Good morning!
Grains firmer this morning... Corn, soybeans and wheat faced pressure earlier in the overnight session but have firmed and are trading near session highs. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are 4 to 5 cents higher and wheat futures are 6 to 9 cents higher. The U.S. dollar index is more than 200 points lower and front-month crude oil futures are about 65 cents higher.
Trump announces new Day 1 tariff plans targeting China, Mexico, and Canada... President-elect Donald Trump revealed plans to impose a 10% tariff on Chinese goods, citing concerns over the influx of illegal drugs, according to posts on Truth Social. Additionally, Trump announced a forthcoming 25% tariff on all imports from Mexico and Canada, linking the decision to issues of immigration and drug trafficking from those countries. “This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” he wrote. “Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!” Trump’s actions demonstrate he is serious about renewing confrontation over a trading system that he believes costs the U.S. dearly. His tariff proposals reflect a continuation of his “America First” policy aimed at reshaping trade dynamics in favor of U.S. interests while addressing complex issues like drug trafficking and immigration. However, the potential economic backlash raises significant concerns among economists and industry leaders.
Retaliation risks from Trump’s planned tariffs... There is a strong likelihood Trump’s tariffs will provoke retaliatory measures from affected countries, particularly China and Mexico. Such responses could further escalate trade tensions and disrupt existing trade agreements like the U.S.-Mexico-Canada Agreement (USMCA). The treaty includes a provision for a review of its terms in 2026. Some also say this indicates Trump may have even broader plans for redoing portions of USMCA under the 2026 review of the trade deal he signed. The Trump team already has been eyeing potential changes designed to prevent China from using Mexico as an export base for its electric vehicles, steel and other goods.
Cordonnier raises Brazilian soybean crop forecast... More rains fell across central Brazil last week and are forecast for dry southern areas this week. With the soybean crop off to a strong start, South American crop consultant Dr. Michael Cordonnier raised his Brazilian production forecast 2 MMT to 168 MMT. He maintains a neutral/higher bias. Cordonnier left his Brazilian corn crop forecast at 125 MMT with a neutral bias. In Argentina, Cordonnier kept his production forecasts at 57 MMT for soybeans and 48 MMT for corn with a neutral bias toward both crops.
Sharp increase in winter wheat CCI ratings... USDA rated the winter wheat crop 55% “good” to “excellent” and 12% “poor” to “very poor” in the final report for the fall. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop jumped 19.1 points to 339.3 amid notable increases in all states except Nebraska and South Dakota. The SRW CCI rating improved 8.1 points to 379.5, as all of the top seven production states increased except North Carolina. CCI ratings are 18.4 points above year-ago for HRW and 5.3 points above for SRW. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of Nov. 24:
· Winter wheat: 55% good/excellent (49% last week); 97% planted (98% average); 89% emerged (89% average).
· Cotton: 84% harvested (80% average).
Weather turns favorable for Ukrainian crops... Weather this month was mostly favorable for the development of winter grain crops in Ukraine, but some of seedlings are still underdeveloped due to the extended drought, the country’s state weather forecaster said. “According to the assessment of meteorologists, the condition of plants before entering winter is mainly good, in some areas of the central and north-eastern regions - satisfactory,” analyst APK-Inform said.
Farmers bet more heavily on cotton in Bahia, Brazil... Farmers in Brazil’s most recent agricultural expansion region are planting more cotton and less corn for 2024-25. Cotton growing continues to make inroads in the sprawling farms around Luis Eduardo Magalhaes in the western part of Bahia state, where the “cerrado” (savannah) climate predominates. Agricultural consultancy Veeries projects Bahia cotton area will grow 9.5% to a record 379,000 hectares (936,530 acres). Bahia is Brazil’s second largest cotton producing state, only behind Mato Grosso.
Mexico NWS trade issue update... We provided a summary (link) of an APHIS briefing on Mexico’s New World Screwworm (NWS) discovery. Says Cattle Market Notes Weekly: “There are many potential impacts of this announcement and also many unknowns. A few unknowns that will be key in potential impacts are: whether additional cases are identified (and where); how long the import ban lasts; and will the ban continue to affect all imported cattle from Mexico or just those from specific regions. The market impacts of this announcement are likely to be obvious in the near term. The U.S. imports a significant number of feeder cattle from Mexico, and that is now temporarily suspended. Roughly 5% of feedlot placements this year have been imported feeder cattle from Mexico. The fall months are a seasonally high import period. If the ban on imports of feeder cattle lasts awhile, it would mean a lower supply of feeder cattle going into feedlots. Tight feeder cattle supplies would get tighter which would mean more support for prices.”
Beef stocks rise more than normal, pork stocks drop more than average in October... USDA’s Cold Storage Report showed frozen beef stocks at 431.9 million lbs. at the end of October, up 19.4 million lbs. from September, whereas the five-year average was a 15.5-million-lb. increase during the month. Beef inventories fell 13.8 million lbs. (3.1%) from year-ago and 47.3 million lbs. (9.9%) from the five-year average. Pork stocks totaled 426.0 million lbs., down 32.4 million lbs. from the previous month, which was nearly double the five-year average decline of 16.8 million lbs. during the month. Pork inventories fell 11.9 million lbs. (2.7%) from year-ago and 63.8 million lbs. (13.0%) from the five-year average.
Cash cattle, beef fundamentals strengthen... Cash cattle rose $1.60 to an average of $186.39 last week, snapping a three-week string of losses. Wholesale beef prices firmed $2.30 for Choice to $309.71 and $1.67 for Select to $273.74 on Monday.
Cash hog index continues to drop, pork cutout rebounds... The CME lean hog index is down another 40 cents to $88.09 as of Nov. 18. Following Monday’s gains, December lean hog futures held a $6.115 discount to today’s cash quote. The pork cutout firmed $1.56 on Monday to $93.33 as gains in all other cuts more than offset a $6.43 drop in primal belly prices.
Overnight demand news... South Korea purchased 198,000 MT of corn in two separate tenders, with 133,000 MT to be sourced from the U.S., South America or South Africa and 65,000 MT to be sourced from the U.S. or South America. South Korea purchased 50,000 MT of U.S. milling wheat. Jordan purchased 60,000 MT of optional origin hard milling wheat. Tunisia tendered to buy 100,000 MT of soft milling wheat and 100,000 MT of durum wheat – all optional origin. Bangladesh tendered to buy 50,000 MT of optional origin rice.
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. Dairy products: Per capita consumption (Annual) — ERS
· 2:00 p.m. Outlook for U.S. Agricultural Trade: November 2024 — ERS
· 2:00 p.m. Per capita consumption of selected cheese varieties (Annual) — ERS