Mexican Cattle Prices Jump on Hopes of U.S. Border Reopening
Trump administration to spotlight fertilizer policy in joint USDA-Energy-EPA event
| LINKS |
Link: The Week Ahead, May 17: Congress Faces Iran War Debate,
Transportation Deadline, and Key Primaries
Link: Weekend Updates, May 16:
Link: Video: Wiesemeyer’s Perspectives, May 16
Link: Audio: Wiesemeyer’s Perspectives, May 16
| Updates: Policy/News/Markets, May 19, 2026 |
| UP FRONT |
TOP STORIES
— Mexican cattle prices jump on hopes of U.S. border reopening: Chihuahua calf prices surged up to 15% on optimism that livestock exports to the U.S. may soon resume following sanitary negotiations between the two countries.
— Trump administration to spotlight fertilizer policy in joint USDA-Energy-EPA event: Secretaries Rollins, Wright and Zeldin are set to appear together at USDA headquarters to outline priorities on fertilizer affordability, domestic production and supply chain security.
— USMEF sees China beef access as major carcass value driver: USMEF CEO Dan Halstrom says restored Chinese demand could add over $150 per head to fed cattle values, with short plate prices potentially rising more than $1 per pound.
— USDA updates China export plant list following Trump/Xi summit: FSIS has certified updated lists of eligible U.S. meat and poultry establishments to China’s customs authority, a key step toward rebuilding trade access.
— China purchase commitments raise questions about timing, accounting and true scale of demand: Analysts are debating whether the $17 billion agricultural package and the 25 MMT soybean commitment overlap or are additive, and whether late-2025 purchases already count toward 2026 targets.
— Greer, Sheinbaum set for new round of USMCA talks in Mexico: USTR Greer will meet with Mexican President Sheinbaum on May 27 in Mexico City as both countries prepare for the first formal USMCA review negotiations the following week.
FINANCIAL MARKETS
— Equities today: U.S. equity futures are under pressure as Treasury yields climb and crude oil stays above $100, with housing data and several Fed speaker appearances on tap this morning.
— Equities yesterday: Major indexes were mixed, with the Dow up modestly while the Nasdaq and S&P 500 edged lower.
— Warsh to take helm at Fed amid inflation and Middle East oil shock: Incoming Fed Chair Kevin Warsh faces rising energy-driven inflation, White House pressure for rate cuts, and growing market odds of a rate hike rather than easing.
AGRIBUSINESS
— Deere wins preliminary approval for $99 million right-to-repair settlement: A federal judge advanced the landmark antitrust settlement, giving farmers until September 2026 to object before a final approval hearing.
AG MARKETS
— Overnight grain markets mixed ahead of key trade, weather developments: Soybeans and wheat firmed modestly overnight while corn and soy oil eased, with traders focused on China demand and Corn Belt weather.
— International grain and oilseed markets firm as China tariff optimism supports trade sentiment: Paris wheat, Russian FOB wheat and Malaysian palm oil all moved higher on prospects of lower Chinese tariffs on U.S. agricultural imports and weather concerns in key regions.
— USDA Crop Progress report shows rapid corn, soybean planting while wheat conditions lag: Corn is 79% planted and soybeans 67% planted, both ahead of average, while winter wheat conditions remain historically poor with only 27% rated good-to-excellent nationally.
— China presses local governments to cut hog capacity amid deepening pork glut: Beijing is pushing sow herd reductions and limits on large-scale farms as collapsing pork prices and chronic oversupply pressure producers and weigh on feed demand.
— Agriculture markets yesterday: Corn, soybeans, wheat and soy oil all posted strong gains on the day, while livestock futures were slightly lower.
ENERGY MARKETS & POLICY
— Tuesday: Oil prices pull back as Trump pauses Iran strike, markets eye renewed diplomacy: Brent crude eased back toward $110 after Trump said he halted a planned strike on Iran following appeals from Gulf allies, though Hormuz risks remain elevated.
— Monday: Oil surges to two-week high as Iran war supply risks dominate markets: Brent settled above $112 and WTI above $108 as Strait of Hormuz disruption fears and shrinking inventories drove crude sharply higher.
— AI power boom drives historic utility merger: NextEra Energy agreed to acquire Dominion Energy for $67 billion, creating the nation’s largest electric utility and positioning the combined company to serve surging AI data center electricity demand.
TRADE POLICY
— Ways & Means Democrats push for USMCA reforms ahead of 2026 review: House Democrats urged USTR Greer to strengthen labor, environmental and economic security provisions in the USMCA review while preserving the trilateral structure of the pact.
WATER POLICY
— Cornyn pushes potential tariffs on Mexico over Rio Grande water shortfalls: The Texas senator introduced legislation that would impose tariffs on Mexican imports and direct revenue to South Texas farmers if Mexico continues to fall short of its 1944 Water Treaty obligations.
POLITICS & ELECTIONS
— Primaries across eight states put Trump’s influence, Senate control and Democratic divisions in focus: Key races in Georgia, Kentucky, Pennsylvania and Alabama will test Trump-backed candidates, establishment-versus-insurgent dynamics, and the emerging Senate battleground ahead of November.
WEATHER
— NWS outlook: Severe weather and flash flooding threats are moving from the east-central Plains into the Southern Plains and Ohio Valley today, with an early-season heatwave challenging records across the eastern U.S. through Wednesday.
— Corn Belt weather pattern splits along Northwest-Southeast divide: The southeastern Corn Belt faces mounting fieldwork delays from excessive rainfall while the northwest sees improving but drying conditions, and the Mid-South is forecast to receive 5 to 8 inches of rain over the next two weeks.
| TOP STORIES—Mexican cattle prices jump on hopes of U.S. border reopeningChihuahua calf prices surge up to 15% as ranchers react to possible resumption of livestock exports to U.S. According to a report from Mexican newspaper El Sol de Parral, cattle prices in the Mexican state of Chihuahua have jumped as much as 15% amid optimism that livestock exports to the United States could soon resume following progress in sanitary negotiations between the two countries. The report said calf prices in Chihuahua quickly climbed from roughly 100 pesos per kilogram — equivalent to about $2.39 per pound U.S. — to as high as 115 pesos per kilogram, or roughly $2.74 per pound U.S., after news circulated of a possible gradual reopening of exports to the U.S. market. Ranchers told the publication that even without an official reopening date, the market reacted within hours because of the region’s heavy dependence on U.S. cattle demand. Tranquilino Payán, representing the Parral Livestock Association before the Regional Livestock Union, said the rally reflects both optimism and ongoing uncertainty among producers. Many ranchers are reportedly holding cattle longer in anticipation of stronger export-driven prices, while others continue selling domestically because of cash-flow pressures and the high costs associated with maintaining livestock on feed. The report noted that Mexican authorities recently demonstrated the use of specially trained dogs to detect screwworm-related lesions in cattle, part of a broader biosecurity effort that could be implemented at border crossings and quarantine stations if exports resume. Producers view those measures as an important step toward reassuring U.S. officials about animal health safeguards. The article also underscored how reliant northern Mexico’s cattle sector remains on the U.S. market. Ranchers indicated that a prolonged delay in reopening exports could continue straining liquidity and profitability across the region, particularly for operators lacking enough capital to hold cattle for extended feeding periods.—Trump administration to spotlight fertilizer policy in joint USDA-Energy-EPA eventRollins, Wright and Zeldin expected to outline priorities tied to fertilizer affordability, domestic production, energy costs and supply chain security USDA Secretary Brooke Rollins, Energy Secretary Chris Wright and EPA Administrator Lee Zeldin are scheduled to appear together late this morning (May 19) at USDA headquarters for a press conference focused on fertilizer policy, an event that is likely to signal a broader Trump administration strategy aimed at reducing input costs for farmers while boosting domestic fertilizer manufacturing and supply chain security.The appearance is notable because it brings together the three agencies most directly involved in fertilizer economics — USDA on farm policy and producer impacts, DOE on natural gas and industrial energy issues, and EPA on environmental regulations tied to fertilizer manufacturing and nutrient management. Members of Congress are also expected to participate, underscoring the political importance of fertilizer costs heading into the 2026 crop season and the broader farm bill debate. Fertilizer remains one of the largest variable input costs for corn, wheat and cotton producers, with nitrogen markets especially sensitive to natural gas prices, global trade disruptions and geopolitical tensions. Industry concerns have intensified in recent months because of supply uncertainty tied to Middle East instability, particularly involving sulfur and ammonia trade flows moving through the Strait of Hormuz, along with broader worries about global phosphate and potash availability. The administration could use the event to frame fertilizer as both an agricultural and national security issue, particularly as policymakers increasingly emphasize domestic manufacturing capacity and reduced dependence on imports from geopolitical rivals or unstable regions. Potential policy announcements could include expanded support for domestic fertilizer production projects, accelerated permitting for ammonia and nitrogen facilities, or new USDA financing initiatives through existing rural development and energy programs. Officials could also discuss incentives for carbon capture projects tied to ammonia production, particularly because low-carbon ammonia has become a major policy focus for both agriculture and energy markets. The Trump administration could additionally announce efforts to streamline environmental permitting requirements for fertilizer plants or revisit certain EPA regulations viewed by farm groups and manufacturers as increasing compliance costs. Zeldin has repeatedly emphasized reducing regulatory burdens across industrial sectors, while Wright has strongly advocated for expanded domestic energy production and lower natural gas costs — both key issues for nitrogen fertilizer economics. Another area to watch is whether USDA announces expanded grant or loan support for fertilizer infrastructure under programs aimed at boosting competition and regional production capacity. Previous USDA initiatives sought to encourage smaller and independent fertilizer manufacturers to diversify supply chains following the sharp fertilizer price spikes that followed Russia’s invasion of Ukraine. Officials could also discuss policies tied to phosphate and potash supply security, including potential trade or tariff considerations. The administration has increasingly linked agricultural input dependency to broader economic and strategic vulnerabilities, particularly regarding imports from countries viewed as unreliable suppliers. Congressional participants may also push for policies designed to lower transportation and logistics costs associated with fertilizer movement, including rail access, inland waterways and pipeline infrastructure. Fertilizer availability and delivery timing remain critical concerns for producers, particularly in the Corn Belt and Southern Plains. The event also comes as lawmakers continue debating broader agriculture policy issues, including disaster assistance, commodity programs, biofuels policy and trade concerns tied to China and other export markets. Lower fertilizer costs are viewed by many farm groups as one of the fastest ways to improve producer margins amid continued pressure from volatile commodity prices and elevated operating expenses. The press conference is scheduled for 11:30 a.m. ET Tuesday at USDA headquarters in Washington. Related officials include Brooke L. Rollins, Chris Wright and Lee Zeldin. —USMEF sees China beef access as major carcass value driverDan Halstrom says restored Chinese demand could quickly boost short plate values, strengthen Asian beef pricing, and add more than $150 per head to fed cattle values During his AgriTalk interview Monday with Chip Flory, Dan Halstrom, president and CEO of the U.S. Meat Export Federation, expanded extensively on the financial importance of restoring U.S. beef access to China, arguing the issue goes far beyond simple export tonnage. Halstrom said the industry had been “at an impasse now for almost a year” after more than 400 U.S. beef facilities lost eligibility to export into China when registrations expired and were not renewed by Chinese authorities. “We’re cautiously optimistic,” Halstrom said, noting that the Trump-Xi summit created the kind of high-level political pressure needed to finally “break this loose.” (See next item for more details.) He stressed that China had evolved into one of the most valuable destinations for the U.S. beef industry after the 2020 Phase One agreement. According to Halstrom, exports surged from roughly $300 million in 2020 to more than $2 billion by 2022 before registrations problems sharply curtailed shipments. Halstrom emphasized repeatedly that China’s importance lies in maximizing total carcass value rather than simply moving additional beef volume.“China has become a very important market because of the way it helps maximize the value of the carcass,” he said. He explained that products with limited domestic value — particularly variety meats and certain plate cuts — command substantial premiums in China and throughout Asia. “There are products, especially variety meats, that have significantly more value in China than they do here domestically,” Halstrom said. He specifically referenced items such as backstrap and aorta, saying Chinese buyers place far greater value on those products than U.S. consumers do. Halstrom also highlighted the impact on beef short plates, arguing restored access could quickly move prices substantially higher. “Today, beef short plates are trading roughly around $2.50 per pound,” Halstrom said. “We estimate that if these plants were relisted and access was restored, you could see short plate values increase by more than a dollar per pound in relatively short order.” He further argued that active Chinese participation lifts values across Asia through what he called a “halo effect.” “It’s not just about what gets sold directly to China,” Halstrom said. “The China market creates a halo effect across Asia because a lot of these same items are traded between China, Japan, Korea and Taiwan.” According to Halstrom, stronger Chinese demand immediately tightens regional supplies and boosts pricing leverage throughout the Asian market for products including short ribs, chuck flap, and short plates. “More customers rather than fewer is what impacts the cutout,” he added. “And there’s no doubt there’s been big money lost over the last year because these plants have not been relisted.” Of note: Halstrom estimated that full Chinese market participation can add roughly $150 to $165 per fed animal harvested in the United States. Meanwhile, he stressed the underlying commercial demand inside China never disappeared despite the political and regulatory tensions. “These are not government-to-government transactions,” Halstrom said. “These are our customers. They want the product and we want to sell it. The commercial business is still there.” He pointed to retailers including Sam’s Club and Costco operations in China as examples of buyers ready to resume purchasing immediately once trade access fully stabilizes. Halstrom also cautioned that the plant registration renewals announced after the Trump/Xi summit represent only the “first phase” of restoring normal trade conditions. He said additional technical and non-tariff barriers — including residue-related issues and suspended facilities — still must be resolved. Still, Halstrom described China’s recent decision to renew registrations for 425 U.S. beef facilities and approve 77 additional establishments as “excellent news” for both the U.S. industry and Chinese buyers eager to resume imports. —USDA updates China export plant list following Trump-Xi summitFSIS certifications signal progress on reopening U.S. meat trade access to China USDA’s Food Safety and Inspection Service (FSIS) has released an updated list (link) of U.S. meat and poultry establishments eligible to export to China, marking another step forward in implementing trade understandings reached during President Donald Trump’s summit with Chinese President Xi Jinping. According to USDA, FSIS has formally certified the eligible establishments to China’s General Administration of Customs (GACC). The agency noted that once the facilities are officially posted on GACC’s approved establishment website, FSIS will then add those plants to its public list of facilities eligible to export product to China. The update is being closely watched by the U.S. meat industry because access to China had been disrupted earlier this year after export registrations for hundreds of U.S. beef facilities expired or were not renewed by Chinese authorities. Industry groups and exporters have viewed the restoration of plant approvals as a critical step toward rebuilding U.S. beef, pork, and poultry shipments to one of the world’s largest protein importers. The move also reinforces broader agricultural trade commitments discussed during the Trump/Xi summit, where both governments signaled efforts to stabilize commercial relations and expand purchases of U.S. agricultural products. Market participants have viewed the restoration of export plant eligibility as one of the earliest concrete outcomes from those discussions. Meanwhile, the timing of when individual facilities become fully operational for exports will depend on how quickly GACC updates and publishes the approved establishment listings. Once finalized, the updated approvals are expected to improve confidence among U.S. exporters seeking to reestablish sales channels into the Chinese market.—China purchase commitments raise questions about timing, accounting and true scale of demandMarket participants debate whether soybean and broader agricultural purchase targets overlap, roll across crop years or represent entirely new demand Questions are mounting across agricultural markets over how to interpret the Chinese purchase commitments announced following President Donald Trump’s summit with Chinese President Xi Jinping, particularly regarding whether the soybean program and broader agricultural package overlap or should be treated as separate commitments. The White House fact sheet (link) stated China would purchase $17 billion annually in U.S. agricultural commodities during 2026, 2027 and 2028, with 2026 prorated because the agreement begins partway through the year. Separately, the agreement referenced earlier commitments made during the Busan talks for China to purchase 25 million metric tons (MMT) of U.S. soybeans annually during 2026, 2027 and 2028. The structure immediately raised questions among analysts because 25 MMT of soybeans alone could carry an annual value near $10 billion to $12 billion depending on soybean prices. If the soybean commitment is additive to the broader $17 billion agricultural package, total Chinese agricultural purchases from the United States could approach roughly $29 billion annually in both 2027 and 2028. Using nearby soybean values near $12 per bushel, 25 MMT converts to roughly 919 million bushels worth approximately $11 billion to $12 billion annually. If added to the stated $17 billion agricultural package, the combined annual total would approach $28 billion to $29 billion. For 2026, if the $17 billion package is prorated beginning June 1, the annualized amount would equal roughly $1.42 billion per month. With seven months remaining in the calendar year, the prorated value would total roughly $9.94 billion. Adding the soybean program would place the implied 2026 total near $22 billion. However, uncertainty remains over whether the soybean commitments are already included within the $17 billion framework or whether they are intended to represent additional purchases beyond the broader agricultural package. Another major source of confusion centers on timing. The November fact sheet initially stated China would purchase 12 MMT of soybeans during the final two months of 2025. Treasury Secretary Scott Bessent later suggested those purchases would extend through February 2026, creating uncertainty over whether the purchases should be treated as part of the 2025/26 U.S. marketing year, the 2026 calendar-year commitment or as a standalone initial tranche. That distinction matters because China traditionally concentrates purchases of U.S. soybeans during the post-harvest export window running from roughly September through February before shifting heavily toward Brazilian supplies. Questions are also emerging regarding sorghum. The November White House fact sheet stated China would resume purchases of U.S. sorghum but did not establish a timetable. USDA export sales data showed sorghum export commitments began building during the week ended Nov. 27. Commitments totaled 853,756 metric tons by Jan. 1, including 271,256 MT outstanding. Those commitments have since expanded to 3.356 MMT, with 2.892 MMT already exported and 464,252 MT remaining outstanding. Soybean sales also accelerated rapidly following the agreement framework. USDA data showed soybean export commitments reached 6.892 MMT by Jan. 1, with 5.701 MMT still outstanding at that time. Total commitments later climbed to 11.87 MMT as of May 7, with 936,000 MT remaining outstanding. The central question for traders is whether purchases already booked beginning in late 2025 are being counted toward future annual commitments. If soybean purchases beginning in October 2025 ultimately count toward 2026 obligations, and sorghum purchases beginning in November 2025 are included within the $17 billion framework, then a portion of the reported “new” demand may already be reflected in existing export sales totals rather than representing entirely incremental business. That accounting issue could significantly alter how markets interpret the agreement’s bullishness for U.S. soybean and grain balance sheets. Meanwhile, if the commitments are entirely additive and require purchases beyond normal seasonal buying patterns, the agreement could represent one of the largest agricultural trade frameworks between the two countries since the Phase One agreement during Trump’s first term. At this stage, officials other than USTR Jamieson Greer have not publicly clarified:• whether the commitments are based on calendar years or USDA marketing years,• whether soybean purchases are included within or separate from the $17 billion package,• whether late-2025 purchases count toward 2026 obligations,• or what enforcement mechanisms exist if targets are not met. Until those details become clearer, analysts say the market is likely to continue debating how much of the announced framework represents genuinely new export demand versus redirected or already-booked trade flows. On agriculture, USTR Jamieson Greer noted the Chinese commitment last year to buy more soybeans and added that “What we expect with the new purchase agreements ($17 billion), [are] double-digit purchases of aggregate agricultural products. When I say aggregate, I mean everything else that could be soybeans, that could be beef, that could be grains, that could be dairy products, all kinds of things. So we have the existing soybean deal … and then over on top of that we have these agricultural products as well, and all of that will be facilitated by Board of Trade discussions with the Chinese.” China’s Ministry of Commerce issued a statement over the weekend broadly characterizing the talks as positive and alluding to “consensus regarding specific tariff arrangements,” without further details, according to an informal translation.It also said the new Board of Trade will allow the two sides to “discuss issues such as tariff reductions on specific products; in principle, they have agreed to reduce tariffs on products of mutual concern on a reciprocal basis of equivalent scale.”—Greer, Sheinbaum set for new round of USMCA talks in MexicoMeeting comes as U.S., Mexico prepare for first formal negotiations ahead of the USMCA review process U.S. Trade Representative Jamieson Greer is scheduled to meet with Mexican President Claudia Sheinbaum on May 27 in Mexico City, marking another high-level step in preparations for the formal review of the U.S.-Mexico-Canada Agreement (USMCA). Link to CRS report on U.S./Mexico trade issues. Sheinbaum announced the meeting during a Monday press conference, according to media reports, as Washington and Mexico City continue to intensify discussions over trade, manufacturing, agriculture, energy, and compliance disputes ahead of the pact’s scheduled review. The upcoming meeting follows Greer’s visit to Mexico last month, where he met with Sheinbaum and Mexican Economy Secretary Marcelo Ebrard. Following those talks, Greer and Ebrard issued a joint statement confirming that the United States and Mexico would begin their first official negotiating round tied to the USMCA review during the week of May 25. The negotiations are expected to serve as an early framework-setting exercise ahead of the broader six-year review mechanism built into the trade agreement. While the formal USMCA sunset review is not scheduled until 2026, both governments have accelerated preliminary discussions amid rising trade tensions and growing political pressure in both countries. Agriculture is expected to remain a central issue in the talks, particularly disputes involving Mexico’s biotechnology policies, restrictions on genetically modified corn, and ongoing concerns over market access for U.S. dairy and meat exports. U.S. lawmakers, especially from Texas and the Midwest, have also continued pressing the administration over Mexico’s water delivery obligations under the 1944 Water Treaty, linking those concerns more directly to broader trade negotiations. Meanwhile, manufacturing rules of origin, automotive supply chains, Chinese investment in Mexico, and energy sector policies are also expected to feature prominently in the discussions. The Trump administration has increasingly emphasized concerns about Chinese companies using Mexico as a production platform to access the U.S. market tariff-free under USMCA provisions. Greer has repeatedly signaled that the administration wants the USMCA review to focus heavily on enforcement mechanisms and reciprocal market access, while Sheinbaum’s government has emphasized preserving regional competitiveness and avoiding disruptions to North American supply chains. The meeting also comes as Mexico remains the United States’ top overall trading partner, with bilateral trade continuing to expand despite persistent disputes over agriculture, energy, labor, and industrial policy. |
| FINANCIAL MARKETS |
—Equities today: U.S. Dow opened 150 points lower and is currently down around 350 points as Treasury yields continue to climb while crude oil remains above $100 per barrel amid little meaningful progress toward a U.S./Iran ceasefire, adding to broader inflation and growth concerns. The Sevens Report notes, “The more the 10-year yield rallies from here, the stronger the headwind on stocks.”
Meanwhile, economic data out of the UK reinforced stagflation fears overnight, with the unemployment rate rising to 5.0% in May versus expectations of 4.9%, even as wage growth accelerated to 4.1%, topping forecasts of 3.7%.
Markets will turn their attention to U.S. housing data this morning, including Housing Starts (E: 1.410 million) and Pending Home Sales (E: +0.9%), both due shortly after the opening bell.
Investors will also closely monitor comments from several Federal Reserve officials today, including Governor Christopher Waller at 8:00 a.m. ET, followed by remarks from Paulson at 7:00 p.m. ET and Venable at 7:45 p.m. ET. Markets will be looking for any dovish signals that could help ease the recent surge in bond yields, which has continued to pressure broader equity markets.
—Equities yesterday:
| Equity Index | Closing Price May 18 | Point Difference from May 15 | % Difference from May 15 |
| Dow | 49,686.12 | +159.95 | +0.32% |
| Nasdaq | 26,090.73 | -134.41 | -0.51% |
| S&P 500 | 7,403.05 | -5.45 | -0.07% |
—Warsh to take helm at Fed amid inflation and Middle East oil shock
New Fed chairman faces immediate pressure from rising energy-driven inflation, White House rate-cut demands and growing market fears that the next move in rates could be higher — not lower
Kevin Warsh is set to be sworn in Friday as the 17th chairman of the Federal Reserve, replacing Jerome Powell after Powell’s term expired May 15, marking the beginning of what could become one of the most politically and economically challenging transitions at the U.S. central bank in years.
Warsh arrives at the Fed with a reputation as a reform-minded policymaker who has long criticized aspects of the central bank’s communication strategy, regulatory footprint and pandemic-era monetary response. But any effort to reshape the institution is likely to be overshadowed initially by the increasingly difficult macroeconomic backdrop confronting the U.S. economy.
The biggest immediate challenge is inflation tied to the escalating Middle East conflict and the near disruption of energy flows through the Strait of Hormuz. Crude oil prices have surged sharply in recent weeks, with Brent crude climbing above $110 per barrel, fueling concerns that higher gasoline, diesel, fertilizer, transportation and petrochemical costs will increasingly bleed through into broader inflation measures across the U.S. economy.
That backdrop creates a delicate balancing act for Warsh, especially given President Donald Trump’s repeated public demands for lower interest rates. Trump has openly criticized the Fed in recent months for not easing policy sooner and recently said he would be “disappointed” if Warsh failed to cut rates after taking over the central bank.
However, the inflation picture may leave Warsh with little room to move aggressively toward easing.
Lowering rates into an environment of rising oil prices and persistent inflation risks could further stimulate demand and potentially worsen inflation pressures at a time when consumers and businesses are already facing higher energy-related costs. Meanwhile, maintaining restrictive policy risks slowing economic growth further as manufacturing, transportation and consumer sectors absorb higher input costs tied to the war.
Markets increasingly appear to believe the Fed may remain sidelined for an extended period — or potentially even return to tightening if inflation accelerates further. Fed funds futures markets are now pricing in little expectation for meaningful rate cuts through the end of 2026.
Meanwhile, expectations for a possible rate increase have been steadily building. CME FedWatch probabilities currently show markets assigning roughly a 40.8% chance of a rate hike by March 2027, compared to 31.2% odds that rates remain at the current 3.5% to 3.75% target range.
The shift reflects growing concern that the inflation shock tied to energy markets may prove more persistent than initially expected, especially if the Middle East conflict continues disrupting global crude and fuel supplies.
Warsh’s challenge is complicated further by the reality that the Fed has limited tools to address supply-side inflation shocks originating from geopolitics. Unlike demand-driven inflation, higher oil prices caused by war and supply disruptions cannot easily be solved through monetary policy alone.
Instead, the Fed risks confronting a stagflation-style environment where inflation remains elevated even as economic growth slows — forcing policymakers to choose between supporting economic activity or maintaining credibility on inflation.
The central question facing Warsh’s tenure may ultimately become whether the Fed prioritizes inflation control despite mounting political pressure, or whether policymakers begin easing financial conditions to cushion the economy from the fallout of rising energy costs and geopolitical instability.
Meanwhile, investors will be closely watching Warsh’s early public comments for signals on how aggressively he intends to pursue reforms at the Fed, how independent he plans to remain from White House pressure and whether he views the recent rise in inflation as temporary or the beginning of a more entrenched inflation cycle tied to global supply shocks.
| AGRIBUSINESS |
—Deere wins preliminary approval for $99 million right-to-repair settlement
Federal court allows antitrust settlement process to move forward as farmers weigh objections to Deere repair restrictions
A federal judge on Monday granted preliminary approval to a proposed $99 million antitrust settlement involving John Deere and farmers who accused the company of monopolizing equipment repairs through restrictive software and diagnostic controls.
The ruling by the U.S. District Court for the Northern District of Illinois marks a major step forward in litigation that has become one of the most closely watched right-to-repair battles in U.S. agriculture. The lawsuits, originally filed in 2022, alleged Deere unlawfully limited farmers’ ability to repair their own machinery by restricting access to diagnostic software, repair codes, and technical tools needed to service modern equipment.
Under the proposed agreement, Deere would pay $99 million to resolve the consolidated lawsuits, while also making commitments tied to repair access and diagnostic capabilities. The court said the proposed deal appears to satisfy the legal standards required for settlement approval and is likely to receive final approval after additional review.
Farmers and other class members now have until September 2026 to file objections or opt out of the settlement before a final approval hearing is held.
The lawsuits centered on claims that Deere used its dominant market position in high-horsepower agricultural machinery to force farmers and independent repair shops to rely on Deere-authorized dealers for many repairs. Producers argued that increasingly software-driven equipment prevented owners from conducting repairs they historically handled themselves, particularly during critical planting and harvest windows when downtime can be costly.
The case became a flashpoint in the broader national “right-to-repair” debate that has spread across agriculture, consumer electronics, and the automotive sector. Farm groups and producer advocates have increasingly argued that modern machinery manufacturers use proprietary software systems to lock customers into expensive dealer repair networks.
Deere has consistently denied wrongdoing and has argued that software protections are necessary for safety, emissions compliance, cybersecurity, and equipment reliability. The company also has pointed to prior voluntary agreements with the American Farm Bureau Federation aimed at expanding farmers’ repair options and access to diagnostic resources.
Meanwhile, the settlement comes as pressure continues to build across Washington and multiple state legislatures for expanded right-to-repair protections. The Federal Trade Commission under both Democratic and Republican administrations has shown increased interest in restrictions tied to equipment repair markets, particularly in agriculture.
The Deere litigation also drew attention because of the growing dependence of modern farming operations on precision agriculture systems, software updates, and electronically controlled machinery. Producers argued that even relatively minor repairs increasingly require proprietary digital authorization tools that are unavailable outside dealer networks.
Industry analysts say the case could influence how other major equipment manufacturers structure software access and repair policies going forward, especially as precision agriculture and autonomous machinery become more widespread across U.S. farming operations.
| AG MARKETS |
—Overnight grain markets mixed ahead of key trade, weather developments
Soybeans and wheat firm modestly overnight while corn and soy oil ease amid ongoing focus on China demand and U.S. weather risks
Overnight grain and oilseed futures traded mixed into Tuesday morning as traders balanced optimism surrounding potential growth in Chinese demand for U.S. agricultural products against evolving weather forecasts across key Northern Hemisphere growing regions.
Soybean futures posted modest gains overnight, supported by continued market discussion surrounding U.S./China trade negotiations and expectations for stronger export demand. July soybeans rose 3/4 cent to $12.1375 per bushel, while July soybean meal added $1.10 to $335.60 per short ton. Soybean oil futures slipped slightly, with July soyoil down 0.18 cent to 75.45 cents per pound.
Corn futures eased modestly following Monday’s sharp rally as traders monitored improving moisture conditions across portions of the western Corn Belt while also assessing the risk of excessive rainfall and planting delays in eastern areas. July corn futures were down 3/4 cent at $4.7625 per bushel.
Wheat markets remained firmer overnight as excessive rainfall concerns in parts of Europe, Russia, and sections of the U.S. soft red winter wheat belt continued to support global milling wheat prices. July Chicago soft red winter wheat futures gained 1 cent to $6.655 per bushel, while July Kansas City hard red winter wheat futures added 3 cents to $7.0675 per bushel.
Traders also continued to monitor broader macroeconomic developments, including elevated crude oil prices tied to Middle East tensions and shifting expectations surrounding global inflation and central bank policy. Firm energy markets continued to provide underlying support to vegetable oils and biofuel-linked commodities despite the modest pullback in soybean oil futures overnight.
Weather forecasts remained a central feature for grain markets, with analysts closely watching expanding wet conditions across the eastern Corn Belt and Mid-South alongside improving but still fragile moisture profiles in portions of the western Plains and northwestern Corn Belt.
—International grain and oilseed markets firm as China tariff optimism supports trade sentiment
Traders eye potential lower Chinese tariffs on U.S. agricultural imports amid weather concerns in key export regions
International grain and oilseed markets were broadly firmer Tuesday as traders positioned for the possibility of lower Chinese tariffs on U.S. agricultural imports and increased global grain demand. Market sentiment was also supported by ongoing weather concerns in several key producing regions, including Europe, Russia, and parts of the United States.
In Europe, Paris milling wheat futures climbed €5.00 per metric ton to €231.75 per metric ton on the Euronext exchange. That equates to approximately $7.17 per bushel in U.S. dollar terms, compared to July Chicago soft red winter wheat futures near $6.28 per bushel and July Kansas City hard red winter wheat futures near $6.83 per bushel overnight. The premium in Paris wheat reflected mounting concerns over excessive rainfall in western Europe, delayed fieldwork in Russia, and wet conditions in portions of the U.S. SRW wheat belt.
The wheat market continues to monitor deteriorating crop conditions tied to persistent wetness, particularly in western Europe where harvest quality risks are beginning to emerge. Delays in Russian spring wheat seeding have also added support to global wheat values.
Russian FOB wheat prices also moved higher Tuesday as heavy rainfall delayed spring wheat planting and increased concerns over crop quality deterioration. Russian 12.5% protein FOB wheat values were estimated near $255 to $258 per metric ton FOB Black Sea, equivalent to roughly $6.94 to $7.02 per bushel on a U.S. Gulf equivalent basis.
Meanwhile, Malaysian palm oil futures rose 49 ringgit to 4,540 ringgit per metric ton. That converts to approximately 97.2 cents per pound U.S., compared to July soybean oil futures near 74.90 cents per pound overnight in Chicago. Palm oil markets were supported by expectations for stronger global vegetable oil demand alongside broader firmness across commodity and energy markets.
The gains in vegetable oils also provided underlying support to soybean oil futures overnight, with traders increasingly focused on potential shifts in Chinese purchasing patterns if trade tensions between Washington and Beijing continue to ease following the recent Trump-Xi summit discussions.
Broader commodity markets also remained supported by elevated crude oil prices, which continue to underpin biofuel-related demand expectations for soybean oil and palm oil markets globally.
—USDA Crop Progress report shows rapid corn, soybean planting while wheat conditions lag
Corn and soybean planting remain ahead of average nationally, while winter wheat conditions continue to trail year-ago levels amid ongoing dryness concerns across parts of the Plains.
USDA’s weekly Crop Progress report showed U.S. corn and soybean planting continued at a strong pace through May 17, with both crops running ahead of their five-year averages despite localized weather delays in parts of the western Corn Belt. Meanwhile, winter wheat conditions remained historically weak, particularly across key HRW-producing states.
• For corn, USDA reported 79% of the crop planted in the top 18 states, ahead of the 76% five-year average but behind last year’s 95%. Corn emergence reached 37%, matching the five-year average pace. Iowa corn planting advanced to 82%, Illinois reached 74%, and Nebraska was 86% planted.
• Soybean planting accelerated sharply, reaching 67% complete in the top 18 states versus the 53% average pace and ahead of 63% last year. Soybean emergence reached 32%, also ahead of the 23% five-year average. Illinois soybeans were 74% planted, Iowa reached 80%, and Nebraska stood at 81%.
•Winter wheat development moved ahead rapidly, with 71% of the crop headed versus the 58% average pace. Kansas winter wheat was 93% headed and Oklahoma reached 94%. However, national winter wheat condition ratings remained poor overall, with just 27% rated good-to-excellent and 43% rated poor-to-very poor. That compares with 52% good-to-excellent a year ago. Kansas — the nation’s top HRW wheat producer — was rated only 15% good-to-excellent, while 58% was rated poor-to-very poor. Nebraska also remained stressed, with 84% rated poor-to-very poor.
Spring wheat planting reached 73%, ahead of the 66% five-year average, while emergence stood at 39% versus the 34% average. Minnesota spring wheat planting was 80% complete and North Dakota reached 66%.
• Rice planting in the six major producing states reached 88%, slightly ahead of the 87% average pace, while emergence reached 74% versus the 67% average. National rice conditions were rated 74% good-to-excellent, up from 73% a year ago. Arkansas rice was rated 69% good-to-excellent, while Louisiana reached 80%.
•Sorghum planting remained near average at 30% complete across the six major states, matching the five-year average. Texas, the largest producer, was 76% planted.
• Cotton planting reached 41% complete across the 15 major producing states, slightly ahead of the 40% average pace. Texas cotton planting stood at 34%, while Georgia reached 38% and Mississippi was 58% planted.
The report also highlighted persistent moisture stress across portions of the Plains. USDA rated topsoil moisture in Kansas at 71% short-to-very short and Nebraska at 81% short-to-very short. Nationally, 24% of topsoil moisture was rated short-to-very short.
Upshot: Fieldwork conditions generally improved nationwide, with many Corn Belt states reporting more than five suitable days for fieldwork during the week, helping support the rapid planting pace.
—China presses local governments to cut hog capacity amid deepening pork glut
Beijing pushes sow reductions, limits on large-scale farms and lower feed use as weak pork demand pressures producer margins
China is intensifying efforts to rein in its massive hog sector as collapsing pork prices and persistent oversupply continue to pressure producers and weigh on the broader agricultural economy.
Oversupply hangover. According to a Reuters report, China’s Ministry of Agriculture and Rural Affairs told local governments during a recent video conference to “strictly implement capacity reduction measures, promote a reasonable recovery in hog prices, and promote stable and healthy development of the industry.” The comments underscore Beijing’s growing concern that years of aggressive herd expansion have created chronic oversupply conditions that are undermining profitability across the sector.
The latest push builds on China’s previously announced plan to reduce breeding sow inventories by 3.8% to about 38.5 million head. Officials view the sow herd as the key lever for controlling future pork production, and reductions are intended to gradually tighten supplies and stabilize prices after a prolonged downturn.
China’s pork market has been under severe pressure as sluggish consumer demand collides with large inventories and elevated production levels. Pork prices in the country have fallen to multi-year lows, squeezing margins for many producers and raising financial stress across the industry, particularly among heavily leveraged companies that expanded rapidly following the African swine fever rebuilding cycle.
Meanwhile, Beijing is increasingly signaling that it wants the industry to shift away from aggressive scale expansion toward what officials describe as “high-quality development.” During the conference, authorities urged producers to move away from “quantitative expansion,” reduce feed consumption and limit grain use — a notable policy objective given China’s broader food security concerns and efforts to reduce dependence on imported feed grains such as soybeans and corn.
The ministry also reiterated a national target of limiting the number of large-scale hog operations to 130,000 nationwide. That reflects growing concern among policymakers that excessive concentration and industrial expansion have amplified boom-and-bust cycles in the pork sector.
The policy changes could have broader implications for global grain and oilseed demand. China remains the world’s largest soybean importer, with the vast majority of imported soybeans crushed into soybean meal for hog feed. Efforts to reduce feed intensity and cap herd expansion could temper long-term feed demand growth, particularly if Beijing successfully pushes producers toward lower grain-use production systems.
Meanwhile, Chinese officials are attempting to stimulate domestic consumption in hopes of improving financial conditions for major pork producers and stabilizing rural incomes. Consumption recovery remains a critical variable because tighter supply controls alone may not be enough to restore profitability if household demand remains weak amid broader economic softness.
For global agricultural markets, the developments are being closely watched because China’s hog sector remains one of the largest drivers of world soybean, corn and feed ingredient demand. Any sustained structural slowdown in herd expansion or feed use efficiency gains could alter long-term trade flows for major exporters, including the United States and Brazil.
—Agriculture markets yesterday:
| Commodity | Contract Month | Closing Price May 18 | Difference from May 15 |
| Corn | July | $4.77 | +21 1/4 cents |
| Soybeans | July | $12.13 | +36 cents |
| Soybean Meal | July | $344.50 | +$3.00 |
| Soybean Oil | July | 75.63 cents/lb | +175 points |
| Wheat (SRW) | July | $6.64 1/2 | +28 3/4 cents |
| Wheat (HRW) | July | $7.03 3/4 | +18 cents |
| Cotton | July | 83.70 cents | +309 points |
| Cattle | June | $253.375 | -$0.525 |
| Feeder Cattle | August | $306.85 | -$0.20 |
| Lean Hogs | June | $98.525 | -$0.225 |
| ENERGY MARKETS & POLICY |
—Tuesday: Oil prices pull back as Trump pauses Iran strike, markets eye renewed diplomacy
Brent crude eases after sharp rally as Persian Gulf allies push for negotiations, though Hormuz disruptions and nuclear tensions continue to underpin energy market risk premiums
Oil prices retreated modestly Tuesday after President Donald Trump said he halted a planned U.S. military strike on Iran following appeals from Persian Gulf allies, easing some immediate fears of a broader regional conflict that had driven crude sharply higher over the past week.
Brent crude futures slipped back toward $110 per barrel after climbing to multi-week highs in volatile trading Monday, while U.S. West Texas Intermediate futures also pared gains. The market reaction followed Trump’s comments that Saudi Arabia, Qatar and the United Arab Emirates urged the United States to “hold off” on military action as diplomatic discussions intensified behind the scenes. WTI crude oil is just below $104 per barrel.
Trump indicated that “serious talks” were underway regarding a potential de-escalation with Tehran, although Iranian officials had not publicly confirmed renewed negotiations. The comments helped cool some of the geopolitical risk premium that had built into oil markets amid fears the conflict could further disrupt global crude supplies.
The decline in prices comes after a prolonged rally fueled by mounting concerns over supply disruptions tied to the ongoing Iran conflict and the near-total closure of the Strait of Hormuz — the critical maritime chokepoint that normally handles roughly one-fifth of global oil and liquefied natural gas flows. Traders remain highly sensitive to any developments involving Hormuz because even partial disruptions can significantly tighten global energy balances and raise shipping and insurance costs.
Despite Tuesday’s pullback, analysts cautioned that the broader market remains structurally tight and vulnerable to renewed spikes in volatility. Tehran’s nuclear program continues to be a central sticking point in negotiations, while the dual naval blockades around Hormuz remain unresolved. Energy traders increasingly view the current situation as a prolonged geopolitical supply risk rather than a short-term disruption.
Meanwhile, the United States issued a new waiver allowing Russian crude oil and petroleum products already loaded onto tankers to continue being sold and transported. The move was interpreted by some traders as an effort by Washington to prevent an even sharper tightening in global crude supplies while diplomacy with Iran remains uncertain.
The waiver could help stabilize near-term physical oil availability, particularly for refiners in Asia and parts of Europe that remain dependent on discounted Russian barrels. However, analysts noted that the measure is unlikely to fully offset concerns about Middle East supply disruptions if shipping through Hormuz remains constrained.
Markets are also increasingly focused on the inflationary implications of sustained high energy prices. Rising crude costs are feeding into higher gasoline, diesel, jet fuel and fertilizer prices globally, raising concerns that the energy shock could complicate monetary policy decisions at the Federal Reserve under incoming Chairman Kevin Warsh (see related item above). Traders have already sharply reduced expectations for interest-rate cuts as oil-driven inflation pressures intensify.
Meanwhile, shipping rates, tanker insurance premiums and fuel surcharges continue to rise across global energy markets, reflecting persistent concerns that any escalation involving Iran could trigger additional disruptions to crude exports from the Persian Gulf.
—Monday: Oil surges to two-week high as Iran war supply risks dominate markets
Strait of Hormuz disruptions, shrinking inventories, and fragile diplomacy keep energy markets on edge despite reports of potential sanctions relief for Iranian crude
Oil prices climbed sharply Monday, with crude futures settling at their highest levels in roughly two weeks as traders focused on the risk of prolonged supply disruptions tied to the Iran war and the near-total closure of the Strait of Hormuz. The gains came despite reports that the Trump administration may temporarily waive sanctions on Iranian crude exports during ongoing diplomatic negotiations.
July Brent crude futures rose $2.84, or 2.6%, to settle at $112.10 per barrel, while June West Texas Intermediate crude gained $3.24, or 3.1%, to close at $108.66. Brent posted its strongest finish since May 4, while WTI notched its highest settlement since April 7.
Trading conditions remained extremely volatile ahead of Tuesday’s expiration of the June WTI contract. Futures at one point rallied more than $4 per barrel before surrendering over $2 later in the session as thin volumes exaggerated intraday swings. Prices eased somewhat after the close when President Donald Trump said he would postpone a military strike on Iran that had reportedly been planned for Tuesday.
Meanwhile, the broader market focus remained fixed on the Strait of Hormuz, a chokepoint that normally handles roughly 20% of global oil and liquefied natural gas flows. The ongoing disruption to Gulf shipping lanes has intensified concerns about tightening global energy supplies and rising inflationary pressures worldwide.
International Energy Agency Executive Director Fatih Birol warned that global commercial oil inventories are being drawn down rapidly and that emergency reserve releases cannot continue indefinitely. According to Birol, strategic petroleum reserve releases have added approximately 2.5 million barrels per day to the market, but he cautioned that those reserves “are not endless.”
Diplomatic developments provided only limited relief to traders. Iran’s semi-official Tasnim news agency reported that U.S. negotiators had agreed in principle to waive sanctions on Iranian crude exports during the negotiation process, a notable shift from earlier U.S. positions. Pakistani intermediaries also reportedly delivered a revised Iranian peace proposal to Washington in an effort to revive stalled negotiations.
Even so, analysts said confidence in a durable diplomatic breakthrough remains low. The ceasefire established after six weeks of fighting following the Feb. 28 U.S.-Israeli strikes on Iran continues to appear fragile. President Trump recently described the truce as “on life support,” reinforcing concerns that renewed military escalation remains possible.
Energy analysts warned that a prolonged closure or severe restriction of the Strait of Hormuz could significantly damage the global economy by slowing growth, reigniting inflation, and forcing central banks to maintain tighter monetary policy for longer than expected. The energy shock is already contributing to weaker economic conditions in major importing nations.
China’s latest economic data underscored those concerns. April industrial production and retail sales both slowed sharply, while Chinese crude oil refinery throughput fell to its lowest level since August 2022 as elevated energy costs and weak domestic demand weighed on activity.
Meanwhile, the United States announced it would extend for another 30 days a sanctions waiver permitting purchases of Russian seaborne oil by countries struggling with supply shortages tied to Gulf disruptions, highlighting the increasing strain on global energy markets as the Iran conflict continues.
—AI power boom drives historic utility merger
NextEra’s $67 billion Dominion acquisition would create the nation’s largest energy company as utilities race to meet surging electricity demand from AI data centers
NextEra Energy has agreed to acquire Dominion Energy in a $67 billion transaction that would create the largest electric utility company in the United States, underscoring how artificial intelligence and the explosive growth of data centers are rapidly reshaping the U.S. power sector.
The combined company would carry a market capitalization of roughly $249 billion, according to Bloomberg data, dwarfing competitors including Southern Company at about $104 billion. The transaction would unite NextEra’s massive Florida-based utility and renewable energy footprint with Dominion’s dominant Mid-Atlantic electricity network, particularly in northern Virginia — the epicenter of U.S. AI-related data center development.
The deal highlights how utilities are repositioning themselves to capitalize on a once-in-a-generation surge in electricity demand tied to artificial intelligence, cloud computing and hyperscale data centers. Northern Virginia, served heavily by Dominion, has become the world’s largest data center market, with facilities operated by major technology firms and cloud providers consuming unprecedented amounts of electricity. Industry estimates suggest U.S. power demand growth, which had been largely stagnant for years, is now accelerating sharply because of AI infrastructure expansion.
Under the agreement, NextEra would pay approximately $76 per share for Dominion, representing a takeover premium of about 23% from Dominion’s prior closing stock price. The companies expect the transaction to close within 12 to 18 months, though the merger is likely to face intense regulatory scrutiny from the Federal Energy Regulatory Commission and the Department of Justice due to the size of the combined entity and its influence across major regional electricity markets.
A central political and regulatory issue surrounding the merger will be the impact of rising AI-related electricity demand on residential utility customers. Policymakers in Virginia and other fast-growing data center states have increasingly questioned whether households will ultimately bear the cost of grid expansion required to support AI infrastructure.
To address those concerns, the companies said they plan to provide approximately $2.25 billion in customer bill credits over two years for Dominion customers, covering roughly 3.6 million homes and businesses across Virginia, North Carolina and South Carolina.
Meanwhile, the transaction could intensify broader debates in Washington and among state regulators over transmission investment, power reliability, renewable energy integration and whether large technology companies should shoulder more of the infrastructure costs associated with AI expansion. The merger also signals continued consolidation pressure across the utility sector as companies seek larger scale, broader transmission networks and stronger access to fast-growing electricity demand corridors tied to data centers and industrial reshoring.
Investors are also likely to focus on how the acquisition strengthens NextEra’s already dominant position in renewables, battery storage and natural gas-fired generation at a time when utilities are balancing aggressive decarbonization goals with the immediate need for reliable baseload electricity to support AI computing demand.
| TRADE POLICY |
—Ways & Means Democrats push for USMCA reforms ahead of 2026 review
Lawmakers urge stronger labor, environmental, and economic security provisions while defending the trilateral structure of the North American trade pact
House Ways & Means Committee Democrats are pressing the Trump administration to use the upcoming review of the U.S.-Mexico-Canada Agreement (USMCA) to strengthen labor protections, environmental enforcement, and North American economic security while preserving the pact’s trilateral framework.
In a letter (link) to U.S. Trade Representative Jamieson Greer, Ways & Means Trade Subcommittee Ranking Member Linda Sánchez (D-Calif.) and all Democrats on the panel argued the agreement must be updated to address growing geopolitical and supply chain risks facing the United States. The lawmakers said reforms are needed to curb offshoring, strengthen worker rights, improve environmental protections, and ensure stronger enforcement of existing commitments.
The Democrats emphasized that the trilateral structure of USMCA remains “the defining feature of the North American economic relationship” and warned against replacing the pact with separate bilateral agreements — an idea floated by some Trump administration officials. The lawmakers instead called for a “mutually beneficial relationship” with Canada and Mexico that broadly shares the gains from trade across North America.
The letter also criticized what Democrats described as the administration’s “combative rhetoric and coercive behavior” toward key trading partners over the past year, arguing that the USMCA review should instead focus on rebuilding trust and strengthening regional economic resilience.
On economic security, the lawmakers urged the administration to push Mexico to establish a formal foreign investment screening system similar to those in the United States and Canada. They also called for closer coordination on critical minerals, sensitive investments, and Section 232 tariffs to better shield North American supply chains from what they described as “predatory trading practices.”
Democrats sharply criticized the use of Section 232 national security tariffs on Canada and Mexico, arguing the measures undermined both USMCA and the credibility of the United States as a trading partner. Canada and Mexico have both sought tariff exemptions or removals as part of the USMCA review process.
The lawmakers also proposed a new rapid-response environmental enforcement system modeled after USMCA’s labor enforcement mechanism and urged the administration to remove the phrases “sustained and recurring” and “in a manner affecting trade” from the labor and environmental chapters, arguing the language has weakened enforcement efforts in past trade disputes.
Additional recommendations included strengthening labor dispute enforcement in Mexico, cracking down on forced labor imports, improving intellectual property enforcement, and maintaining duty-free treatment for digital trade and cross-border e-commerce.
The letter also highlighted ongoing agricultural disputes with Canada, particularly over dairy market access and Canadian restrictions on U.S. wine and spirits exports, while warning that rebuilding consumer trust in North American trade relationships will take time.
| WATER POLICY |
—Cornyn pushes potential tariffs on Mexico over Rio Grande Water Shortfalls
Texas lawmakers escalate pressure on Mexico with legislation tying trade penalties to compliance with the 1944 water treaty and compensation for U.S. farmers
Sen. John Cornyn (R-Texas), chairman of the Senate Finance trade subcommittee, has introduced legislation that would impose tariffs on Mexican imports if Mexico fails to meet its water delivery obligations to the United States under the 1944 Water Treaty. The proposal would also direct tariff revenue toward compensating South Texas farmers and ranchers harmed by persistent water shortages.
The bill, titled the “Water Assurance and Treaty Enforcement for Rio Grande Farmers Act,” or the “WATER for Farmers Act,” was introduced May 14 amid growing frustration among Texas lawmakers over Mexico’s alleged failure to deliver required Rio Grande water flows. Under the 1944 treaty, Mexico is obligated to provide 1.75 million acre-feet of water to the U.S. over five-year cycles. According to Sen. Ted Cruz (R-Texas), International Boundary and Water Commission data showed Mexico delivered only about 885,000 acre-feet during the five-year period that ended in October 2025.
The legislation would require the International Boundary and Water Commission, along with the State and Agriculture departments, to determine whether Mexico has a “water delivery shortfall” at the end of each year within a five-year treaty cycle. If a shortfall is identified, the Office of the U.S. Trade Representative would be required to impose duties on selected Mexican imports within 90 days.
The bill gives USTR broad discretion over which imports would face tariffs, though it directs the agency to prioritize agricultural goods and products originating from regions that rely on Rio Grande water systems.
The legislation also allows for escalating penalties if Mexico remains out of compliance for more than two years within a five-year cycle, either by increasing tariff rates or expanding the categories of affected imports.
Cornyn argued the legislation is necessary to protect South Texas agriculture from mounting economic losses tied to chronic water shortages. “Water shortages created by Mexico’s failure to follow the 1944 Water Treaty have wreaked havoc on the ability of South Texas farmers and ranchers to plan and to tend their crops and livestock,” Cornyn said in a statement announcing the bill. He added that the measure would “impose tariffs on Mexico if they continue in their delinquency of water deliveries and use the tariff revenue to compensate South Texas farmers.”
The proposal would establish a “South Texas Agricultural Compensation Trust Fund” within the Treasury Department. Revenue generated from tariffs on Mexican goods would be deposited into the fund and made available to USDA for direct payments to agricultural producers suffering economic losses tied to the water shortages.
The legislation marks the latest effort by Texas lawmakers to increase pressure on Mexico over treaty compliance. Cornyn and Cruz previously urged USTR Jamieson Greer to raise the water dispute during the upcoming USMCA review process and explore enforcement mechanisms to compel compliance.
Rep. Monica De La Cruz (R-Texas) and Rep. Henry Cuellar (D-Texas) introduced related legislation in the House last December aimed at restricting the Mexican government if treaty obligations were not met. Cornyn and Cruz later introduced companion legislation in the Senate.
President Donald Trump also weighed into the dispute late last year, threatening an additional 5% tariff on Mexican goods if Mexico failed to satisfy its treaty commitments. Shortly after those comments, USDA announced an agreement with Mexico intended to address the country’s outstanding water deficit.
| POLITICS & ELECTIONS |
—Primaries across eight states put Trump’s influence, Senate control and Democratic divisions in focus
Key contests in Georgia, Kentucky, Pennsylvania and Alabama could shape the 2026 Senate map and test the strength of establishment versus insurgent factions in both parties
Voters in eight states head to the polls Tuesday, but several marquee races in Georgia, Kentucky, Pennsylvania and Alabama are drawing outsized national attention as both parties sharpen their strategies ahead of the Nov. 3 midterms.
•In Georgia, Republicans are focused on defeating Sen. Jon Ossoff (D-Ga.), one of the most vulnerable Democratic senators on the ballot this cycle. Rep. Mike Collins (R-Ga.) has emerged as the perceived frontrunner in the GOP Senate primary, benefiting from strong name recognition and support among conservative grassroots voters.
The key battle, however, may be for second place in the expected runoff system. Former football coach Derek Dooley — backed by Gov. Brian Kemp (R-Ga.) — is competing with Rep. Buddy Carter (R-Ga.) for a spot in the June 16 runoff. Carter has attempted to position himself as the most aggressively pro-Trump candidate in the field, while Dooley is drawing support from establishment Republicans aligned with Kemp’s political network.
Georgia remains one of the GOP’s top Senate pickup opportunities after Ossoff’s narrow 2020 victory. Republicans view the state as increasingly competitive in federal races despite Democrats’ recent statewide successes.
• Meanwhile, in Kentucky, President Donald Trump and his political allies are targeting Rep. Thomas Massie (R-Ky.) in a closely watched Republican primary challenge. Trump-backed veteran Ed Gallrein is attempting to unseat Massie, who has frequently broken with Republican leadership and opposed portions of Trump’s legislative agenda.
Massie’s libertarian streak and willingness to challenge party leadership have long frustrated Trump allies, making the race a test of Trump’s continued influence over Republican primary voters and the limits of ideological independence within the GOP conference.
Kentucky Republicans are also choosing a nominee to replace retiring Sen. Mitch McConnell (R-Ky.). Rep. Andy Barr (R-Ky.) enters the primary with Trump’s endorsement and significant institutional support, while former Kentucky Attorney General Daniel Cameron is seeking a political comeback after his gubernatorial defeat.
•The Pennsylvania primaries are highlighting ideological tensions inside the Democratic Party. In the competitive 7th Congressional District, Democratic leaders are closely watching a crowded contest to challenge Rep. Ryan Mackenzie (R-Pa.) in a district viewed as critical to House control.
The Democratic Congressional Campaign Committee-backed Bob Brooks is facing challenges from Northampton County Executive Lamont McClure, former prosecutor Ryan Crosswell and engineer Carol Obando-Derstine. The race is viewed as a test of whether national Democratic organizations can still shape primaries amid growing activist pressure for more progressive candidates.
Further east in Pennsylvania’s heavily Democratic 3rd District, state Rep. Chris Rabb (D-Pa.) is seeking to succeed retiring Rep. Dwight Evans (D-Pa.). Rep. Alexandria Ocasio-Cortez (D-N.Y.) campaigned for Rabb in Philadelphia on Friday, underscoring the national progressive movement’s investment in the race.
• In Alabama, Republicans are battling to replace outgoing Sen. Tommy Tuberville (R-Ala.), who is running for governor. Rep. Barry Moore (R-Ala.) enters the Senate primary with Trump’s endorsement, though Alabama Attorney General Steve Marshall and veteran Jared Hudson are also mounting serious campaigns.
The Alabama race is another closely watched measure of Trump’s sway in Republican primaries, particularly in deeply conservative states where endorsements can heavily influence turnout dynamics and fundraising.
Bottom Line: Tuesday’s contests are expected to provide early signals about voter enthusiasm, the strength of Trump-aligned candidates, establishment-versus-insurgent dynamics in both parties, and the emerging battlefield for Senate and House control heading into the fall campaign season.
| WEATHER |
— NWS outlook: Severe weather and flash flooding threats across east-central Plains to Midwest this morning will shift south into the Southern Plains and Ohio Valley later today into tonight… …An early-season heatwave will challenge temperature records across the eastern U.S. through Wednesday.
—Corn Belt weather pattern splits along Northwest-Southeast divide
Wet southeastern areas face mounting fieldwork delays while drier western regions see improving soil moisture and lingering frost risks
The latest 15-day weather outlook points to a sharply divided pattern across the Corn Belt, with rainfall expected to range from below normal in the northwestern Corn Belt to significantly above normal in the southeastern portion of the region. The southeastern Corn Belt is expected to remain especially wet, raising growing concerns about additional fieldwork delays after persistent heavy rainfall since mid-April already saturated many areas.
In the western Corn Belt and northern Plains, recent precipitation has helped ease severe topsoil moisture deficits that had developed earlier this spring. However, forecasters now expect those regions to shift into a drier pattern during the 6-10 day and 11–15-day periods, with rainfall trending near to below normal. Temperatures are also expected to run below normal in the near term, maintaining an active frost threat through Saturday before a much warmer pattern develops next week.
Meanwhile, the Mid-South is forecast to enter an exceptionally wet stretch over the next two weeks, with widespread rainfall totals of 5 to 8 inches expected. The moisture is anticipated to significantly improve drought conditions that have intensified in parts of the region, but the heavy precipitation is also likely to create logistical challenges, slow planting progress, and increase the risk of localized flooding.
The Hard Red Winter wheat belt is also forecast to receive its wettest weather pattern of the season, with above-normal rainfall expected across key production areas. While the moisture should provide meaningful benefits for summer row crops and pasture conditions, analysts cautioned that much of the winter wheat crop may be too far advanced in its deterioration to fully recover from earlier dryness and stress.
