Good morning!
Fresh tariffs spur selling pressure in early trade… Corn and wheat saw positive action ahead of Beijing’s announcement of fresh tariffs on U.S. goods this morning, but the grain and oilseed complex turned lower in early morning trade as the trade war escalated with Chinese tariffs. As of 6:30 a.m. CT, corn futures are trading 6 to 7 cents lower, soybeans are 24 to 26 cents lower, winter wheat is 11 to 13 cents lower and spring wheat is 7 to 8 cents lower. Front-month crude oil futures plunged to the lowest mark in four-years this morning and continue to see liquidation selling pressure. The U.S. dollar index is around 50 points lower, consolidating following yesterday’s weakness.
China to impose 34% tariffs on all U.S. goods… China’s finance ministry said it will impose additional tariffs of 34% on all U.S. good starting April 10 as a countermeasure to sweeping tariffs imposed by President Trump, which equate to a 54% tariff on Chinese imports. Beijing also announced it is adding several U.S. entities to an export control list and classifying others as an “unreliable” entity, as well as limited exports of rare earths, materials critical to EVs and defense. Both sides doubling down leads to a small chance for a swift resolution as previously hoped for. The Trump administration could come back with additional tariffs or other action on China. The report of China increasing tariffs this morning sent markets reeling, erasing gains in index futures and in corn, pushing the S&P to fresh lows.
Canada strikes back with auto tariffs… Canadian Prime Minister Mark Carney announced a 25% tariff on U.S.-made cars that do not comply with the USMCA (CUSMA) agreement, retaliating against President Donald Trump’s sweeping global auto tariffs. The U.S. tariffs, which target over $460 billion in auto imports annually, have already led to significant production halts and layoffs across North America — including 3,200 Canadian, 2,600 Mexican, and 900 American workers, primarily from Stellantis NV facilities. Carney emphasized that the countermeasures are carefully designed to minimize domestic fallout while maximizing impact in the U.S., sparing auto parts and Mexican-made cars to protect Canada’s integrated manufacturing system.
Trump seeking to use tariffs as negotiation tactic but wants “phenomenal” returns… President Donald Trump suggested Thursday he may be open to scaling back tariffs if trading partners offer significant concessions, signaling a possible shift in tone even as the White House continues to ramp up trade pressure. “The tariffs give us great power to negotiate,” Trump said aboard Air Force One, adding that “every country has called us.” Despite a $2.5 trillion market plunge this week — one of the steepest since the height of the pandemic — Trump defended his tariff policies and remained optimistic about the U.S. economy. “I think our markets are going to boom. Got to give it a chance,” he said.
Global markets reeling from tariff announcements… In Japan, on of the U.S.’s top trading partners, Prime Minister Shigeru Ishiba said that the tariffs had created a “national crisis” as a plunge in banking shares on Friday set Tokyo’s stock market on course for its worst week in years. Investment bank JP Morgan says it now sees a 60% chance of the global economy entering a recession, up from 40% previously, due to the heightened costs of goods from trade barriers.
Tariff triggers global supply shock, inflation for U.S., deflation for the world… For the second time in five years, the global economy is grappling with a major supply shock. But unlike the Covid-19 pandemic, which triggered inflation almost everywhere, this time the effects are split — and deeply political. The U.S. is now poised for a fresh wave of inflation. “This is going to be pretty deflationary for large sections of the rest of the world, while for the U.S. it’s going to be intensely inflationary,” said Thomas Gatley of Gavekal Dragonomics during a Thursday webinar.
Immediate U.S. farm aid unlikely as tariffs stir fresh tensions… USDA Secretary Brooke Rollins signaled that immediate financial assistance for farmers may not be necessary following President Trump’s newly announced tariffs, despite growing concern within the agricultural sector. Rollins noted that it could take “literally months” to determine whether compensation is needed, but assured that the administration is prepared to act if required. The tariffs, part of Trump’s “reciprocal trade” agenda, have triggered fears of retaliatory measures from key trading partners — just as China has already done.
Fed expected to cut rates five times this year… CME Fed funds futures have shifted sharply in the wake of recent tariff actions, with markets now expecting no change at the May 6–7 FOMC meeting. However, expectations for the remainder of the year suggest five rate cuts — one at each of the Fed’s June, July, September, November, and December meetings. Each cut is projected to be 25 basis points, which would bring the target Fed funds rate down to 3%–3.25%, from the current 4.25%–4.5%. The anticipation of cuts is a big shift from where Fed funds were trading just a month ago.
USDA attache sees continued Brazilian corn production growth… The USDA attache in Brazil sees continued growth in Brazilian corn production, estimating 2025-26 (next year’s production) rising to 130 MMT. That would be up from 126 MMT in 2024-25 but still below record production in 2022-23 of 137 MMT. Both domestic use and export use in Brazil are growing, keeping stocks tight and prices high, enticing plantings.
Slow and steady job growth expected… The Bureau of Labor Statistics will release the monthly nonfarm payrolls report out later this morning. A Reuters survey estimated that 135,000 jobs were added in March, which would be down from 151,000 in February and well below the six-month average of 190,000. The unemployment is forecast to remain steady at 4.1%.
China concludes two-day warm games around Taiwan… The Chinese military recently ended two-day war games around Taiwan in which it held long-range, live-fire drills in the East China Sea, marking an escalation of exercises around the island. China has held several training exercises in the East China Sea which were seen as an escalation of the conflict with Taiwan, whom China sees as their territory.
Tesla sales fall following Musk backlash… Tesla posted its first ever sales decline in 2024, after which Musk pledged sales would return to growth. Protests in many countries against the billionaire’s involvement in President Trumps administration have turned many would-be customers away from the electric car brand. One asset manager noted they believe 2025 deliveries will be 9% below the 1.79 million vehicles delivered last year.
Wholesale beef continues pullback… Choice cutout is down another $1.53 to $338.37, the second consecutive daily decline. Select fell 99 cents to $317.84 Thursday, bringing the Choice/Select spread to $20.53. Cash cattle trade remains light through mid-week at weaker prices, averaging $210.00 so far, though movement remains light at just 266 head.
Pork cutout rebounds from 2-month low… Pork cutout climbed $1.11 to $94.81 Thursday, led by a $7.04 jump in bellies. Cutout climbed despite another steep downtick in bellies. Movement remained strong at 347.76 loads indicating higher demand at lower prices.
Overnight demand news... None.
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Today’s reports
- 11:00 a.m. Livestock and Meat International Trade Data — ERS
- 2:00 p.m. Dairy Products — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC