GRAIN CALLS
Corn: 9 to 11 cents lower.
Soybeans: 9 to 11 cents lower.
Wheat: SRW 12 to 14 cents lower, HRW 13 to 15 cents lower; HRS 10 to 12 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each saw extensive selling pressure overnight and went into the break on session lows. Markets are quickly pricing in tariff risk with soybeans making new lows and corn trading near Monday’s low. Outside markets are mixed this morning as front-month crude oil futures are bouncing off recent lows while the U.S. dollar index is around 500 points higher.
U.S. personal consumption expenditures (PCE) increased by 0.3% month-over-month in Dec. 2024, the highest inflation in eight months. That was well above 0.1% in November but in line with expectations. Annual PCE rose to 2.6%, the highest in eight months. Core PCE, the Federal Reserves preferred inflation gauge, rose 2.8% annually, steady with a month prior and in line with forecasts.
President Donald Trump announced that his administration will impose 25% tariffs on imports from Canada and Mexico starting Feb. 1, citing concerns over trade deficits, illegal immigration and the fentanyl crisis. He suggested the tariff rate could rise further. The move has triggered warnings of economic fallout, with both Canada and Mexico vowing to respond with retaliatory measures. This signals a potentially disruptive turn in North American trade relations, threatening key industries like automotive and energy. Trump also reiterated plans to impose tariffs on China over its alleged role in fentanyl trafficking and suggested additional sectoral tariffs on industries such as pharmaceuticals, semiconductor chips and steel.
President Trump’s advisers are exploring ways to avoid sweeping 25% tariffs on imports from Canada and Mexico, despite his repeated threats to implement them by Saturday. Ongoing negotiations suggest a possible shift toward targeted measures, particularly affecting steel and aluminum, while oil may receive exemptions. Business groups and labor unions are lobbying against broad tariffs, warning of supply chain disruptions. Of note: The administration could announce new tariffs by Saturday, but with a grace period before they are implemented, allowing negotiations to continue.
President Trump on Thursday warned off BRICS member countries from replacing the U.S. dollar as a reserve currency by repeating a 100%-tariffs threat he had made weeks after winning the November presidential elections. The BRICS group, led by Brazil, Russia, India, China and South Africa does not have a common currency, but long-running discussions on the subject have gained some momentum in recent years. The dollar’s dominance has strengthened of late, thanks to the strong U.S. economy, tighter monetary policy and heightened geopolitical risks, even as economic fragmentation has boosted a push by BRICS countries to shift away from the dollar into other currencies.
CORN: March corn futures saw sharp selling overnight. Support stems from Monday’s low of $4.77 3/4 which is just above the 20-day moving average at $4.77. Bulls are looking to retake resistance at $4.84 1/4, which is reinforced by resistance at $4.90.
SOYBEANS: March soybean futures saw continued selling pressure overnight. Bulls are looking to maintain support at $10.35 1/4, while additional weakness finds support at $10.24, the 40-day moving average. Resistance stands at $10.44 1/2 then the psychological $10.50 mark.
WHEAT: March SRW futures reversed lower overnight. Continued selling pressure finds support at the $5.50 mark. Resurgent strength finds resistance at $5.58 3/4 then the 100-day moving average at $5.67 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 in a continuation of selling pressure from the past couple of days. February futures corrected overbought conditions in the past two days of sharp losses. Considering funds are heavily long, today being the last day of the month and the upcoming annual Cattle Inventory Report this afternoon, additional liquidation seems likely. Meanwhile, the cash cattle market remains strong, though trade has remained light this week. Wholesale beef prices saw a sharp pullback Thursday as Choice cutout fell $3.06 to $327.48 while Select dropped $4.77 to $315.90.
HOGS: Lean hog futures are expected to open with a mostly firmer tone in a continuation of recent technical strength. April futures are poised to test the December high, which seems likely given recent cash market strength. Meanwhile, steep premiums to the cash market could spur corrective selling, as February lean hogs finished Thursday at a $1.315 premium to the CME lean hog index, which is up another 47 cents to $83.06 as of Jan. 29. Concerns with potential tariffs on Mexico starting Feb. 1 and possible retaliation could also weigh on hog futures, as Mexico is the leading buyer of U.S. pork. Pork cutout fell 38 cents to $92.93 Thursday, as it has struggled to break above recent highs. Losses in bellies, hams and ribs led cutout lower, as movement fell to a disappointing 213.04 loads.