Good morning!
Grains lower overnight... Corn, soybeans and wheat faced price pressure overnight in reaction to Argentina cutting grain and soy export taxes through midyear. As of 6:30 a.m. CT, corn futures are trading 2 to 5 cents lower, soybeans are 9 to 14 cents lower and wheat is 5 to 7 cents lower. The U.S. dollar index is down around 450 points and front-month crude oil futures are about 50 cents higher.
Perspective on Argentina’s soy, grain export tax cut... As we reported in “Evening Report” on Thursday, from Jan. 27 through June, Argentina’s taxes on soybean exports will decline to 26% from 33%, while rates on soy products will fall to 24.5% from 31%. For both wheat and corn, export taxes will be reduced to 9.5% from 12%. An Argentine ag source told us, “Even with the export tax cut, our soybeans are still too expensive to actively compete in the export market.”
Trump signals softer stance on China tariffs, keeps threats alive... President Donald Trump expressed a preference for avoiding tariffs on China, describing them as a “tremendous power” but reiterating his willingness to use them if necessary. In an interview with Fox News’ Sean Hannity, Trump noted that while tariffs provide leverage over Beijing, he’d rather not implement them. Trump’s remarks reflect a balancing act in his foreign policy approach. However, he remains critical of certain Chinese exports and continues to link Beijing’s influence to resolving broader global issues, such as the war in Ukraine. His stance underscores ongoing diplomatic and economic complexities in U.S./China relations. Trump also addressed other international challenges, including Russia and North Korea, emphasizing negotiations and sanctions as key tools in his foreign policy arsenal.
U.S. lawmakers introduce bill to revoke China’s trade designation... A bipartisan group of U.S. lawmakers introduced a bill seeking to revoke China’s permanent normal trade relations (PNTR) status. The status is a legal designation in the U.S. for free trade with a foreign state, granted to China in 2000. The legislation proposes a new tariff structure: A minimum 35% tariff on non-strategic goods from China and a minimum 100% tariff on strategic goods. These tariffs would be phased in over a five-year period. The bill aims to end the exemption for low-value shipments (under $800) from import duties and rigorous screening. Revenue generated from the new tariffs would be allocated to assist U.S. farmers and manufacturers who might face retaliation from China. China’s embassy in Washington said any such move would harm both Chinese and U.S. interests. “Some U.S. politicians are trying to reverse history and drag Sino/U.S. economic and trade relations back to the Cold War era,” embassy spokesperson Liu Pengyu said. With bipartisan support, the bill has good odds of eventually passing.
Weekly Export Sales Report out this morning... For the week ended Jan. 16, traders expect:
| 2024-25 expectations (in MT) | Last week (in MT) | |
| Corn | 700,000-1,700,000 | 1,024,234 |
| Wheat | 200,000-600,000 | 513,424 |
| Soybeans | 600,000-1,800,000 | 569,142 |
| Soymeal | 100,000-450,000 | 144,448 |
| Soyoil | 10,000-60,000 | 57,206 |
India struggling to sign sugar export contracts... Indian traders are struggling to sign export contracts even after New Delhi allowed the export of 1 MMT as mills are seeking a hefty premium, which overseas buyers are unwilling to pay, four trade sources told Reuters. Before the export approval earlier this week, Indian prices were at a big discount to global prices, making exports profitable. However, Indian prices surged nearly 10% after the 1 MMT export quota was announced while global prices declined, reducing the export incentive for mills. Indian mills have until September to export via the quota, so they are in no hurry to sign deals, instead waiting for global prices to rise.
WTO Chief urges calm over tariffs... World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala called for a measured approach to tariff discussions, urging leaders to “chill” and avoid overreacting. Speaking ahead of President Trump’s address to the Davos forum, she noted the tendency to use tariffs to address issues unrelated to trade. “Sometimes the problem is not actually coming from trade but from macroeconomic imbalances,” she said, pointing to factors like domestic consumption and savings disparities. While tariffs may temporarily reduce trade deficits, Okonjo-Iweala warned of inflationary consequences and potential harm to export competitiveness. Her remarks were echoed by EU economy chief Valdis Dombrovskis during the panel discussion.
Treasury expands measures to avoid debt ceiling breach... The U.S. Treasury Department announced new accounting measures to prevent exceeding the federal debt limit, reinstated earlier this month. Acting Treasury Secretary David Lebryk informed Congress on Thursday the Treasury has halted full investments in the Government Securities Investment Fund for federal employees, promising to restore the fund once the debt limit is raised or suspended. This move follows recommendations by former Treasury Secretary Janet Yellen. President Trump has nominated Scott Bessent as Yellen’s successor, pending Senate confirmation. Analysts project the Treasury can avoid a debt ceiling breach until the third quarter of 2025 through these measures.
Chinese EV makers file challenges to tariffs at EU court... Chinese electric vehicle makers BYD, Geely and SAIC have challenged the EU’s import tariffs at the Court of Justice of the European Union (CJEU). Court filings show all three lodged their complaints at the General Court, the lower of two CJEU chambers, on Tuesday, a day before the deadline for filing challenges. Proceedings at the General Court last on average 18 months and can be appealed. The China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), an industry body that has represented Chinese EV producers, also filed a complaint on Wednesday. CCCEU urged Beijing and Brussels to negotiate a compromise to avoid tariffs. In a statement on Friday, the CCCME confirmed its action on behalf of “authorized companies” and pledged to “continue to represent China’s EV industry through judicial litigation and resolutely defend the legitimate rights and interests of Chinese EV companies.”
Euro zone PMI modestly expands in January thanks to services sector... HCOB’s preliminary composite euro zone purchasing managers index (PMI) compiled by S&P Global rose to 50.2 in January from December’s 49.6, the first expansion in the bloc’s private sector activity since August 2024. The expansion was solely drive by the services sector, offsetting a sharp contraction for manufacturers.
Japan raises interest rates... The Bank of Japan (BOJ) raised its key short-term interest rate by 25 basis points to 0.5%, the highest level in 17 years. The move reflected wage hike momentum and steady progress in inflation. It also marked the third rate hike since BOJ ended negative interest rates in March 2024. The central bank also indicated plans for further rate increases and reduced monetary support if economic and price data align with its forecasts.
December feedlot placements expected to rise despite Mexico cattle ban... Analysts expect USDA’s Cattle on Feed Report this afternoon to show the large feedlot (1,000-plus head) inventory down 0.3% from year-ago at 11.894 million head as of Jan. 1. The report is expected to show a 1.1% increase in the number of cattle moved into feedlots last month, despite a ban on Mexican feeder cattle imports that went into effect in late November. Marketings are anticipated to be up 1.2% from December 2023.
Cold Storage Report also out this afternoon... USDA will detail frozen meat stocks at the end of December. The five-year average is an 18.3-million-lb. increase in beef stocks and a 2.5-million-lb. rise in pork stocks during the month.
Cash cattle trade steady/firmer... Cash cattle trade has been relatively light so far this week, but what activity took place suggests prices will rise again. Deals in the Southern Plains were mostly steady to $1.00 higher, with some light trade in the northern market as much as $2.00 higher.
Cash hog index continues steady climb... The CME lean hog index is up another 21 cents to $81.93 as of Jan. 22, the ninth straight daily gain during which prices have risen $1.50. February lean hog futures finished Thursday 19.5 cents above today’s cash quote, suggesting traders expect the slow but steady climb to continue near-term.
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
- 7:30 a.m. Weekly Export Sales — FAS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Coffee — NASS
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Poultry Slaughter — NASS