more economically important than many products covered by the current Section 338 duties, and the highly integrated U.S.-Canadian auto supply chain means a 50% tariff could raise costs on both sides of the border. Reuters noted that U.S. vehicle production remains heavily dependent on Canadian-made vehicles and parts.

Canada, meanwhile, has deliberately chosen politically sensitive U.S. exports. The largest values of products affected by Canada’s retaliation originate in Ohio, Illinois, Pennsylvania, Michigan and California. With the Nov. 3 U.S. midterm elections approaching, that increases the political cost of allowing Ottawa’s retaliation to stand unanswered — but also increases the domestic political cost of escalating further if U.S. manufacturers and exporters begin losing Canadian sales.

That tension is central to the outlook. Each new tariff gives the other government a reason to retaliate, but every retaliation also creates a new domestic constituency pushing for a settlement.

Agriculture is now directly involved. The agriculture implications are becoming more significant even though major bulk commodities such as corn, soybeans, wheat, beef and pork are not at the center of Canada’s current retaliation list.

Canada’s schedule includes substantial duties on dairy. Milk powders and several concentrated milk and cream products face 50% tariffs, as do numerous whey and milk-protein products. Many cheeses, including cheddar, mozzarella, Swiss, Parmesan and other varieties, are slated for 25% tariffs. Natural honey faces a 50% duty.

Farm machinery is also exposed. Canada’s list includes duties of 15% to 25% on certain harvesting and mowing machinery and parts, while some farm and livestock trailers face 25% duties.

The immediate impact, therefore, is likely to fall more heavily on U.S. dairy processors, food manufacturers and agricultural-equipment companies than on corn or soybean producers. But the bigger danger for agriculture is another round of retaliation that expands the product lists.

Canada is simply too important a farm market for that risk to be dismissed. USDA’s Economic Research Service says U.S. agricultural exports to Canada totaled $28.2 billion in 2025, making Canada the second-largest U.S. agricultural export market behind Mexico. Canada accounted for 16.7% of total U.S. agricultural exports last year. Leading U.S. sales included bakery products, fresh vegetables, fresh fruit, ethanol and food preparations.

There is exposure in the other direction as well. U.S. agriculture and food companies depend heavily on Canadian supplies, while U.S. farmers rely on Canada for key inputs — most notably potash fertilizer. Canada is also a major supplier of beef, cattle, pork, canola oil and processed foods to the U.S. AP notes that the deeply integrated relationship is one reason both governments have strong economic incentives to prevent the conflict from becoming an unrestricted trade war.

Sept. 8 becomes the first off-ramp. For markets, the dates may be more important than this week’s rhetoric. Canada deliberately delayed implementation of its new tariffs until Sept. 8. The threatened U.S. 50% auto tariffs would not begin until Jan. 1, 2027. Those delays create negotiating windows in which Washington and Ottawa could revive the agreement that appeared close just days ago.

Before negotiations collapsed Friday, the proposed deal would reportedly have reduced U.S. tariffs on Canadian light-duty vehicles from 25% to 15% and cut steel and aluminum duties from 50% to 25%. The talks broke down over several issues, including the treatment of medium- and heavy-duty trucks.

That history is why the latest White House threat should be viewed partly as negotiating leverage as well as an escalation warning. The two countries were close enough to an agreement last week that neither side has to start negotiations from scratch.

AP cited trade specialists who believe an eventual compromise remains possible, noting that about $880 billion of annual U.S.-Canadian trade is ultimately at stake. The current Section 338 tariffs cover only a fraction of that relationship.

But the political environment has worsened considerably. Canada’s response has shifted from trying to minimize retaliation to demonstrating that every U.S. tariff escalation will carry a comparable cost for American exporters. Washington, meanwhile, appears reluctant to allow Canadian retaliation to go unanswered.

Bottom line: The greatest risk is no longer the roughly US$20 billion of trade covered by either country’s latest tariff list. It is the possibility that the dispute spreads into autos, additional agricultural products, energy, fertilizers and other sectors that define the deeply integrated North American economy. Canada’s Sept. 8 implementation date provides the nearest opportunity for another negotiated pause. If Washington instead answers Ottawa with a broader tariff package, the dispute would move another step away from a limited bilateral confrontation and toward a trade war capable of materially affecting U.S. farm exports, agricultural input costs and the wider USMCA relationship.

■  POLITICS & ELECTIONS

—Trump flexes primary clout in South Carolina and Oklahoma

Runoff wins were narrow as Democrats also showed progressive strength

Tuesday’s final major round of August election contests produced victories for President Donald Trump’s preferred candidates in two closely watched Republican runoffs, while Democrats delivered a progressive upset in Oklahoma and elected a new member of Congress in Georgia.

Voters went to the polls Tuesday, Aug. 25, in South Carolina, Oklahoma and Georgia, although the Georgia contest was technically a special-election runoff rather than a party primary. The results reinforce Trump’s continuing ability to influence Republican primary voters, but the margins also showed that a presidential endorsement does not automatically eliminate resistance inside the GOP.

•SOUTH CAROLINA: Graham survives conservative challenge. Interim Sen. Darline Graham (R-S.C.), sister of the late Sen. Lindsey Graham (R-S.C.), defeated Rep. Ralph Norman (R-S.C.) in the Republican special Senate primary runoff.

With nearly all votes counted, Graham received about 52.4%, compared with 47.6% for Norman. Graham had led the initial 10-candidate Aug. 11 primary with roughly 33%, while Norman finished second with about 25%.

The result is an important victory for Trump because he invested considerable political capital in Graham. He endorsed her, campaigned with her in Myrtle Beach and urged Republicans to approach the runoff almost as if Trump himself were on the ballot. MAGA Inc., the pro-Trump super PAC, poured another $827,000 into supporting Graham on the campaign’s final day.

Norman presented an unusually serious challenge because his own conservative credentials were difficult to attack. A House Freedom Caucus member, Norman argued that his congressional record and experience made him more qualified than Graham, who had never held elected office before Gov. Henry McMaster appointed her after her brother’s death.

Graham also endured a potentially damaging debate moment when she acknowledged that she was not well informed on national-security issues. That allowed Norman to question whether she was prepared for the Senate. Yet Trump’s endorsement, Graham’s family name and strong support from other South Carolina Republicans ultimately proved enough.

Perspective: This was a Trump victory, but not a landslide. Nearly 48% of Republican runoff voters still backed Norman despite Trump’s highly visible intervention. The lesson for other GOP candidates is that Trump remains capable of moving enough Republican voters to decide a close contest, particularly when his endorsement is reinforced with rallies and substantial outside spending.

Graham will face Democratic nominee Annie Andrews in November. South Carolina remains strongly Republican, leaving Graham heavily favored to keep the seat in GOP hands.

• OKLAHOMA: Mazzei edges Drummond in GOP governor runoff. The closest major contest Tuesday came in Oklahoma, where former state Sen. Mike Mazzei narrowly defeated state Attorney General Gentner Drummond for the Republican gubernatorial nomination.

Mazzei won about 50.3% to 49.7%, an advantage of only about 2,000 votes out of more than 350,000 cast. Drummond had actually finished slightly ahead of Mazzei in the June primary, 26.25% to 25.97%, before the contest moved to a runoff.

Trump endorsed Mazzei and repeatedly attacked Drummond as insufficiently loyal to the Republican agenda. The contest also highlighted disagreements over economic development and agriculture. Drummond opposed a proposed roughly $4 billion aluminum smelter in Inola, citing concerns including foreign ownership, environmental effects and impacts on nearby farmland; Trump, Gov. Kevin Stitt and Mazzei backed the project.

Drummond had also criticized Trump administration policies affecting Oklahoma producers, including tariffs and plans to increase supplies of imported beef.

Perspective: The razor-thin result makes Oklahoma more complicated than a simple Trump endorsement story. Trump may have provided the margin Mazzei needed, but almost half of Republican voters chose an attorney general who publicly differed with the president on several policies.

That could matter beyond Oklahoma. Republican officeholders in heavily agricultural states have increasingly faced a balancing act between loyalty to Trump and constituent concerns over tariffs, cattle prices, energy projects and other economic issues. Drummond demonstrated that such disagreements do not automatically disqualify a Republican with primary voters—but Tuesday showed they can become decisive liabilities in an exceptionally close race.

Mazzei will face Democratic state House Minority Leader Cyndi Munson in November. Given Oklahoma’s strong Republican lean, Mazzei begins the general election as the clear favorite.

• OKLAHOMA SENATE: Progressive Democrat wins easily. Oklahoma Democrats, meanwhile, moved sharply in the opposite ideological direction.

Nurse N’Kiyla Jasmine Thomas defeated attorney Jim Priest with roughly 61% of the vote in the Democratic runoff for Oklahoma’s open U.S. Senate seat. Thomas had led the June Democratic primary with about 45%, while Priest received roughly 24%.

Thomas identifies as a democratic socialist and has advocated policies including Medicare for All and universal child care. Priest argued during the runoff that a more moderate Democrat would be better positioned to attract crossover voters in deeply Republican Oklahoma.

Democratic voters rejected that electability argument.

Perspective: Thomas’ victory adds to evidence from several 2026 Democratic primaries that progressive candidates can defeat more centrist alternatives even in states where Democrats face daunting general-election odds. But Oklahoma also illustrates the difference between winning an ideological battle inside the Democratic Party and winning control of a Senate seat.

Thomas will face Republican Rep. Kevin Hern (R-Okla.), who easily won the GOP nomination in June. Oklahoma has not elected a Democratic U.S. senator since the 1990s, making Hern the strong November favorite.

Oklahoma voters also approved a ballot proposal placing the state’s voter-identification requirement in the state constitution, with about 55% voting yes.

• GEORGIA: Blair comes from behind to win Scott’s seat. In Georgia’s 13th Congressional District, Democrat Everton Blair defeated fellow Democrat Marcye Scott, daughter of the late Rep. David Scott (D-Ga.), in a special-election runoff.

Unofficial results showed Blair winning approximately 52.5% to 47.5%. That represented a significant reversal from the July 28 first round, when Scott led Blair roughly 46% to 37%.

Blair, a former chair of the Gwinnett County Board of Education, will serve only through the end of David Scott’s term in January. He will not be the Democratic nominee for the next full two-year term. State Rep. Jasmine Clark won that nomination in May and will face Republican Jonathan Chavez in November.

Still, Blair’s victory has immediate implications in Washington. Adding another Democrat to the House further reduces Republicans’ already narrow working margin for votes during the remainder of the current Congress.

Perspective: The Georgia outcome was also a rejection of automatic family succession. Marcye Scott entered the runoff with both the Scott name and a first-round lead, but Blair consolidated enough voters from eliminated candidates to overtake her.

Because the district is overwhelmingly Democratic, Tuesday’s result does not materially change the November battle for House control. Its more immediate importance is arithmetic: every additional Democratic vote matters when Republicans are operating with only a small cushion in the House.

Bottom line: Trump wins the night — but with warning signs. The broadest takeaway from Tuesday is that Trump remains the single most powerful endorsement in Republican primary politics. His candidates prevailed in both of the night’s major GOP tests — Graham in South Carolina and Mazzei in Oklahoma. But the margins deserve as much attention as the victories.

Mazzei survived by roughly half a percentage point. Graham, despite Trump rallies, establishment Republican endorsements and heavy outside spending, still lost nearly 48% of GOP voters to Norman. Those results indicate that Republican primary voters remain willing to support candidates who challenge Trump’s preferred choice when they have strong conservative credentials of their own.

For Democrats, Thomas’ Oklahoma win continues the party’s 2026 pattern of progressive candidates performing strongly in primaries, although several of those victories have occurred in states where the eventual Republican nominee remains favored in November.

And Georgia provided the one result with an immediate congressional consequence: Blair’s arrival in Washington further tightens House voting arithmetic as both parties head into the final stretch before the Nov. 3 midterm elections.

Tuesday therefore produced a good night politically for Trump — but also another reminder that beneath the president’s dominance of the Republican Party, meaningful pockets of resistance remain.

■  WEATHER

— NWS outlook: The day’s biggest story for agriculture is an organized severe weather threat sweeping across the heart of the Corn Belt: WPC highlights heavy rainfall and severe thunderstorms across the Midwest, Lower Mississippi Valley, and Great Lakes/Ohio Valley today, with large hail, damaging winds, and frequent lightning as the main hazards as northern-stream troughing pushes storms eastward from yesterday’s Plains activity. A Marginal excessive-rainfall risk covers portions of the Lower Mississippi Valley, with flash-flood potential extending into parts of the Plains and Southeast; that flooding threat shifts toward the Southeast and Northeast by Thursday. Meanwhile, dangerous, record-breaking heat continues to bake the Southern Plains and Southwest under a stout upper ridge, with highs of 100–110°F (to 115°F in the Desert Southwest) and little overnight relief through Thursday — a continuing stress factor for Texas and Oklahoma crops, pastures, and livestock, and a contrast with the wetter, stormier pattern to the north. For the Delta, the combination of daily Gulf-moisture thunderstorms and the marginal flood risk bears watching during harvest prep.
 

—Heat builds as Corn Belt rainfall turns increasingly uneven

Late-August heat raises soybean risk as northwest Belt catches showers

The U.S. crop/weather pattern is becoming increasingly polarized heading into September: parts of the Texas Panhandle finally received meaningful rain, the northwestern Corn Belt is moving toward a more active thunderstorm pattern, but much of the central and southeastern Corn Belt faces several more dry days followed by a significant late-summer heat wave.

For crop markets, the key issue is no longer simply whether it rains. Where the rain falls — and whether it arrives before the upcoming heat accelerates crop maturity — will matter considerably more. That distinction is particularly important for soybeans, which remain more sensitive than corn to weather during the final days of August and early September.

Texas Panhandle rain helps — but does not end the drought. Thunderstorms delivered badly needed moisture to portions of the Texas Panhandle Tuesday night into early Wednesday. National Weather Service observations illustrate how localized the rainfall was: Amarillo 9 NNE reported 2.11 inches, while the Dumas observation site received 1.19 inches through early Wednesday. Other locations received roughly 1 inch or more. Additional thunderstorms could produce intense localized rainfall, with NWS Amarillo warning that some storms could produce rainfall rates of 1 to 3 inches per hour.

For winter wheat producers, the moisture is well timed. Planting normally begins increasing across the southern Plains during September, and even an inch or two of rain can dramatically improve near-surface soil moisture and seedbed conditions.

But the rainfall should be viewed as drought relief rather than drought removal.

The latest U.S. Drought Monitor, released Aug. 20 and based on conditions through Aug. 18, continued to show extreme to exceptional drought across portions of the Texas Panhandle and western Oklahoma. The region had experienced several weeks of rapidly worsening conditions, with depleted ponds and streams and considerable agricultural stress.

That means wheat growers will need follow-up rainfall during September. A single heavy thunderstorm can wet the planting layer while doing relatively little to rebuild deeper soil-moisture reserves.

Bottom line for wheat: the rain improves planting prospects, but it does not yet eliminate establishment or pasture concerns for the 2027 winter wheat crop.

Corn Belt pattern turns into a battle between heat and thunderstorms. Most of the Corn Belt should remain relatively quiet through Friday, aside from scattered eastern thunderstorms. The more important shift begins Friday night and over the weekend as thunderstorms become increasingly focused across the northern Plains and northwestern Corn Belt.

The setup is a classic late-summer ridge-rider pattern: disturbances move along the northern edge of a strong central and southern U.S. ridge, producing repeated thunderstorm complexes.

The Weather Prediction Center is already highlighting the potential. Its latest outlook calls for an excessive-rainfall risk across portions of the Upper Midwest and northern Plains Saturday, shifting toward the Great Lakes Sunday. Atmospheric moisture is expected to be sufficient for localized rainfall rates approaching 2 inches per hour where thunderstorms repeatedly track over the same areas.

That creates a substantial rainfall gradient.

Northern and northwestern areas — potentially including portions of Nebraska, South Dakota, Minnesota, Iowa and Wisconsin — have the best opportunity for meaningful rainfall. Meanwhile, Missouri, southern Illinois, Indiana and other southeastern portions of the production region may receive considerably less until sometime during Week Two.

Thus, there could simultaneously be localized flooding in the northwest Corn Belt and increasing crop stress several hundred miles farther southeast.

Heat becomes the bigger story starting this weekend. The temperature outlook is potentially more important than the rainfall forecast.

Temperatures remain relatively mild through Friday, but the ridge is forecast to strengthen beginning around Aug. 30. The forecast calls for temperatures averaging roughly 7 to 12 degrees above normal from Aug. 30 through Sept. 5, with widespread highs in the 90s across central and southern portions of the Corn Belt and unusually warm nighttime temperatures in the 70s.

NOAA’s Climate Prediction Center supports the broader heat signal. Its Week Two hazards outlook identifies a high risk of extreme heat across portions of the central and southern Plains on Sept. 2, a moderate risk across a broader region through Sept. 3 and some elevated heat risk continuing through Sept. 8. CPC says temperatures above 100°F are likely at many southern Plains locations.

The CPC also warns that rapidly drying soils can reinforce the heat through land-atmosphere feedback — dry soils allow more solar energy to go into heating the air rather than evaporating moisture. CPC has consequently identified a rapid-onset drought risk across portions of the central and southern Plains and Mississippi Valley.

Corn is less vulnerable than it was a month ago — but not immune. The timing reduces the threat to corn compared with a similar heat wave in July. Much of the crop has moved beyond pollination and into grain filling. Consequently, prolonged 90-degree temperatures are unlikely to cause the catastrophic yield losses associated with hot, dry weather during pollination.

But heat can still matter.

Warm nights increase plant respiration, shortening the effective grain-fill period. Rapid drying can also accelerate maturity before kernels achieve maximum weight. In stressed fields, that combination can reduce kernel depth and ultimately trim yield.

That is particularly noteworthy because USDA crop ratings have already deteriorated. As of Aug. 23, USDA rated only 57% of U.S. corn good to excellent, down from 60% the previous week and 71% a year earlier. The deterioration is particularly striking in portions of the northern Plains: South Dakota corn was only 42% good to excellent, while North Dakota stood at just 26%.
 

Consequently, rainfall arriving across the northern Corn Belt could still protect kernel weight, especially in later-developing fields.

Soybeans have more at stake. The upcoming weather pattern arguably carries greater yield implications for soybeans than corn. USDA reported that 91% of soybeans were setting pods as of Aug. 23. National soybean conditions slipped to 60% good to excellent, down from 61% the previous week and 69% last year.

Late August and early September remain important for determining soybean seed size and final pod weight. Unlike corn, soybeans can still respond meaningfully to late-season rainfall.

That makes the projected rainfall distribution critical. Rain across Nebraska, Iowa, Minnesota and the Dakotas would be valuable because soybean conditions have already deteriorated significantly in several of those areas. South Dakota soybeans were only 46% good to excellent, and North Dakota just 27% as of Aug. 23. Nebraska stood at 64% and Minnesota at 65%.

Conversely, fields that miss the ridge-rider storms and then experience several days of 90-degree temperatures and warm nights could lose seed size quickly.

Southern Plains heat merely takes a short break. The extraordinary southern Oklahoma heat wave is also not finished. After 32 consecutive days of 100-degree temperatures in portions of southern Oklahoma, temperatures should temporarily ease through Friday. But triple-digit readings are forecast to return by Saturday as the upper-level ridge strengthens again.

That continued heat is important not only for crops but also for pastures, livestock water supplies and winter wheat soil moisture. Even after scattered rain, evapotranspiration rates will rise sharply once temperatures return above 100°F.

CPC’s outlook reinforces the concern, indicating that persistent heat and dryness could continue promoting rapid drought development across the central and southern Plains into early September.

Market implications: weather risk is shifting toward soybeans. For grain markets, the pattern is not uniformly bullish. Corn has moved far enough through its reproductive cycle that the upcoming heat wave is unlikely to generate the sort of weather premium that would have developed from the same forecast six weeks ago. Northern Belt rainfall could also help stabilize corn yield potential.

Soybeans are different. The combination of declining crop ratings, ongoing pod filling, an intensifying heat wave and uncertain rainfall coverage could keep weather premium in November soybean futures. The market will pay especially close attention to whether ridge-rider storms expand south and east into Iowa, Illinois, Indiana and Missouri during early September. If they do, late rainfall could stabilize soybean yield expectations. If the northwestern Corn Belt receives repeated thunderstorms while the central and southeastern Belt remains mostly dry, the national soybean crop could enter September with a widening regional yield divide.

That makes the Aug. 30-Sept. 5 heat wave more than simply a temperature story. It represents the next important test of whether the 2026 crop can hold its current yield potential — with soybeans carrying considerably more weather risk than corn as September approaches.

Weather & Market Scorecard: Northwest Rain vs. Late-August Heat

Conditions from USDA NASS Crop Progress, week ended Aug. 23, 2026. Drought from the U.S. Drought Monitor released Aug. 20. Forecasts from NOAA/WPC, CPC and NWS field offices, Aug. 26, 2026. Futures settlements are Tuesday, Aug. 25.

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