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Wheat producers: Finish 2024-crop sales... Wheat futures have rallied to a one-month high with funds covering short positions amid some global weather concerns. While there could be more near-term upside potential, the rally is too strong to pass up with the end of the old-crop marketing year just over a week away. We advise all wheat producers to sell the final 15% of 2024-crop production to get to 100% sold. Be prepared to make additional 2025-crop and initial 2026-crop sales when the rally shows signs of stalling.
Livestock producers: Extend feed coverage... Corn and soybean meal futures recently bounced from key support levels and have strengthened. We advise livestock producers to extend corn-for-feed and soybean meal coverage another month in the cash market through July.
EU sends new trade proposal to U.S. in hopes of securing deal... The European Union has shared a revised trade proposal with the U.S., as it aims to inject momentum in talks with President Donald Trump’s administration amid lingering skepticism that a transatlantic deal can be reached.
It includes proposals that take into account U.S. interests, including international labor rights, environmental standards, economic security and gradually reducing tariffs to zero on both sides for non-sensitive agricultural products as well as industrial goods, people familiar with the matter told Bloomberg.
Brazil’s Tocantins rules out HPAI in commercial flock... Preliminary test results indicate a commercial chicken farm in Brazil’s Tocantins state is free from highly pathogenic avian influenza (HPAI), according to a statement from the state’s ag department sent to Reuters. The tests have indicated low pathogenicity (mild influenza A). The samples tested negative for HPAI and Newcastle Disease.
“Even with this reassuring initial result, the agriculture ministry continues to carry out additional tests,” Tocantins state ag department Adapec said. “This is a precautionary measure to rule out any risk and guarantee health safety.”
Another potential case of HPAI on a commercial farm is under investigation in Santa Catarina state, according to a Brazilian ag ministry list.
GOP farm bill criticized by Tester... In a pointed MSNBC commentary, former Montana Democrat senator and longtime farmer Jon Tester sharply criticized the GOP-led House reconciliation bill and its proposed agriculture provisions. Tester accused House Republicans of abandoning bipartisan tradition and endangering the longstanding urban-rural coalition that has underpinned past farm bills.
Tester warned the bill would:
- Shift SNAP costs to states, worsening food insecurity and passing the blame
- Expand farm subsidies without addressing market competition
- Hurt demand for commodities by cutting nutrition support
- Ignore bipartisan negotiation, further polarizing farm policy
Tester concluded by urging Republicans to “go back to the drawing board” and produce a farm bill that reflects 21st-century needs and reinforces — not undermines — rural America.
U.S./China tariff truce triggers export frenzy... The recent 90-day mutual tariff truce between the United States and China has unleashed a shipping frenzy on the China-to-U.S. trade route, as exporters and importers race to move goods before the temporary reprieve expires. The rush to capitalize on reduced tariffs has triggered a cascade of disruptions across shipping lines, ports and supply chains, echoing the chaos of the pandemic-era trade surge.
Container bookings from China to the U.S. nearly doubled between May 12 and May 18, with some sources reporting a surge of up to 277% in bookings compared to early May. U.S. importers are scrambling to secure everything from consumer goods to industrial components, aiming to stockpile before tariffs potentially snap back after the truce ends.
Retailers, in particular, are accelerating orders in anticipation of the critical fall and winter holiday shopping seasons, making this the busiest period for transpacific shipping in years.
The surge in demand has pushed freight rates up by 22% to 31.7% on China-to-U.S. routes, with spot market rates to the U.S. West Coast climbing to $2,400 per FEU and East Coast rates reaching $3,200. Major shipping lines, such as MSC, have announced further rate hikes for June, while premium services are being reinstated to prioritize high-volume U.S.-bound shipments.
The spike in bookings has led to severe congestion at Chinese ports, especially at major gateways like Shenzhen’s Yantian Port, which handles over a quarter of China’s exports to the United States.
The export scramble has created acute shortages of shipping space, with many routes fully booked and carriers only able to accommodate clients with long-term contracts. Transpacific shipping capacity had dropped nearly 60% by mid-May due to earlier service suspensions and redeployment of vessels from other global routes is expected to take weeks.
The backlog is expected to persist into late May and June, with container shortages in Asia likely to worsen as equipment repositioning lags behind the surge in demand. Despite the tariff pause, a 30% duty still applies to many Chinese goods, limiting the full benefit for some importers and keeping margins tight, especially for low-value products.
Both U.S. and Chinese ports are struggling to keep up, despite U.S. port activity still 20% below normal levels, and Asian ports bracing for further congestion as the export rush continues. The uncertainty of what happens after the 90-day truce ends has led many companies to “bite the bullet” and pay higher rates now, rather than risk even greater disruption later.
U.S./China trade update: Rare earths is China’s leverage in trade fight... Tensions between China and the Trump administration are rising again, just a week after a temporary trade truce. Earlier this week, China accused the U.S. of jeopardizing the fragile agreement by targeting tech giant Huawei. At the heart of China’s strategic leverage are rare earth minerals — critical materials essential for electric vehicles, defense systems and high-tech manufacturing. Beijing’s dominance in this supply chain gives it outsized influence in trade negotiations.
U.S. automakers have reportedly cautioned White House officials that any Chinese move to restrict rare earth exports could disrupt production lines and push vehicle prices higher. They are urging the administration to prioritize long-term access to these minerals in ongoing trade talks.
OMB schedules seven meetings on 2026 RFS proposals... The Office of Management and Budget (OMB) has now scheduled seven stakeholder meetings on EPA’s proposed Renewable Fuel Standard (RFS) levels for 2026 and beyond. Key industry groups set to meet include:
- May 22: National Oilseed Processors Association (NOPA)
- May 27: Fuels America
- May 28: American Biogas Council
- May 29: Amp Americas (on-farm dairy RNG developer)
- June 2: Renewable Fuels Association (RFA)
- June 3: Clean Fuels Alliance
- June 4: Renewable Natural Gas Coalition
In addition, OMB has scheduled June 5 and June 9 meetings on EPA’s separate final rule regarding the partial waiver of cellulosic biofuel requirements, with Amp Americas and RFA, respectively.
U.S. companies rush to convert warehouses into bonded facilities to deflect tariff exposure... U.S. companies are racing to convert warehouses into bonded facilities in a bid to delay hefty tariff payments on imported goods, especially from China, according to Reuters. Bonded warehouses allow merchandise to be stored for up to five years without immediate duties, offering importers cash flow relief and a hedge against volatile trade policy.
Why bonded warehousing is booming
- Tariff deferral strategy: With Chinese import duties reaching as high as 145% before recent rollbacks, bonded storage allows firms to wait before paying tariffs — only when goods are sold.
- Cash flow management: Deferring tariff payments helps companies stagger costs rather than front-loading them at the point of import.
- Trade policy volatility: The Trump administration’s fluctuating tariff stance has made tariff timing a critical strategic variable.
Costs and bottlenecks grow
- Capacity crunch: The U.S. has over 1,700 bonded warehouses, many of which are now full. Inquiries for bonded space have surged sixfold.
- Soaring prices: Bonded storage now costs between $75 to $150 per pallet/month, compared to $17.50 for standard warehousing.
- Lengthy certification: Customs and Border Protection approval can now take six months or more, requiring high-security upgrades, recordkeeping systems and bonds starting at $100,000.
Many firms see bonded warehousing as a stopgap, hoping for tariff relief. But if trade tensions ease, excess bonded capacity could lead to losses. Companies are also exploring foreign trade zones or rerouting imports through Mexico and Canada to minimize tariff exposure.
No recession forecast but rate cuts still off the table... At the Atlanta Fed’s financial markets conference Tuesday evening, three Federal Reserve Bank presidents — Mary Daly (San Francisco), Beth Hammack (Cleveland) and Raphael Bostic (Atlanta) — delivered a unified message: economic uncertainty justifies patience, not policy shifts.
“We’re in center position,” said Daly, emphasizing the need for flexibility without rushing decisions. Hammack echoed that restraint: “The best action we can take is to sit on our hands.”
Bostic went further, stating, “I don’t have a recession in my outlook.” All three highlighted the limitations of traditional data and pointed to a growing reliance on real-time sentiment tracking, including machine learning and textual analysis, to better anticipate shifts in the economy.