PCE Inflation Cools on Monthly Basis, but Annual Price Pressures Remain Elevated
Rail merger clears key STB step | USTR Greer skips Mexico USMCQ confab | U.S., India move toward interim trade deal finalization | China tariff relief could reopen U.S. grain demand window
| LINKS |
Link: Video: Wiesemeyer’s Perspectives, May 22
Link: Audio: Wiesemeyer’s Perspectives, May 22
| Updates: Policy/News/Markets, May 28, 2026, Part 2 |
| UP FRONT |
TOP STORIES
— Rail merger clears key STB step: The Surface Transportation Board formally accepted Union Pacific and Norfolk Southern’s revised merger application, advancing plans for a coast-to-coast freight railroad despite opposition from shippers and labor groups.
— Greer skips Mexico USMCA meetings for Cabinet session amid broader trade push: USTR Greer stayed in Washington for a Cabinet meeting instead of attending early USMCA review talks in Mexico City, raising questions about North American trade priorities as the administration simultaneously manages China negotiations and tariff disputes.
— Treasury, IRS extend 45Z hearing as imported feedstocks debate intensifies: A one-day hearing on the 45Z Clean Fuel Production Credit expanded to three days as biofuel, agriculture, and SAF interests clashed over imported feedstock eligibility and lifecycle emissions modeling.
— U.S., India move toward interim trade deal finalization: A U.S. negotiating team will travel to India next week to finalize an interim bilateral trade agreement, despite complications stemming from the Supreme Court’s invalidation of IEEPA-based tariffs.
— Pentagon explores direct funding for U.S. drone makers: The Trump administration is considering debt and equity deals with domestic drone startups, including possible government ownership stakes, as the Pentagon races to scale low-cost production toward a goal of 300,000 drones by 2027.
FINANCIAL MARKETS
— Equities today: U.S. equity futures are modestly lower following limited U.S./Iran missile and drone exchanges, with investor focus shifting to economic data and remarks from several Federal Reserve officials, including John Williams.
— PCE inflation cools on monthly basis, but annual price pressures remain elevated: April PCE inflation rose 0.4% monthly but accelerated to 3.8% annually, with energy costs and slowing consumer spending reinforcing stagflation concerns for the Federal Reserve.
— Exxon relocates legal home to Texas amid shareholder activism debate: ExxonMobil shareholders approved reincorporating in Texas, a move the company says aligns governance with operations, but critics say is designed to raise barriers against ESG-focused shareholder challenges.
AG MARKETS
—Grains higher overnight as bulls test key resistance levels: Corn, soybeans, and wheat futures firmed overnight on corrective buying and technical support, while livestock futures pointed higher amid continued strength in cattle and hog markets
— China tariff relief could reopen U.S. grain demand window: Analysts believe Beijing may soon ease tariffs on U.S. soybeans and grains, potentially rekindling Chinese buying during the critical summer growing season and adding volatility to Chicago futures.
— International grain markets: Paris wheat futures firmed on Russian export constraints, while Malaysian palm oil rose sharply, lending broader support to global vegetable oil markets amid Middle East-related freight and energy concerns.
FERTILIZER
— Morocco fertilizer duties debate highlights supply chain tensions: The Fertilizer Institute’s CEO says the countervailing duty dispute over Moroccan phosphate imports remains legally complex and internally divisive, while the industry increasingly focuses on 2027 supply risks and China’s outsized influence over global phosphate flows.
U.S. WINE INDUSTRY
— California wine country faces deepening vineyard crisis: Falling land values, weak grape demand, and lender pressure are pushing Northern California vineyard owners into severe financial distress, with stabilization unlikely before next year.
ENERGY MARKETS & POLICY
— 45Z credit could create opportunities — but no guaranteed premiums — for Midwest farmers: University of Illinois researchers argue the 45Z Clean Fuel Production Credit may make farm-level carbon intensity more economically relevant, but caution that any benefits to farmers depend on whether biofuel producers choose to share value through premiums.
TRADE POLICY
— EU signals broader trade crackdown on Chinese imports: The EU plans to deploy tariffs, safeguards, and import quotas more aggressively across entire industrial sectors to counter what officials call an existential threat from Chinese overcapacity and subsidized exports.
FOOD POLICY & FOOD INDUSTRY
— Britain’s food system faces mounting pressure from heat, inflation and Middle East conflict: Extreme heat, persistent food inflation, and Iran-related supply disruptions are straining UK agriculture and household budgets, with food prices projected to be roughly 50% higher this November than five years ago.
WEATHER
— Northern Plains heat, eastern Corn Belt dryness deepen weather divide: Beneficial rains are expected across the western northern Plains while the eastern Corn Belt faces intensifying dryness under an omega block pattern, with exceptional heat across the northern Plains adding further crop stress.
| TOP STORIES—Rail merger clears key STB stepUnion Pacific-Norfolk Southern deal advances despite growing opposition from shippers and labor groups The proposed takeover of Norfolk Southern by Union Pacific cleared an important procedural hurdle Thursday after the Surface Transportation Board formally accepted the companies’ revised merger application for review. The decision moves forward plans to create the nation’s first coast-to-coast freight railroad operator.The STB said the railroads had provided enough information to satisfy the completeness requirements for a major merger application, rejecting arguments from critics that the filing should be dismissed. The ruling follows months of scrutiny after regulators earlier requested additional details, including conditions under which the companies could abandon the transaction. Union Pacific and Norfolk Southern submitted their revised filing on April 29. The merger now enters what is expected to be an extended and contentious review process. Under STB rules adopted in 2001, major rail mergers must demonstrate that they enhance competition and serve the public interest. Large shippers, labor unions, and several elected officials have already signaled opposition, warning the combination could reduce rail competition, increase shipping costs, and weaken service reliability across key freight corridors.—Greer skips Mexico USMCA meetings for Cabinet session amid broader trade pushUSTR chief’s absence fuels questions over timing and priorities as Trump administration ramps up parallel negotiations with China and prepares for major USMCA review talks U.S. Trade Representative (USTR) Jamieson Greer was notably absent from meetings in Mexico tied to early discussions over the upcoming review of the United States-Mexico-Canada Agreement (USMCA), instead remaining in Washington to attend a Cabinet meeting convened by President Donald Trump. Greer did, however, participate in a virtual session with Mexican Economy Secretary Marcelo Ebrard in which the two discussed issues on rules of origin and steel and aluminum tariffs. Deputy USTR Jeff Goettman is in Mexico City to lead the U.S. side in the first round, “which will feature negotiations on economic security and rules of origin for key industrial goods,” USTR said in a statement on Wednesday. That statement revealed plans for two more rounds with Mexico, one in Washington, DC, June 16-17 and another in Mexico City the week of July 20. The scheduling shift comes at a sensitive moment for North American trade relations as the administration simultaneously manages escalating negotiations with China, ongoing tariff disputes, and preparations for the formal USMCA joint review process expected to intensify later this year and into 2027. Greer’s decision to remain in Washington underscored how the White House is increasingly centralizing trade policy discussions within the broader geopolitical and economic agenda of the administration. Cabinet meetings in recent weeks have focused heavily on tariffs, industrial policy, energy security, China negotiations, and supply chain resilience — all issues that intersect directly with the future of USMCA implementation. The absence also comes as the administration is preparing for potential public comment periods and stakeholder consultations tied to several trade initiatives, including discussions surrounding a proposed U.S./China “Board of Trade” framework that Greer has publicly referenced in recent appearances. Meanwhile, Mexico and Canada are already positioning themselves ahead of the USMCA review process, with disputes simmering over biotechnology policies, automotive content rules, energy investment treatment, dairy access, and broader concerns over tariff escalation. Agricultural trade is expected to remain a major flashpoint, particularly if the U.S. moves forward with additional tariff recalibrations involving China that could redirect commodity flows across North America. Greer has increasingly become one of the administration’s lead voices on balancing aggressive tariff enforcement with efforts to secure targeted trade arrangements. His recent comments suggesting future discussions with China could include lowering some tariffs have heightened industry focus on how any bilateral accommodations could affect trade flows with traditional partners such as Mexico and Canada. For farm groups and commodity traders, the timing is particularly important. Mexico remains one of the largest export markets for U.S. corn, dairy, pork, and wheat, while Canada continues to play a critical role in integrated livestock, fertilizer, and grain supply chains. Any perception that North American negotiations are taking a back seat to China discussions is likely to draw scrutiny from agricultural and manufacturing stakeholders ahead of the formal USMCA review window. Meanwhile, administration officials have argued that the trade agenda is interconnected, with China negotiations, tariff enforcement, and North American supply chain policy all feeding into a broader strategy aimed at rebuilding domestic industrial capacity and reducing strategic vulnerabilities. —Treasury, IRS extend 45Z hearing as imported feedstocks debate intensifiesThree-day hearing underscores growing industry divide over imported feedstocks, lifecycle emissions modeling, and implementation of the 45Z Clean Fuel Production Credit The U.S. Treasury Department and the Internal Revenue Service expanded their public hearing on the Section 45Z Clean Fuel Production Credit from one day to three days, extending proceedings through May 29 as biofuel, refining, agriculture, and sustainable aviation fuel (SAF) interests pressed officials on key implementation issues tied to the credit. Link to Part 1 of Updates for more details of the hearing thus far. A major flashpoint during the hearing has been the treatment of imported feedstocks — particularly used cooking oil and other foreign-sourced materials used in renewable diesel and SAF production. The debate intensified after the One Big Beautiful Bill Act (OBBBA) revised the law governing 45Z eligibility to specify that only fuels derived from feedstocks sourced in the U.S., Canada, or Mexico can qualify for the credit. Renewable diesel, SAF, and refining interests argued that limiting eligibility to North American feedstocks could disrupt supply chains, raise production costs, and slow investment in low-carbon fuel production capacity. Industry representatives warned that global feedstock access remains important for maintaining adequate supplies and scaling renewable fuel output. Agriculture and traditional biofuel groups pushed back, arguing Congress intentionally structured the credit to support domestic and North American agricultural demand. Those groups contend the tax incentive should reinforce U.S. energy security and rural economic activity by prioritizing domestically produced feedstocks rather than imported materials. Another major issue at the hearing involved the 45ZCF-GREET model, which Treasury and IRS plan to use for calculating lifecycle greenhouse gas emissions from transportation fuels. The Renewable Fuels Association argued the model should include separate pathways for ethanol produced from cellulosic corn fiber and sorghum kernel fiber, saying those fuels generate significantly lower emissions profiles than conventional pathways and are currently excluded from the model. The extended hearing highlights how many critical implementation details remain unresolved for the 45Z credit, which is viewed as central to long-term investment decisions across the biofuel and SAF industries. Trade groups and companies used the hearing to outline multiple areas where Treasury and IRS retain discretion in crafting the final rule. However, the debate over imported feedstocks also exposed the limits of Treasury and IRS authority. The North American sourcing requirement was established directly by Congress in OBBBA rather than by the agencies in their proposed rule. As a result, Treasury and IRS likely have limited flexibility to alter that provision administratively without additional congressional action. That distinction contrasts with a separate EPA proposal tied to the Renewable Fuel Standard that would reduce the value of biofuel credits by 50% beginning in 2028 for imported fuels and fuels produced from imported feedstocks. Unlike the statutory 45Z sourcing language, that EPA proposal stems from administrative policy decisions rather than explicit legislative text. While administrations may exercise some discretion in enforcing existing laws, Treasury and IRS cannot independently rewrite statutory eligibility requirements enacted by Congress. Given the Trump administration’s broader emphasis on domestic manufacturing, domestic energy production, and North American supply chains, significant changes to the imported feedstock restrictions currently appear unlikely. —U.S., India move toward interim trade deal finalizationWashington to send negotiating team to India next week as both sides work to lock in tariff, market access, and investment terms amid shifting U.S. trade authorities India’s Commerce Ministry said Wednesday that a U.S. delegation led by Washington’s chief trade negotiator for the talks will travel to India next week to finalize details of an interim bilateral trade agreement and advance negotiations on a broader trade framework between the two countries.The upcoming meetings are expected to focus on unresolved elements of the interim agreement while also expanding negotiations under a broader bilateral trade agreement (BTA) covering market access, non-tariff barriers, customs and trade facilitation, investment promotion, and economic security cooperation. Indian officials did not identify the lead U.S. negotiator, though previous Indian statements have pointed to Brendan Lynch, assistant U.S. trade representative for South and Central Asia, as the chief negotiator. The talks come as the Trump administration intensifies efforts to deepen economic ties with India despite continued uncertainty surrounding U.S. tariff policy. Jamieson Greer said Tuesday that a U.S. team would travel to India soon and indicated he expects separate discussions with Indian Commerce and Industry Minister Piyush Goyal to advance the agreement based on the “joint framework” reached earlier this year. Meanwhile, Secretary of State Marco Rubio, during a recent visit to India, described the country as one of Washington’s most important strategic partners and expressed optimism that the two sides were nearing a durable trade accord. Rubio said the negotiations had made “tremendous progress” and suggested the final arrangement would be designed to support long-term commercial and strategic ties. The interim agreement stems from a February framework under which the U.S. agreed to reduce tariffs on Indian goods from 50% to 18%, including removal of a 25% tariff layer that had been imposed to pressure India over purchases of Russian oil. In return, India agreed to expand purchases of U.S. goods and address a range of longstanding American trade concerns. However, negotiations became more complicated after the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA), one of the legal foundations underpinning the Trump administration’s trade pressure campaign. Following the ruling, India reportedly sought clarification from Washington and delayed a planned delegation visit to finalize the interim agreement. At present, Indian exports face a separate 10% tariff imposed under Section 122 of the Trade Act of 1974, though those duties are scheduled to expire in July unless extended or replaced. India is also under scrutiny in two ongoing Section 301 investigations by the Office of the U.S. Trade Representative involving industrial overcapacity and forced labor concerns, raising the possibility of additional tariffs later this year. Indian officials have acknowledged that the evolving U.S. tariff landscape forced recalibration of the negotiations. Goyal recently said the agreement needed adjustment because of “changed circumstances,” emphasizing India’s objective of securing preferential access to U.S. markets despite shifting American trade authorities. Despite the uncertainty, Lynch argued last week that India remained focused on preserving and expanding access to the U.S. market rather than disputing the legal mechanisms Washington uses to impose tariffs. He suggested Indian negotiators were more concerned with maintaining comparative trade advantages than with the specific statutory authority behind U.S. tariff actions.The renewed push for a deal also reflects broader geopolitical considerations as the Trump administration seeks closer economic coordination with India amid rising tensions with China and ongoing supply-chain realignment efforts. —Pentagon explores direct funding for U.S. drone makersWall Street Journal reports Trump administration is considering debt and equity deals with drone startups as Pentagon races to expand low-cost domestic production capacityThe Trump administration is in talks to provide financing to a group of U.S. drone companies — including possible government equity stakes — as part of a broader push to rapidly expand domestic drone manufacturing and reduce costs, according to a report by the The Wall Street Journal. The discussions involve Pentagon officials and the Defense Department’s Office of Strategic Capital, a lending office originally established during the Biden administration to support strategically important supply chains. According to the report, companies under consideration include Neros Technologies, Performance Drone Works, and Unusual Machines, the latter of which counts Donald Trump Jr. as both a shareholder and advisory board member. The proposed financing packages could combine loans with equity investments, potentially giving the U.S. government partial ownership stakes in some drone firms. The effort reflects growing Pentagon concern that the U.S. remains far behind global rivals in scalable, low-cost drone production. The Defense Department’s “Drone Dominance” initiative aims to build an arsenal of roughly 300,000 inexpensive attack drones by the end of 2027, with a target cost of approximately $5,000 per unit. However, many domestically produced drones still cost tens of thousands of dollars more than that benchmark, underscoring the manufacturing and supply-chain challenges facing the sector. Industry officials have argued for years that inconsistent Pentagon purchasing has limited the ability of drone startups to scale production. The Journal noted that the U.S. currently has annual production capacity for roughly 100,000 drones, far below wartime manufacturing levels seen elsewhere. Ukraine, by comparison, reportedly produced roughly four million drones last year amid its ongoing war with Russia. The potential deals would represent one of the strongest commitments yet by the Pentagon to directly support U.S. drone startups financially rather than simply awarding procurement contracts. The Office of Strategic Capital reportedly has access to roughly $210 billion in lending authority and has previously backed critical-minerals and defense-industrial projects tied to national security priorities. The discussions also align with a dramatic proposed expansion of Pentagon drone spending. The Defense Department has requested more than $54 billion for its Defense Autonomous Warfare Group — known as DAWG — compared to roughly $225 million this year, signaling how rapidly autonomous warfare systems are moving toward the center of U.S. military planning. Meanwhile, the talks are likely to draw scrutiny because of the involvement of companies connected to members of the Trump family, particularly Unusual Machines and related drone ventures tied to Donald Trump Jr. and Eric Trump. Pentagon officials declined to comment on the negotiations, describing them as “pre-decisional matters” still subject to change. |
| FINANCIAL MARKETS |
—Equities today: U.S. equity futures are modestly lower following another round of limited missile and drone exchanges between the U.S. and Iran. The two sides traded what officials described as largely “defensive” strikes, while expectations for a broader ceasefire agreement have so far remained intact. Absent either a formal ceasefire breakthrough or a significant escalation in the conflict, investor focus today will shift back to economic data. Meanwhile, several Federal Reserve officials are also scheduled to speak today, including John Williams at 8:55 a.m. ET, Alberto Musalem at 10:15 a.m., and Thomas Barkin at 3:00 p.m. Of the group, Williams will draw the most attention given his role within Fed leadership. Any indication that policymakers remain open to additional rate hikes could weigh on equities.
In Asia, Japan -0.5%. Hong Kong -1.3%. China +0.1%. India closed.
In Europe, at midday, London -1%. Paris -0.4%. Frankfurt -0.6%.
—PCE inflation cools on monthly basis, but annual price pressures remain elevated
Energy costs continue to ripple through the economy as consumer spending growth slows and Fed concerns linger over persistent inflation pressures
The latest Personal Consumption Expenditures (PCE) Price Index data showed some moderation in monthly inflation during April, but underlying price pressures remained elevated on an annual basis, reinforcing the difficult balancing act facing the Federal Reserve. Headline PCE inflation rose 0.4% in April, easing from the 0.7% increase recorded in March and coming in below expectations for a 0.5% gain. However, the year-over-year inflation rate accelerated to 3.8% from 3.5% the prior month, matching market expectations and underscoring that inflation remains well above the Fed’s long-term target.
Core PCE inflation, which excludes food and energy and is closely watched by Fed policymakers, increased 0.2% on the month, slightly below expectations for a 0.3% rise. On an annual basis, core inflation accelerated to 3.3% from 3.2% in March, highlighting continued stickiness in underlying prices despite some moderation in monthly gains.
Energy costs continued to play a major role in broader inflation trends, with higher fuel prices increasingly filtering into other sectors of the economy. Consumers spent an additional $28.8 billion on gasoline and other energy goods during April, while spending tied to housing and utilities climbed by another $22.7 billion. The persistence of elevated energy-related costs has remained a major concern for policymakers because those increases often bleed into transportation, manufacturing, and service-sector pricing.
Meanwhile, the report suggested consumers may be beginning to show signs of spending fatigue, particularly at the fuel pump. Consumer spending overall rose by $111.1 billion in April, consisting of a $67.2 billion increase in services spending and a $44.0 billion gain in goods spending. However, that pace slowed notably from March, when total consumer spending jumped by $195.4 billion. Fuel-related spending also moderated sharply from the prior month, when consumers spent an additional $81.3 billion on gasoline and energy products.
The slowing pace of spending growth could become an increasingly important signal for Fed officials as they assess whether elevated inflation is beginning to weigh more heavily on consumer demand. While inflation remains stubbornly high, any sustained cooling in consumer activity could intensify concerns about slowing economic momentum alongside persistent price pressures — a combination that continues to fuel stagflation worries within financial markets and among policymakers.
—Exxon relocates legal home to Texas amid shareholder activism debate
Company says move streamlines governance and aligns with operations, while critics argue it strengthens defenses against ESG and shareholder challenges
ExxonMobil shareholders approved a proposal to shift the company’s legal incorporation from New Jersey to Texas, marking a significant governance change for one of the world’s largest oil companies. The move means Exxon will now operate under Texas corporate law and within Texas courts, which executives and supporters describe as a more predictable and business-friendly legal environment.
The relocation reflects a broader trend among major corporations reconsidering traditional incorporation venues amid rising shareholder activism, litigation risks, and environmental, social, and governance (ESG) pressures. Texas has increasingly positioned itself as an alternative corporate hub, particularly for energy and industrial companies seeking a regulatory framework viewed as more favorable to management.
Exxon argued the change better aligns the company’s legal structure with its operational footprint. The company already maintains its headquarters in Texas and conducts substantial business across the state’s energy sector. Executives said the move would simplify governance and provide greater consistency between corporate operations and the legal system overseeing them.
Critics, however, contend the decision is closely tied to Exxon’s escalating battles with activist investors and climate-focused shareholder groups. Under Texas law, small shareholders generally face higher hurdles when attempting to sue corporate directors or submit activist shareholder proposals. Governance advocates warn the shift could reduce shareholder influence and make it more difficult to challenge company decisions related to climate disclosures, emissions targets, and executive accountability.
The decision comes after Exxon engaged in several high-profile disputes with environmental investors, including litigation against activist groups seeking to advance climate-related shareholder resolutions. That legal strategy drew national attention because Exxon pursued court action even after some activists withdrew proposals, signaling a more aggressive posture toward shareholder campaigns.
Supporters of the move argue Texas courts offer clearer protections against what they characterize as politically motivated shareholder activism. Business groups have increasingly criticized ESG campaigns as an attempt to pressure companies into policy changes outside traditional fiduciary responsibilities.
The incorporation change also underscores Texas’ growing influence in corporate America. State leaders have actively promoted Texas as a destination for incorporations, positioning it as a competitor to Delaware, which has long dominated corporate law. Several high-profile companies have recently explored or completed similar governance shifts amid concerns about litigation exposure and shareholder activism.
Meanwhile, governance experts say Exxon’s move could intensify the national debate over shareholder rights versus corporate management authority, particularly as energy companies continue facing pressure from investors, regulators, and climate activists over long-term emissions strategies and fossil fuel investment plans.
| AG MARKETS |
—Grains higher overnight as bulls test key resistance levels
Corn, soybeans, and wheat futures firmed overnight on corrective buying and technical support, while livestock futures pointed higher amid continued strength in cattle and hog markets
July corn futures moved higher overnight on corrective buying, with traders closely watching resistance near $4.60 3/4 as bullish momentum persists. Support is seen at the overnight low of $4.51 1/2 if the market turns lower.
Soybean futures also firmed, with July beans trading near bundled resistance around $11.95. Additional upside could push prices toward the key psychological $12.00 level, while downside support is pegged at $11.85 1/4.
Wheat futures rebounded overnight after recent weakness, with July Chicago SRW wheat testing resistance near the 40-day moving average at $6.29 1/2. Additional chart resistance stands at $6.40, while support is noted at the overnight low of $6.18.
Livestock futures are expected to open higher, continuing the recent bullish tone across cattle and hog markets. Cattle futures found support at the 40-day moving average, which has helped stabilize prices since mid-March. Feedlots could regain leverage if futures continue to recover, although weaker cash cattle trade last week may still pressure the market. Meanwhile, choice boxed beef prices continued climbing, rising $1.82 on Wednesday to $394.72.
Hog futures are also expected to open firmer, although gains may be limited after Wednesday’s rally stalled near the 10-day moving average. Lean hog futures remain in a broader downtrend on daily charts as traders await improvement in the cash market. The CME Lean Hog Index slipped another 12 cents to $90.58 as of May 26, while pork cutout values fell 50 cents Wednesday to $98.35, pressured by weaker picnic and rib prices.
—China tariff relief could reopen U.S. grain demand window
Markets are beginning to focus on the possibility that Beijing could soon reduce import duties on U.S. soybeans and grains, potentially reopening Chinese buying just as the most critical phase of the U.S. growing season approaches
Trade analysts and grain merchants increasingly believe China may ease tariffs or other import restrictions on select U.S. agricultural commodities in the coming weeks as part of broader efforts to stabilize relations with Washington ahead of additional trade negotiations. Such a move could encourage Chinese state buyers, TRQ holders, and domestic crushing companies to re-enter the U.S. market more aggressively after months of cautious purchasing behavior.
For soybeans, the stakes are especially high. China remains the world’s dominant soybean importer, and even modest policy adjustments in Beijing can quickly shift global trade flows, freight patterns, and futures prices. Domestic Chinese crushers have faced difficult margins amid uneven feed demand and elevated South American competition, but lower import duties on U.S. supplies could improve economics enough to trigger renewed buying interest during the late-summer and fall shipping window.
Corn markets are also watching closely. Chinese TRQ allocations for corn imports have remained underutilized relative to historical peaks, partly because of trade uncertainty and large domestic grain stockpiles. Any reduction in tariffs or easing of administrative barriers could increase the competitiveness of U.S. corn versus other origins, particularly if weather concerns intensify in the Northern Hemisphere.
Meanwhile, the timing is critical for U.S. producers. The core of the 2026 Midwest corn and soybean growing season still lies ahead, with pollination for corn and August pod-setting weather for soybeans likely to determine final yield potential. Current forecasts continue to show meaningful regional weather divergence across the Corn Belt, leaving markets highly sensitive to any shift in temperature or rainfall patterns. That combination — uncertain yield prospects and the possibility of renewed Chinese demand — creates the potential for heightened volatility in Chicago grain futures during the weeks ahead. Traders continue to struggle with rapidly shifting macro headlines tied to President Donald Trump’s foreign policy, U.S./China negotiations, Iran-related energy disruptions, and broader financial market swings.
Against that backdrop, many commercial firms say the grain market has become increasingly difficult to trade on a day-to-day basis because geopolitical headlines can overwhelm traditional supply-and-demand fundamentals. Even so, the underlying focus for agriculture increasingly returns to two core issues: Midwest weather and whether China ultimately returns as a larger buyer of U.S. grain and oilseeds.
—International grain markets
Wheat and palm oil markets firm as Russian export constraints and stronger vegetable oil demand support prices
Global grain and oilseed markets were mostly firmer on May 28, with wheat values supported by ongoing export tightness out of Russia and vegetable oil markets buoyed by gains in Asian palm oil futures.
Paris milling wheat futures climbed €1.50/metric ton, lifting the contract to roughly $212/MT in U.S. equivalent terms as concerns persist over Black Sea export availability and weather uncertainty across portions of Europe and Russia.
Russian June FOB wheat offers increased another $2/MT to $247/MT, while new-crop offers were reported near $245/MT bid. Russian exporters continue to struggle with a strengthening ruble and limited farmer selling, factors that are tightening nearby export supplies and reducing competitiveness into key import markets.
Meanwhile, August Malaysian palm oil futures rose 41 ringgits to close near $4,537/MT in U.S. dollar equivalent terms. Strength in palm oil added underlying support to global vegetable oil markets, including soybean oil futures, amid ongoing concerns over edible oil supplies and elevated freight and energy costs tied to Middle East tensions.
In broader grain trade, Black Sea wheat values remain closely watched as importers continue shifting purchases between Russian, European Union, and South American origins depending on currency fluctuations and freight economics. Traders also continue monitoring Northern Hemisphere weather risks, including dryness in parts of the eastern European wheat belt and excessive heat across sections of the northern Plains in the U.S.
| FERTILIZER |
—Morocco fertilizer duties debate highlights supply chain tensions
TFI chief says countervailing duty dispute remains legally and politically complex as the industry shifts focus toward 2027 fertilizer availability and China’s growing influence over global phosphate flows
In an interview with Politico, The Fertilizer Institute CEO Corey Rosenbusch said the debate over removing or suspending countervailing duties (CVDs) on Moroccan fertilizer imports remains highly complicated because TFI members are divided on the issue. Some companies support maintaining the duties after pursuing the trade case, while others in production agriculture have pushed for relief amid tightening fertilizer supplies and elevated prices.
Rosenbusch noted the Moroccan phosphate fertilizer duties are currently under review and said companies involved in the litigation are separately discussing potential emergency waivers with the Trump administration. He emphasized those conversations are being handled directly by corporate legal teams and administration officials rather than through TFI itself.
The comments underscore broader concerns about global phosphate concentration and supply vulnerability. Rosenbusch pointed to China’s dominant role in the market, noting the country controls roughly 43% of global phosphate supplies and therefore exerts greater influence on pricing than domestic U.S. producers. He added that China’s current phosphate export restrictions through August are closely tied to Brazil’s planting cycle, arguing Beijing historically directs phosphate exports toward countries tied to broader agricultural trade relationships.
Rosenbusch noted that when China loosened similar export restrictions last year, much of the supply ultimately flowed to Brazil, which remains a key soybean supplier to China. That dynamic could become increasingly important following China’s reported commitment to purchase 25 million metric tons of U.S. soybeans annually in 2026, 2027, and 2028 under the broader U.S./China trade framework. Market participants will be watching whether Beijing eventually frees up additional phosphate supplies for the U.S. market rather than concentrating exports toward Brazil.
Meanwhile, Rosenbusch said the fertilizer industry is increasingly focused on 2027 supply risks rather than only the immediate 2026 crop year. He highlighted ongoing cooperation between fertilizer companies and USDA through the Fertilizer Production Expansion Program as the industry seeks to strengthen domestic production capacity and reduce vulnerability to geopolitical and trade disruptions.
| U.S. WINE INDUSTRY |
—California wine country faces deepening vineyard crisis
Falling land values, weak grape demand and mounting lender pressure are forcing vineyard owners across Northern California into a prolonged financial squeeze
California’s wine industry is confronting one of its most severe downturns in decades as vineyard values tumble, buyers retreat from the market and growers struggle with oversupply and weakening consumer demand. Industry experts at the recent AWG Wine Advisors conference warned that the correction is accelerating across key wine-producing regions, particularly in Napa Valley, Sonoma County, Mendocino County and Lake County.
Market participants described a landscape saturated with sellers as vineyard owners rush to unload properties amid declining grape demand and shrinking winery purchases. The imbalance has left many owners facing sharply lower valuations with few interested buyers, especially for lower-tier vineyards and bulk wine operations.
Tony Correia, a longtime California vineyard appraiser, said the current environment resembles some of the industry’s most painful historical downturns, with many growers unable to generate enough cash flow to cover debt obligations or operating expenses. As lenders tighten pressure on distressed borrowers, additional vineyard sales could further depress land prices across the state.
The downturn reflects a broader structural shift in wine consumption trends. Younger consumers have reduced wine intake in favor of spirits, ready-to-drink beverages and nonalcoholic alternatives, while premium wine sales have slowed after years of rapid expansion. Meanwhile, wineries continue to work through excess inventories built during stronger demand periods, limiting the need for new grape contracts.
Lower-priced vineyard acreage appears particularly vulnerable as wineries concentrate purchases on premium appellations and established brands. Industry analysts said some vineyard owners may ultimately remove acreage or transition land to alternative agricultural uses if profitability does not improve.
Even premium regions are not immune. While high-end Napa Valley properties continue to command interest from wealthy investors, transaction activity has slowed significantly, and pricing has softened compared to peak pandemic-era valuations. Mid-tier and non-premium vineyards have seen the steepest declines as financing conditions tighten and investor appetite weakens.
Conference participants said stabilization is unlikely before next year, with recovery dependent on inventory reductions, improved wine consumption trends and a broader rebalancing between grape supply and winery demand. Until then, many growers face difficult decisions on restructuring debt, selling assets or exiting the industry altogether.
| ENERGY MARKETS & POLICY |
—45Z credit could create opportunities — but no guaranteed premiums — for Midwest farmers
farmdoc Daily authors outline how clean fuel tax credit may reshape grain markets
University of Illinois researchers Jonathan Coppess and Zhangliang Chen, writing in farmdoc Daily (link), argue that the Section 45Z Clean Fuel Production Credit could create new marketing opportunities for Midwest corn and soybean farmers, but they caution that the policy does not guarantee higher grain prices or direct payments to producers. The authors emphasize that the tax credit flows to biofuel producers — not farmers — and that any farm-level benefits would depend on whether ethanol, biodiesel, or sustainable aviation fuel (SAF) producers decide to pay premiums for lower-carbon feedstocks.
Variable credit. The article explains that 45Z, created under the Inflation Reduction Act and later modified by Congress to limit qualifying feedstocks to those produced in the U.S., Canada, or Mexico, is designed to incentivize the production of lower-carbon transportation fuels. Unlike the former Volumetric Ethanol Excise Tax Credit (VEETC), which provided a fixed subsidy to gasoline blenders, 45Z offers a variable credit tied directly to the carbon intensity score of the fuel produced.
Coppess and Chen note that the size of the credit depends on how far a fuel’s greenhouse gas emissions fall below the benchmark of 50 kilograms of CO2 equivalent per million British thermal units. The maximum credit can reach $1 per gallon for ethanol and as much as $1.75 per gallon for SAF, depending on the emissions profile.
The researchers argue that this structure creates incentives for biofuel producers to seek out “lower carbon” corn and soybeans because feedstock production can account for roughly 40% to 60% of a biofuel’s total lifecycle carbon intensity. If ethanol plants or other biofuel producers compete for lower-carbon grain, some bushels could become more valuable than others based on production practices and emissions profiles.
A chart in the article illustrates how grain, carbon-intensity data, and financial value could move through the supply chain under 45Z. The framework shows farmers supplying feedstocks to biofuel producers, who then combine farm-level carbon-intensity estimates with processing emissions to determine the final fuel score and resulting tax credit value. The authors stress, however, that the financial benefits only reach farmers indirectly and only if biofuel producers choose to share some of the value through premiums or contracts.
The article repeatedly warns producers against assuming that low-carbon grain automatically translates into higher income. Coppess and Chen write that whether premiums emerge will depend on local grain market conditions, competition among biofuel producers for qualifying feedstocks, and the costs associated with verifying emissions reductions and meeting IRS documentation requirements.
The authors conclude that 45Z could make farm-level carbon intensity more economically relevant than in the past, particularly if ethanol plants begin differentiating grain purchases based on emissions profiles. They add that future research will examine how farm-level carbon-intensity scores may be calculated and how management practices could influence potential economic returns under the program.
| TRADE POLICY |
—EU signals broader trade crackdown on Chinese imports
Brussels plans wider use of tariffs and import quotas to shield key industries from what officials describe as an “existential” threat from Chinese overcapacity
The European Union is preparing a major expansion of its trade defense arsenal as concerns mount over a flood of low-cost Chinese imports hitting European industrial sectors. European Union Industry Commissioner Stéphane Séjourné said the bloc intends to use tariffs, safeguard measures, and import quotas more aggressively and systematically to protect strategic industries ranging from chemicals and metals to clean technology manufacturing.
Séjourné said the EU can no longer rely solely on lengthy anti-dumping and anti-subsidy investigations that often target individual products while broader sectors continue to suffer market damage. Instead, Brussels is considering a more coordinated deployment of safeguard clauses designed to protect entire industrial ecosystems from surging imports tied to Chinese overcapacity.
The tougher posture reflects growing alarm inside Europe that Chinese manufacturers — backed by state support, excess production capacity, and weakening domestic demand — are exporting aggressively into overseas markets, particularly as trade tensions with the United States intensify. European officials increasingly fear that goods unable to enter the U.S. market because of tariffs could be redirected toward Europe, putting additional pressure on already struggling manufacturers.
Sectors viewed as especially vulnerable include steel, aluminum, chemicals, batteries, solar equipment, electric vehicles, and other clean-energy technologies where European producers argue they face unfair pricing competition from heavily subsidized Chinese rivals. EU officials contend that without faster and broader intervention tools, entire industries could face long-term erosion before formal trade cases are completed.
Meanwhile, Séjourné emphasized that the EU is not pursuing a wholesale economic decoupling from China. Instead, Brussels is framing the strategy as an effort to “rebalance” trade relations and preserve Europe’s industrial base while maintaining commercial ties with Beijing. The approach aligns with the EU’s broader “de-risking” strategy, which seeks to reduce strategic dependencies on China in critical sectors without severing trade entirely.
The proposed shift also underscores a broader change in European industrial policy, with Brussels increasingly willing to intervene directly to defend domestic production capacity amid rising geopolitical tensions and global competition over manufacturing leadership in clean energy and advanced industrial goods.
| FOOD POLICY & FOOD INDUSTRY |
—Britain’s food system faces mounting pressure from heat, inflation and Middle East conflict
Experts warn that climate shocks and global supply disruptions are exposing vulnerabilities in UK food security and driving prices sharply higher
Britain is facing growing warnings of a potential food security crisis as extreme weather, persistent inflation, and fallout from the Iran conflict combine to strain domestic agriculture and household budgets. Food policy experts and farming groups say the convergence of climate stress and geopolitical instability is exposing deep vulnerabilities in the UK’s food supply chain.
A prolonged heatwave across parts of the U.K. has already damaged crops and increased stress on livestock, particularly in key agricultural regions dependent on stable summer rainfall. Farmers report declining yields for vegetables, grains, and forage crops, while heat-related pressure on dairy and beef herds is raising concerns about lower productivity and higher feed costs heading into the autumn and winter months.
Industry analysts estimate the economic toll on British agriculture could reach hundreds of millions of pounds if hot and dry conditions persist. The warnings come as food inflation remains elevated after several years of weather disruptions, labor shortages, energy cost spikes, and broader global supply chain instability.
Food experts now project that average food prices in Britain could be roughly 50% higher this November than they were five years ago, reflecting both structural inflation pressures and the increasing cost of climate-related disruptions. Rising temperatures across Europe are also affecting production in other exporting countries, limiting Britain’s ability to offset domestic shortages through imports.
Meanwhile, the war involving Iran and continuing instability around the Strait of Hormuz are adding further pressure to global energy and fertilizer markets. Higher oil and natural gas prices are increasing transportation, refrigeration, and fertilizer costs throughout the food supply chain. Agricultural economists warn that fertilizer availability and pricing remain especially vulnerable because the Middle East is a major hub for global energy and petrochemical exports.
The debate has intensified pressure on Prime Minister Keir Starmer’s government to update Britain’s national food strategy. A coalition of food system experts, academics, and advocacy groups is urging policymakers to prioritize more resilient domestic food production, stronger emergency preparedness for supply-chain disruptions, and improved access to affordable food for lower-income households.
Some policymakers and consumer advocates have floated voluntary price caps or agreements with retailers to limit further food inflation. However, the proposals have faced resistance from supermarket chains and opposition politicians who argue that intervention could distort markets and discourage investment in domestic agriculture.
Critics also warn that Britain’s long-term dependence on imported food leaves the country increasingly exposed to geopolitical shocks and climate volatility. The UK imports roughly 40% of its food supply, making it particularly sensitive to disruptions in shipping lanes, fertilizer markets, and international commodity prices.
The concerns mirror broader debates unfolding across Europe over food sovereignty, climate resilience, and strategic supply chains. Governments across the continent are increasingly weighing whether food security should be treated similarly to energy security following multiple years of geopolitical and weather-related disruptions.
Analysts say the coming months will be critical. If extreme heat persists through the summer and energy markets remain volatile because of tensions involving Iran, Britain could face another sharp increase in grocery prices heading into the holiday season, further intensifying political pressure on the government and retailers alike.
| WEATHER |
—Northern Plains heat, eastern Corn Belt dryness deepen weather divide
Forecast models point to a sharp split in U.S. crop weather patterns, with beneficial rains improving conditions in parts of the northern Plains and western Corn Belt while the eastern Corn Belt faces intensifying dryness and mounting topsoil concerns
A growing regional divide is emerging across the U.S. crop belt as weather models show sharply contrasting moisture patterns between the western and eastern portions of the northern Plains and Corn Belt. Forecasters now favor widespread above-normal rainfall across western and southwestern areas of the northern Plains over the near term, offering important relief for moisture deficits that have stressed developing crops. Far eastern sections of the region, however, are expected to miss nearly all meaningful precipitation over at least the next 10 days, leaving dryness entrenched.
The rainfall outlook comes as exceptional heat spreads across the northern Plains, with temperatures running 10 to 20 degrees above normal through today and tomorrow. Longer-range models also indicate another round of much-above-normal temperatures returning during the 11–15-day period, a combination likely to accelerate crop development and increase evapotranspiration rates.
Meanwhile, the eastern Corn Belt remains locked under a restrictive omega block weather pattern that continues to suppress precipitation. Forecast totals across portions of the Great Lakes region are expected to remain below 25% of normal during the next 10 days, raising concerns about rapid topsoil moisture depletion and increasing stress on corn and soybean crops entering key early growth stages.
Conditions improve farther west in the Corn Belt, where updated forecasts call for expanding rain chances beginning late this week and extending into the 6–10-day period. Western and far western areas could receive 1 to 2 inches of moisture, improving soil conditions and stabilizing crop prospects.
Across the southern Plains, the core HRW wheat belt is expected to benefit from repeated rain chances over the next 10 days, supporting developing summer row crops and maintaining near- to above-normal precipitation totals. Farther east, an exceptionally wet pattern is forecast to persist across the Mid-South and Southeast during the next 15 days, bringing additional long-term drought relief. Those areas are also expected to experience unseasonably cool temperatures during the June 2-5 window, helping ease crop stress and reduce evaporation rates.
