Ahead of the Open | February 3, 2025

Reports of tariffs and retaliatory tariffs against the U.S. spurred a lower open last night across the grain and soy complex.

Pro Farmer Ahead of the Open
Pro Farmer Ahead of the Open
(Lindsey Pound)

GRAIN CALLS

Corn: 5 to 7 cents lower.

Soybeans: 1 to 3 cents higher.

Wheat: Winter wheat steady to 2 cents lower; HRS 2 to 4 cents higher.

GENERAL COMMENTS: Reports of tariffs and retaliatory tariffs against the U.S. spurred a lower open last night across the grain and soy complex. While soybeans and wheat closed their overnight gaps, corn has struggled to garner much bullish momentum. Outside markets were not immune to overnight volatility, as front-month crude oil futures are solidly higher and the dollar index is around 850 points higher. S&P 500 futures sat near 100 points lower most of the overnight session as well.

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 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.

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.

CORN: March corn futures struggled to rebound from last night’s lower open. Resistance at $4.77 limited buying efforts overnight, while that is reinforced by the 10-day moving average at $4.83. Support stands at $4.72 1/2 then the 40-day moving average at $4.66.

SOYBEANS: March soybean futures are poised to challenge 10-day moving average resistance at $10.45, which is backed by the psychological $10.50 mark, then $10.60 1/2. Support at $10.30 1/4 limited overnight losses, while tentative support at $10.36 3/4 lies on the way.

WHEAT: March SRW futures opened lower overnight but have since closed the gap. Bulls are targeting stiff resistance at $5.67 1/2 on continued strength. Support lies at $5.53 1/2, the 10-day moving average, then the overnight low of $5.50 1/2.

LIVESTOCK CALLS

CATTLE: Choppy/lower.

HOGS: Choppy/higher.

CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone on reports that the U.S. will resume cattle 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. The cattle herd was down slightly from a year-ago, with no early signs of herd rebuilding, according to USDA’s annual cattle report. Meanwhile, continued strength in the cash cattle market could limit selling as futures are now trading at a hefty discount to the cash market. Wholesale beef prices were modestly higher Friday, with Choice cutout rising 20 cents to $327.68 while Select climbed $1.17 to $317.07.

HOGS: Lean hog futures are expected to open with a mostly firmer tone, supported by persistent strength in the cash market. 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. Recent consolidation in futures has put February futures just 69.5 cents above the index, which could spur strength. Pork cutout made a fresh for-the-move high on Friday as it rose $1.82 to $94.75. Bellies continue to lead strength in cutout.