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Grains extend losses as trade war erupts... Corn, soybeans and wheat faced followthrough selling overnight in reaction to the start of a tariffs war with major trading partners. As of 6:30 a.m. CT, corn futures are trading 3 to 5 cents lower, soybeans are 11 to 13 cents lower and wheat futures are 4 to 7 cents lower. The U.S. dollar index is down around 850 points and front-month crude oil futures are more than $1.00 lower this morning.
“Tit-for-Tat Tariff Wars Begin” Special Report... President Donald Trump’s new tariffs on imports from Canada, Mexico and China went into effect at 12:01 a.m. ET, marking a significant escalation in global trade tensions. U.S. tariffs include a 25% duty on imports from Mexico and Canada (10% for Canadian energy products) and a doubling on Chinese imports to 20%. With this increase, U.S. trade-weighted tariffs on Chinese imports are nearing 38%, comparable to a repeal of Permanent Normal Trade Relations. The only difference on tariffs from the prior notification is that the de minimis exemption is available until the Commerce Secretary says there is a system in place to collect tariffs on those shipments. As we reported in “Evening Report” on Monday, Trump said the U.S. would impose duties on foreign agricultural products starting April 2.
China and Canada retaliate, Mexico to respond this morning... China is imposing new tariffs on U.S. agricultural products and expanding the Unreliable Entities List to include 10 new companies. Effective on March 10, the following Chinese tariffs will be implemented: An additional 15% tariff will be imposed on U.S. chicken, wheat, corn and cotton. An additional 10% tariff will be imposed on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products. Canada announced immediate 25% tariffs on over $20 billion in U.S. imports, with additional tariffs on $86 billion worth of U.S. goods to be implemented in three weeks. Mexican President Claudia Sheinbaum said her country has a “Plan A, Plan B, Plan C, and even Plan D” in place, without offering much detail about the contingency plans. Sheinbaum is expected to address the issue today.
Trump’s tariff gamble: Balancing ‘America First’ with potential isolation... Despite acknowledging potential economic pain, Trump imposed steep tariffs on Canada, Mexico and China to push his “America First” agenda. He aims to leverage these tariffs to pressure these key trading partners into combating drug trafficking. However, some analysts note the move risks damaging U.S. interests, potentially driving Canada and Mexico toward alternative trade partners, including China, and leaving America more isolated globally.
China suspends soybean imports from three exporters... China’s customs authority suspended the soybean import qualifications from three U.S exporters and halted the imports of U.S. lumber, effective immediately. The three U.S. companies affected are CHS Inc, Louis Dreyfus Company Grains Merchandising LLC and EGT. CHINA’s customs says it detected ergot and seed treatment agent-treated soybeans in imported U.S. soybeans and pests in U.S. log shipments.
Cordonnier leaves South American crop estimates unchanged... South American crop consultant Dr. Michael Cordonnier kept his production forecasts unchanged this week for both Brazil and Argentina. Cordonnier forecasts Brazilian production at 170 MMT for soybeans and 123 MMT for corn. For Argentina, he projects crop output at 48 MMT for soybeans and 46 MMT for corn. Despite general improvement in weather recently, Cordonnier has concerns with dryness in parts of southern Brazil, especially in Rio Grande do Sul, western Parana, western Santa Catarina and southern Mato Grosso do Sul, excessive moisture in parts of central Brazil as soybeans mature and hot and dry conditions in parts of northern Argentina.
HRW crop deteriorates more during February... State-level winter wheat condition ratings showed deterioration in the HRW crop during February. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped 6.7 points over the past month to 323.1, as all states except Kansas (unchanged) and Colorado (up 1 point) showed deterioration. Since the final national ratings at the end of November, the HRW crop has declined 16.2 points, with only Montana’s crop rated higher than when the crop entered dormancy. Click here for more details.
USDA employees ordered back to office by March 10... USDA has instructed many of its employees to return to in-person work by March 10, according to internal emails obtained by Bloomberg Government. The directive impacts remote workers not covered by union contracts within the Farm Service Agency and revokes telework arrangements previously negotiated under union agreements. The move follows a Jan. 20 executive order from President Trump mandating in-person work for federal employees.
NRF economist: Economic outlook for 2025 clouded by policy uncertainties... Despite strong economic momentum from 2024, National Retail Federation (NRF) Chief Economist Jack Kleinhenz warns that policy debates on immigration, tariffs, deregulation and taxes could blur the economic outlook for 2025. While deregulation and tax cuts may boost growth, immigration restrictions and tariffs pose risks. Consumer spending remains robust, but uncertainty around government policies could dampen business and consumer confidence. Inflation concerns persist, with the Federal Reserve unlikely to cut interest rates soon.
Putin agrees to help Trump broker nuclear talks with Iran... Russia has agreed to assist President Trump’s administration in engaging with Iran on its nuclear program and its support for regional anti-U.S. proxies, Bloomberg reports, citing sources familiar with the situation. Trump conveyed his interest to Russian President Vladimir Putin in a February phone call, followed by discussions between U.S. and Russian officials in Saudi Arabia. While neither Russia nor Iran has publicly confirmed or denied this development, the Kremlin indicated its support for negotiations. Iran’s response was cautious, with officials stating it is “natural” for countries to offer assistance in such matters. The potential collaboration comes amid Trump’s efforts to restore relations with Putin and negotiate an end to Russia’s ongoing war in Ukraine. Meanwhile, the U.S. halted all military aid to Ukraine until Trump is satisfied with Ukrainian President Volodymyr Zelenskyy’s commitment to peace negotiations with Russia.
Cattle in liquidation mode... Live cattle futures and feeders faced more long liquidation pressure on Monday, as traders lightened their long exposure amid the trade uncertainty. While both markets finished well off their session lows, there is risk of additional liquidation pressure amid trade concerns.
Cash hog fundamentals strengthen... The CME lean hog index is up 50 cents to $89.94 as of Feb. 28. Over the last eight days, the index has risen and fallen four times each, though there was a net $1.04 decline during that span. The pork cutout firmed $1.37 to $99.79 on Monday, as all cuts except ribs strengthened.
Overnight demand news... Japan is seeking 94,282 MT of milling wheat via its weekly tender.
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 — NASS