Good morning!
Grains mildly rebounding early this morning... After facing followthrough selling earlier in the overnight session, corn, soybeans and wheat are modestly firmer and trading near session highs this morning. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents higher, soybeans are 2 to 3 cents higher and wheat futures are 1 to 3 cents higher. The U.S. dollar index is around 650 points higher and front-month crude oil futures are about 60 cents higher.
Cordonnier cuts Argentine crop forecasts... Hot, dry conditions have taken a toll on Argentine crops, with soybean crop ratings falling for six straight weeks and likely to decline further. As a result, South American crop consultant Dr. Michael Cordonnier lowered his Argentine soybean crop estimate 2 MMT to 49 MMT. He cut the corn crop forecast 1 MMT to 47 MMT. He maintains a neutral to lower bias toward both crops. Cordonnier left his Brazilian soybean crop estimate at 170 MMT with a neutral bias as he awaits additional harvest results. Cordonnier kept his Brazilian corn crop forecast at 125 MMT, though he now has a neutral to lower bias as roughly 30% to 40% of the safrinha crop will likely be planted after the ideal window due to soybean harvest delays.
Trump reiterates need for universal tariffs to ‘protect our country’... Asked about a report that incoming Treasury Secretary Scott Bessent, who was confirmed by the Senate on Monday, favored starting with a global tariff rate of 2.5% that would gradually increase, President Donald Trump said he didn’t think Bessent supported that and wouldn’t favor it himself. He said he wanted a rate “much bigger” than 2.5%. “I have it in my mind what it’s going to be but I won’t be setting it yet, but it’ll be enough to protect our country,” Trump said. “As tariffs on other countries go up, taxes on American workers and businesses will come down and massive numbers of jobs and factories will come home,” Trump said. “Remember, again, the word ‘tariff.’ We’re going to protect our people and our businesses, and we’re going to protect our country, with tariffs,” he added. Trump also said he’d impose tariffs on steel, aluminum, copper, computer chips, semiconductors and pharmaceuticals in the “very near future” to bring production back to the United States.
White House halts federal grants, sparking uncertainty nationwide... The White House budget office issued a directive to pause all federal grants and loans, according to a leaked memo from the Office of Management and Budget (OMB). This unprecedented action could place trillions of dollars on hold and has sown confusion among federal agencies, nonprofits and state governments. The memo, signed by acting OMB director Matthew J. Vaeth, instructs agencies to halt financial disbursements and reassess their alignment with President Trump’s executive orders targeting diversity, clean energy initiatives and other programs. Of note: The memo specifies that Social Security, Medicare and “payments to individuals” will not be affected. That means the $10 billion in farmer financial aid will not be impacted but appears to leave all other federal pay-outs in jeopardy, including grants and loans issued to research bodies, charities, universities and community projects.
U.S. has options to address Chinese influence in Panama... The head of the Federal Maritime Commission (FCM) will tell a U.S. Senate committee the U.S. has options to address the growing presence of China and Chinese firms in Panama. President Donald Trump has vowed the U.S. would take back the Panama Canal but has given no further details on when or how he intended to reclaim the canal, which is the sovereign territory of an ally. “We need to increase support for American companies seeking to do business in Panama and throughout the Americas. Chinese companies must not be the sole bidders on contracts,” FCM Chair Louis E. Sola said in written testimony seen by Reuters to be presented today at the Senate Commerce Committee hearing on the Panama Canal. In Sola’s testimony, he said: “The United States is not without options in addressing the growing presence of China and Chinese companies in Panama and throughout the Americas. Nor are we without options as they relate to the continued viability of the Canal.” He also said it was crucial to protect the independence of the Panama Canal Authority. More than 40% of U.S. container traffic, valued at roughly $270 billion annually, transits the Panama Canal.
Mexico proposes constitutional ban on GM corn cultivation... Mexican President Claudia Sheinbaum has proposed a constitutional amendment to ban the cultivation of genetically modified (GM) corn in the country. This move is a significant development in Mexico’s ongoing efforts to protect its native corn varieties and food sovereignty. The latest initiative has strong backing from the Morena party and aligns with Sheinbaum’s goals to safeguard biodiversity and native corn. This will likely strain relations with the U.S., which argues the ban lacks scientific grounding and harms its corn industry. It also raises questions about balancing food sovereignty with U.S.-Mexico-Canda Agreement compliance.
Thai rice exports expected to plunge amid stronger competition... Thailand’s rice exports are seen falling 2.25 MMT (24.6%) to 7.5 MMT this year, the commerce ministry said, due to the resumption of exports from India and increased shipments from other rice producers. Easing drought conditions are supporting yields and major importers such as Indonesia may also have less demand, the ministry said.
CPKC avoids strike with tentative agreement as Canadian National faces labor threats... Canadian Pacific Kansas City (CPKC) reached a tentative four-year collective bargaining agreement with Unifor, covering 1,200 employees and averting a potential strike set for Jan. 29. The deal follows a strike authorization vote by most Unifor members, representing mechanics, laborers and other support staff. Details of the agreement will be disclosed after ratification. Meanwhile, the International Brotherhood of Electrical Workers has issued a 72-hour strike notice against Canadian National Railway, though the company claims operations will remain unaffected. This development comes as Canadian National recently ratified a similar four-year agreement with Unifor, providing 3% annual wage increases for over 3,000 workers.
Smithfield raises $522 million in IPO... Smithfield Foods Inc.’s initial public offering raised $522 million, with shares pricing below the marketed range. The world’s largest pork producer and an indirectly owned subsidiary of Hong Kong-listed WH Group Ltd., sold about 26 million shares for $20 each, according to a statement. Smithfield and its owner offered 17.4 million shares each for $23 to $27 apiece, a previous filing showed. WH Group, which acquired Smithfield more than a decade ago, will maintain control of the company after the listing.
Historic cash cattle surge continues... Cash cattle averaged a record 209.19 last week, up $5.52 from the previous week and the tenth straight weekly gain. Cattle futures surged to an all-time high on support from the cash strength and last Friday’s bullish Cattle on Feed Report. But amid heavily overbought conditions, futures finished higher but well off their session highs on Monday, a potential sign the market may be ready for a pause after the historic run.
Pork cutout jumps to highest this year... The pork cutout firmed $1.47 to $93.16 on Monday, the highest since Dec. 30, led by strong gains in butts, ribs and loins. Wholesale pork prices have been strong enough to keep packer margins in the black, which is helping support the cash market’s move off the seasonal lows.
Overnight demand news... Tunisia tendered to buy 100,000 MT of soft milling wheat and 100,000 MT of durum wheat – all optional origin.
Lunar New Year schedule.... China’s stocks, bond, foreign exchange and commodity futures markets will be closed from today through Tuesday, Feb. 4, for the Lunar New Year holiday. Other Asian markets also observe varied market closures for Lunar New Year celebrations.
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
· 2:00 p.m. Livestock and Meat Domestic Data — ERS