Good morning!
Grains lower to open the week... Corn, soybeans and wheat faced pressure overnight as markets reacted to tariffs levied against the leading U.S. trading partners. As of 6:30 a.m. CT, corn futures are trading mostly 6 to 7 cents lower, soybeans are a nickel lower, winter wheat markets are 3 to 5 cents lower and spring wheat is narrowly mixed. The U.S. dollar index is nearly 800 points higher and front-month crude oil futures are around $1.90 higher.
Trump announces sweeping trade measures... President Donald Trump signed a trio of executive orders over the weekend that imposed 25% tariffs on imports from Canada and Mexico and a 10% duty on imports from China as he sought to force the countries to clamp down on the flow of migrants and fentanyl across their borders and into the United States. The new tariffs on imports from all three nations – expected to go into effect Tuesday – are in addition to existing duties. Energy resources from Canada will have a lower 10% tariff. The orders included a retaliation clause that counter tariffs would likely be met with further action from the U.S. government. Trump plans to hold discussions with the leaders of Canada and Mexico today. Beijing is preparing an initial proposal to restart trade negotiations and prevent further economic confrontation, the Wall Street Journal reports. Trump officially announced plans to impose new tariffs on imports including computer chips, pharmaceuticals (without specifying which, at what level or when it would take effect), steel, aluminum, copper, oil and gas by mid-February, expanding his administration’s trade war strategy. He said he would put new taxes on imported oil and gas on Feb. 18 and aimed to do the same for steel and aluminum this month or next month. This move is separate from scheduled tariffs — 25% on Canadian and Mexican goods and 10% on Chinese products.
Canada hits back with retaliatory tariffs on U.S. imports... Canada announced its retaliation move Sunday, releasing a list of 1,256 U.S. goods to be hit Feb. 4 with tariffs of 25% on goods worth $20 billion (C$30 billion), including oranges from Florida, household appliances from Ohio and South Carolina and motorcycles from Pennsylvania. Then, in 21 days, additional tariffs for goods worth $86 billion (C$125 billion) will come into effect, giving Canadians time to make plans. A senior Canadian government official said the goal was in part to inflict pain that would mobilize Republican politicians to press Trump to drop the tariffs — a tactic Canada used during the first Trump administration.
Mexico’s ‘Plan B’ retaliation short of specifics... Mexican President Claudia Sheinbaum announced its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled. She told her economy minister “to implement Plan B” which she said “includes tariff and non-tariff measures” though it was not clear what those measures were exactly. Mexico’s government is considering a carousel retaliation, which would periodically rotate the U.S. products subject to retaliatory tariffs. This generates uncertainty for U.S. exports and has a political impact when hitting sectors such as agriculture that are likely to lobby Congress.
Trump says tariffs on EU are coming... President Trump reiterated his plan to impose new tariffs on the European Union, citing trade imbalances and insufficient EU imports of American goods. While he did not provide specifics on timing or scale, he stated they would happen “pretty soon.” The EU has warned it will respond firmly if tariffs are enacted. Trump remained more optimistic about trade relations with the UK, saying issues with Prime Minister Keir Starmer’s government “can be worked out.”
Rubio tells Panama to end China’s influence of canal or face U.S. action... U.S. Secretary of State Marco Rubio on Sunday warned Panama’s President Jose Raul Mulino that Washington will “take measures necessary” if Panama does not immediately take steps to end what President Trump sees as China’s influence and control over the Panama Canal. Rubio did not spell out exactly what steps Panama must take or what U.S. retaliation would include. Mulino signaled he would review agreements involving China and Chinese businesses, and announced further cooperation with the U.S. on migration, but reiterated that his country’s sovereignty over the world’s second busiest waterway is not up for discussion. Panama promised free passage for U.S. warships through the Panama Canal.
Argentina to get needed rains but crop stress continues... Argentina’s main crop areas are forecast to receive needed rains during the middle of this week, though a period of hotter, drier conditions will follow. Another rain event is likely for next week, though rains will likely be lighter and more scattered. Brazil rain will continue frequent and significant from Mato Grosso into Sao Paulo and parts of Parana early this week, delaying soybean harvest and safrinha corn planting. Rainfall intensity and coverage are expected to lighten across central Brazil next week.
Record soybean crush expected for December... Analysts surveyed by Bloomberg expect USDA to report December soybean crush totaled 218.1 million bu., which would be a record for the month. At that level, crush would rise 18.1 million bu. (8.6%) from November and 13.8 million bu. (6.8%) from December 2023. Corn-for-ethanol use is expected to total 480.0 million bu., up 15.1 million bu. (3.2%) from November but 4.2 million bu. (0.9%) less than December 2023.
Australia’s wheat production bigger than expected... Australia has produced around 2 MMT more wheat in 2024-25 than was estimated during the harvest, according to four analysts polled by Reuters. Their estimates now range from 32 MMT to 35.5 MMT, up from 29 MMT to 34.5 MMT they predicted in November. Their estimates are all above the Australian government’s forecast of 31.9 MMT. Yields in Western Australia, one of the country’s biggest cropping regions, greatly exceeded expectations, the analysts said.
Sinograin to expand domestic corn stockpiling in northeast China... China’s state stockpiler Sinograin said it plans to add new stockpiling sites in northeast China to expand purchases of domestic corn harvested in 2024. Sinograin will publicize further details of the new stockpiling program at a later date that cover the provinces of Heilongjiang, Jilin and Liaoning.
Philippines declares ‘food security emergency’ to tame retail rice prices... The Philippines declared a food security emergency, which will allow the government to release buffer rice stocks to help bring down retail prices of the national staple. Half of the 300,000 MT buffer rice stocks the National Food Authority currently holds could be released over the next six months to ensure supply for emergencies and disaster response. Last year, the Philippines lowered tariffs on rice and extended existing tariff cuts on some other commodities to combat inflation and ensure ample supply.
The week ahead in Washington... Congress is in this week and while there will be lots of hearings and Trump nominee-related action (Senate Ag panel vote today on USDA secretary nominee Brooke Rollins; Senate Finance hearing Thursday on USTR nominee Jamieson Greer), the focus will be on tariffs that President Trump announced Saturday on Canada, Mexico and China. The economic focus will be Friday’s employment data for January. Key agricultural reports include USDA’s farm income forecast on Thursday and the ag trade update on Friday.
China’s factory activity growth slows in January... China’s Caixin/S&P Global manufacturing purchasing managers index slipped to 50.1 in January from 50.5 the previous month. This was the fourth straight month of growth in factory activity but the slowest during that span. Output rose for the 15th straight month, with its pace of growth accelerating, in line with trend in new orders.
Euro zone inflation rises in January... The annual consumer inflation rate in the euro zone edged up to 2.5% in January from 2.4% in December, the highest since July 2024. Core inflation, excluding prices for energy, food, alcohol and tobacco, held at 2.7% for a fifth straight month.
U.S. to resume cattle, bison imports from Mexico... USDA’s Animal and Plant Health Inspection Service (APHIS) is set to resume cattle and bison imports from Mexico in the coming days, following a temporary suspension due to a New World screwworm (NWS) outbreak. Under the new measures, designated pre-export inspection pens in Chihuahua and Sonora have been approved, where cattle and bison will undergo multiple veterinary inspections and insecticide treatment before entering the U.S. through the Santa Teresa and Douglas Ports of Entry. The U.S. and Mexico are also working to expand inspection sites and reopen additional trade routes.
Slightly smaller cattle herd, no signs of expansion... USDA estimated there were 86.662 million head of cattle in the U.S. as of Jan. 1, down 495,000 head (06%) from last year and the lowest since 1951. The beef cow herd declined 149,000 head (0.4%) to 27.864 million head. The 2024 calf crop was estimated at 33.530 million head, down 33,000 head (0.1%) from the previous year. The number of beef heifers expected to calve in 2025 dropped 50,000 head (1.7%) and total beef replacement heifers declined 46,000 head (1.0%). Compared to pre-report expectations, the data was mostly neutral, though the lack of expansion plans was a modest surprise.
Cash hog index continues to climb... The CME lean hog index is up another 42 cents to $83.48 as of Jan. 30, extending the rise from the seasonal low in early January. February lean hog futures finished Friday 69.5 cents above today’s cash quote.
Weekend demand news... Iran tendered to buy up to 120,000 MT of corn from Brazil, Europe or Black Sea region, 120,000 MT of feed barley from the EU or Black Sea region and 60,000 MT of soymeal from Brazil or Argentina.
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. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Fats and Oils: Oilseed Crushings — NASS
- 2:00 p.m. Flour Milling Products — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS