Good morning!
Grains mildly weaker to open the week... Corn, soybeans and wheat faced light price pressure overnight amid escalating trade tensions. As of 6:30 a.m. CT, corn and soybeans futures are trading fractionally to a penny lower, winter wheat markets are 2 to 3 cents lower and spring wheat is fractionally lower in most contracts. The U.S. dollar index is around 250 points higher, while front-month crude oil futures are nearly $1.00 higher. Gold futures surged to a record high overnight.
Trump will announce 25% tariffs on all imports of steel and aluminum today... President Donald Trump on Sunday said the tariffs will apply to the metal imports from all countries. He didn’t specify when the duties would take effect. This marks a significant escalation in his trade policy. These new tariffs appear to be in addition to existing duties on metals from certain countries. Trump also plans to announce “reciprocal tariffs” later in the week, likely on Tuesday or Wednesday. These reciprocal tariffs would match duties imposed by other countries on U.S. goods.
Tariffs on targeted U.S. goods by China kick in today, others prepare for potential trade moves... China’s tariffs on $14 billion worth of U.S. exports are set to take effect today. Beijing’s retaliatory duties target U.S. manufacturing and energy sectors, which could hit Republican-leaning states hardest, according to analysts. Brazilian officials are analyzing sectors that could be impacted by U.S. tariffs and weighing countermeasures. The measures under consideration include raising tariffs, suspending the ex-tariff regime that temporarily lowers import taxes and strengthening trade ties with other BRICS nations, particularly China, Russia and India. Of note: Brazil currently imposes an 18% tariff on ethanol imports from U.S., while the U.S. does not impose any tariffs on ethanol imports from Brazil. On Saturday, Canada’s Trade Minister Mary Ng met with EU officials in Brussels to deepen economic ties between Canada and the European Union. The visit is part of Canada’s broader effort to strengthen partnerships beyond the U.S., particularly as both regions face trade challenges. Meanwhile, the European Union is exploring a proposal to reduce tariffs on U.S. car imports from the current 10% to a rate closer to the 2.5% imposed by the U.S. on European vehicles.
Chinese ports see record traffic in January ahead of U.S. tariffs, holiday... China’s busiest port processed a record amount of goods in January, as companies rushed to get their products onto ships before U.S. tariffs kicked in and ahead of its Lunar New Year holiday. Shanghai’s port processed a record 5 million containers last month, well above any previous month in data going back to 2007. Last year, the port was the first globally to process over 50 million containers in one year. The nearby Ningbo port also saw a spike in cargo. It reported 59 MMT in foreign trade processed at the port last month. Despite the record, trade flows slowed in the last week of January and the first week of February, according to separate government data, as companies shut down for more than a week for the Lunar New Year holiday.
Argentina gets needed rains, central Brazil remains wet... Some locally significant rain fell in northern Buenos Aires and far southern Santa Fe, Argentina, during the weekend. Argentina is forecast to receive more rains this week, with forecast models indicating greater amounts than on Friday, especially through central areas of the country. Center-west and some southern areas of Brazil will get frequent shower and thunderstorm activity over the next two weeks. That will benefit dry areas in far southern Brazil but will keep soybean harvest and safrinha corn planting delayed in central areas.
Brazil’s January bean, corn exports well below year-ago... Brazil exported 1.072 MMT of soybeans during January, down 932,000 MT (46.5%) from December and 1.786 MMT (625%) below last year. Brazil’s corn exports totaled 3.594 MMT last month, down 672,000 MT (15.8%) from December and 1.282 MMT (26.3%) below January 2024.
IKAR cuts Russian wheat export, production forecasts... IKAR consultancy cut its 2024-25 wheat export forecast by 500,000 MMT to 43 MMT, citing low stocks and poor margins as the main factors. IKAR also cut its 2025 wheat production estimate to 82 MMT from 84 MMT previously in a baseline scenario, saying forecasts for freezing temperatures could damage crops amid a lack of snow cover.
Indian sugar mills close early, driving up local prices... Over three dozen sugar mills in India’s leading sugarcane-producing states have shut down nearly two months earlier than usual due to reduced cane supplies caused by adverse weather conditions, Reuters reported. This unexpected early closure is pushing up local sugar prices and encouraging mills to demand higher prices for their limited export quotas. The closures indicate that India, the world’s second-largest sugar producer, is likely to produce less sugar than earlier projections, tightening global supplies. India’s sugar output for the 2024–25 marketing year could fall 14.7% to 27.27 MMT, according to the Indian Sugar and Bio Energy Manufacturers Association. However, dealers anticipate production may drop even further to around 26 MMT due to the rapid pace of mill closures. Local sugar prices have surged 10% in the past month, and mills are now seeking at least 45,000 rupees per ton for exports, up from earlier levels. This trend is providing financial relief for domestic mills but tightening the global sugar supply chain.
The week ahead in Washington... The House and Senate are in session this week. The Senate will move through several nominations throughout the week, including Tulsi Gabbard for director of national intelligence, Robert F. Kennedy Jr. for HHS secretary, Howard Lutnick for secretary of Commerce, Brooke Rollins for USDA secretary and Kelly Loeffler to be administrator of Small Business Administration. Senate Budget Chairman Lindsey Graham (R-S.C.) late last week released the fiscal year 2025 budget resolution, directing nine authorizing committees to draft a filibuster-proof reconciliation bill by March 7. The proposal prioritizes border security, military spending and domestic energy expansion. The Budget Committee will consolidate the submitted plans into a single package for markup on Feb. 12-13. House Republicans are working on a separate, more comprehensive package incorporating debt ceiling negotiations and tax cut extensions. A House Ag Committee hearing on Tuesday will focus on the ag sector financial situation. The Senate Ag panel will continue its examination of the agricultural economy with a second hearing scheduled for Thursday. Fed Chair Jerome Powell will testify before two congressional panels on Tuesday and Wednesday. Consumer inflation data for January will be released Wednesday, with producer prices slated for Thursday. USDA will release its February Supply & Demand Report on Tuesday.
U.S. to continue providing food aid despite program review... USDA announced it will maintain its purchase of crops such as soybeans and wheat for food aid programs, following reports that funding had been halted under a Trump administration review. These programs — McGovern-Dole International Food for Education, Childhood Nutrition Program, and Food for Progress — supply food to some of the world’s poorest countries.
China’s consumer inflation at 5-month high, producer deflation persists... China’s annual consumer inflation rate climbed to 0.5% above year-ago in January, the highest since August. Food prices rose 0.4%, driven by a 13.8% increase in pork. Non-food prices rose 0.5%. China’s producer prices fell 2.3% from year-ago in January, the 28th straight month of factory gate price deflation.
Money flow key for cattle futures... Cattle futures faced heavy long liquidate the past two weeks as funds lightened their recent record long stance. While the selloff in futures was accompanied by pressure on cash cattle prices and wholesale beef values, money flow will be the key factor in whether recent heavy losses are extended this week.
Cash hog index continues to climb... The CME lean hog index is up another 34 cents to $85.39 as of Feb. 6. The index is now nearly $5.00 off its seasonal low in early January. February lean hog futures, which expire on Friday and are settled against the cash index on Feb. 19, finished Friday $1.86 above today’s cash quote while the April contract held at $6.76 premium.
Overnight demand news... Exporters reported no tenders or sales.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
- 10:00 a.m. Weekly Export Inspections — AMS
- 2:00 p.m. Catfish Production — NASS