Good morning!
Grains lower to open the week... Corn, soybeans and wheat faced price pressure during the overnight session. As of 6:30 a.m. CT, corn and soybean futures are trading 2 to 3 cents lower, while wheat futures are 8 to 9 cents lower. The U.S. dollar index and front-month crude oil futures are both modestly firmer.
Brazil, Argentina to receive rains... Rainfall across center-west, southern parts of center-south and far southern areas of Brazil will be light to moderate, which could slow soybean harvesting and safrinha corn planting. Other areas of the country will be mostly dry, with concerns for rising crop stress. Argentina is in line for widespread rains over the next 10 days, though northern areas of the country will be slow in getting sufficient rainfall given hog temps.
AgRural cuts Brazilian soybean production forecast... AgRural reduced its Brazilian soybean production forecast by 2.8 MMT to 168.2 MMT, led by cuts to the crop in Rio Grande do Sul. The firm said soybean harvest reached 39% as of last Thursday, nearly caught up to last year’s 40% on this date. Safrinha corn planting jumped to 64% done, though that was still behind 73% at this time last year.
Rollins teases ‘big announcements’ coming this week... USDA Secretary Brooke Rollins hinted in a post on X that “big announcements” would be coming this week. This was a clear teaser as no details or other hints were provided. Possibilities include: 1) The Trump administration’s new approach to fighting highly pathogenic avian influenza and plan to lower egg prices; 2) More farmer funding freed up from prior review holds; 3) Information on timing of $10 billion in economic aid and $21 billion in ag disaster aid.
Trump Administration upholds Biden-era E15 policy... As we noted Friday, EPA confirmed the Trump administration will uphold waivers for eight Midwest states, allowing year-round sales of E15 fuel. States can request one-year delays by Feb. 26. The agency is also working with Congress on legislation to make E15 sales permanent, which many see as necessary to avoid recurring emergency waivers. If no legislative solution is reached, EPA may continue issuing emergency waivers as needed.
Canada, Mexico push to avert Trump’s 25% tariffs amid border, fentanyl talks... Canada and Mexico are ramping up negotiations with the U.S. this week to prevent the implementation of a 25% tariff on their exports, set to take effect on March 4. Both nations have bolstered border security and fentanyl countermeasures, seeking to convince President Trump’s administration that their actions are yielding results. Despite progress, legal experts suggest Trump may keep the tariff threat in place until clear evidence of reduced fentanyl trafficking and illegal migration emerges. Meanwhile, additional tariff threats on steel, autos, and other imports could trigger an early renegotiation of the U.S.-Mexico-Canada Agreement trade deal.
China adopts multiple measures to safeguard grain security... China will deepen its rural reforms as part of efforts to revitalize the agricultural sector and bolster food security in the face of U.S. tariffs, an economic slowdown and climate change, state media reported on Sunday. The State Council’s annual rural policy blueprint, known as the “No.1 document,” outlined plans to improve rewards and subsidy systems for major grain-producing areas, promoting the industrialization of biotech cultivation among other measures. To reach its goal of achieving self-sufficiency in food, the country will work to increase per-unit yields of grain and oilseed crops on a large scale, strengthen its protection and improve the quality of arable land, and enhance its capacity to prevent and mitigate agricultural disasters, among other tasks, according to the document. Notably, the document highlights the role of technology in promoting food security, calling for the development of new quality productive forces in agriculture in light of local conditions, as well as the cultivation of a group of leading high-tech agricultural enterprises.
The week ahead in Washington... House Republican leaders are pushing for a vote Tuesday on their sweeping fiscal 2025 budget resolution, aiming to fast-track key Trump legislative priorities. However, they face resistance within their own party, needing near-unanimous GOP support to advance the measure. While leaders frame the vote as a procedural step to enable reconciliation, Medicaid cuts remain a major sticking point, with centrist Republicans wary of deep reductions while hardliners demand even steeper spending cuts. Meanwhile, moderates hope to influence the final package through negotiations with the Senate’s more measured approach. The Senate will continue to vote on nominees for leadership positions within the Trump administration. The economic focus will be the second estimate of GDP from the fourth quarter of last year on Thursday and Friday’s Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, on Friday. USDA will release updated food price forecasts on Tuesday, the outlook for ag trade on Thursday and hold its annual Ag Outlook Forum on Thursday and Friday, which will feature the first look at the 2025-26 balance sheet projections.
Euro zone inflation in January reaches six-month high... Annual consumer inflation in the euro zone was confirmed at 2.5% in January, the highest since July 2024. Core inflation, which excluded food, energy, alcohol and tobacco, remained at 2.7% for a fifth consecutive month.
Neutral Cattle on Feed Report... USDA estimated the large feedlot (1,000-plus head) inventory at 11.716 million head as of Feb. 1, down 0.7% from year-ago. Placements increased 1.7% while marketings rose 1.4% from year-ago levels during January. All three categories were close to pre-report expectations and will have limited market impact.
Canada holds firm on dairy market access ahead of USMCA review... There is no concrete evidence that Canada will offer dairy market concessions in the upcoming review of USMCA. However, tensions persist between the U.S. and Canada over market access, shaping a complex and contentious trade landscape. Since the USMCA took effect in 2020, U.S. dairy exports to Canada have increased by 34% ($173 million), falling short of the 43.8% ($227 million) forecasted by the U.S. International Trade Commission (ITC). This shortfall is attributed to Canada’s partial compliance with tariff-rate quota (TRQ) allocations, which the U.S. sees as restrictive. In November 2023, a USMCA dispute panel ruled in favor of Canada, allowing it to maintain its current TRQ allocation system, a setback for U.S. dairy interests. Despite the ruling, U.S. trade officials continue to voice concerns about Canada’s approach. Despite ongoing friction, Canada’s historically strong protections for its dairy industry suggest that any significant policy shift would require substantial leverage or incentives from the U.S.
Researcher: China’s demand has no more room for growth... There is no more room for Chinese demand for pork to grow in the future, Zhu Zengyong, a researcher with the state-backed Chinese Academy of Agricultural Sciences said. Current demand in China is stable and unlikely to rise further. Given the current price of pork, it is not recommended that companies expand breeding sow capacity this year and they should instead focus on improving the efficiency of breeding sows, he said. The State Council said it will strictly enforce and supervise pig slaughter and regulate pork production capacity. China’s imports of pork meat and offal shrunk 15.7% last year, a fourth consecutive annual decline, and Zou forecasts imports to further decline in 2025.
Cash hog index declines... The CME lean hog index is down 69 cents to $90.53 as of Feb. 20, ending an extended string of price gains. April lean hog futures finished last Friday $2.855 below today’s index quote, while June hogs held a $10.095 premium.
Weekend demand news... Algeria tendered to buy an unspecified amount of milling wheat.
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. Chickens and Eggs — NASS