News/Markets/Policy Updates: Jan. 20, 2025
— Trump will meet with House and Senate GOP leadership at the White House on Tuesday. — Biden issues pre-emptive pardons on final day in office. Outgoing President Joe Biden issued pardons to members and staff of the Jan. 6 select committee. including GOP Reps. Liz Cheney of Wyoming, Adam Kinzinger of Illinois; and Sen. Adam Schiff (D-Calif.), as well as police officers who testified before it. The pardons also extended to Gen. Mark Milley, former chair of the Joint Chiefs of Staff, and Dr. Anthony Fauci, former director of the National Institute of Allergy and Infectious Diseases. In a statement, Biden emphasized that the pardons “should not be mistaken as an acknowledgment that any individual engaged in any wrongdoing.” — Vance, Han discuss trade and fentanyl ahead of inauguration. Vice President-elect JD Vance met with Chinese Vice President Han Zheng in Washington to discuss trade and the fentanyl crisis, a day before Donald Trump’s second presidential inauguration. The meeting follows a call on Friday between Trump and Chinese President Xi Jinping, which addressed similar topics, including TikTok. Han is expected to attend Monday’s inaugural ceremony, relocated indoors due to subfreezing temperatures in the capital. it will be the first time a high-ranking Chinese official attends a U.S. presidential inauguration. The Vance/Han meeting represents the most substantial individual engagement for Vance since securing his election victory alongside Trump last year. Of note: Han also met billionaire Elon Musk and other U.S. business figures, underscoring Beijing’s efforts to set a positive tone in ties with the US before President-elect Donald Trump returns to office. — TikTok returns after brief U.S. shutdown amid uncertainty. TikTok has reappeared in the United States following a temporary shutdown that began late Saturday night, Jan. 18. The app was blocked due to a federal law mandating that its Chinese parent company, ByteDance, divest its U.S. operations. Service began to be restored on Sunday, January 19, driven by two key developments: (1) President-elect Donald Trump’s intervention: Trump announced plans to issue an executive order on his inauguration day, Jan/ 20, to delay the ban’s implementation. He emphasized the need for negotiations to protect national security and suggested the possibility of a joint venture granting the U.S. a 50% ownership stake in TikTok’s operations. (2) TikTok’s agreement with service providers: TikTok confirmed service restoration through agreements with its service providers. The company thanked President-elect Trump for providing “necessary clarity and assurance.” While the app is back online, its future remains uncertain, contingent on the Trump administration’s actions and potential negotiations with ByteDance. — Trump’s early executive orders: A preview. Stephen Miller, President-elect Donald Trump’s top domestic policy adviser, briefed Republican lawmakers Sunday on an ambitious slate of executive orders planned for the early days of the administration. These orders, many of which Trump had campaigned on, will focus on government reform, energy policy, and immigration. While details remain fluid, here are the key areas discussed: · Government reform: Streamlining federal hiring and dismissal processes, targeting DEI initiatives, and reforming rules for Schedule F employees. Miller cautioned that these orders are still under development, with specific details yet to be finalized. Miller, a key architect of Trump’s immigration policies, is expected to play a significant role in shaping and implementing these executive orders. Miller’s involvement suggests a continuation of the hardline approach to immigration that characterized Trump’s first term. |
| FINANCIAL MARKETS |
— MSCI’s Asia index rallied about 1% after Trump and Xi Jinping held a call on Friday that raised hopes for easing U.S./China tensions. The dollar index weakened. U.S. markets are closed for the Martin Luther King Jr. holiday.
— Equities Friday and for the week: Stocks finished higher on Friday, capping off strong gains for the week ahead of being closed on Monday for Martin Luther King Jr Day. For the week, the Dow was up 3.69%, The Nasdaq gained 2.45%, and the S&P 500 rose 2.91%. On Friday, the Dow rose 334.70 points, 0.78%, at 43,487.83. The Nasdaq was up 291.91 points, 1.51%, at 19,630.20. The S&P 500 added 59.32 points, 1.00%, at 5,996.66.
— Bitcoin hits record high amid Trump’s cryptocurrency push. Bitcoin’s price skyrocketed to an unprecedented $109,000 ahead of President-elect Trump’s inauguration. The surge follows the weekend release of “memecoins” by Trump and his wife. Bitcoin’s value has been on the rise since Trump’s election victory in November, driven by his promise to establish the United States as “the Bitcoin superpower of the world.”
— Global economic highlights for the week.
Monday: China’s loan prime rate is expected to remain at 3.10% for 1-year loans and 3.60% for 5-year loans. Germany’s producer price index is forecasted to rise significantly by 1.0% annually, compared to 0.1% in November.
Tuesday: Canada’s consumer price index is projected to decline by 0.4% month-on-month, influenced by a GST sales tax holiday, with annual CPI growth easing to 1.8%, reflecting slower food inflation despite higher energy costs.
Midweek: The U.S. leading index for December is anticipated to fall by 0.1%, resuming its decline after a brief recovery in November. Japan’s trade deficit is expected to narrow to ¥50 billion, with export values rising for the third consecutive month and imports climbing for the ninth. U.S. jobless claims are forecasted to remain steady at 218,000, though holiday-season fluctuations may impact the data.
Friday: Japan’s core CPI is expected to rise by 2.9% annually due to the expiration of utility subsidies and persistent high food prices. The Bank of Japan may raise its policy rate by 25 basis points to 0.5%. In the U.S., existing home sales are projected to remain stable at an annual rate of 4.16 million units, despite rising mortgage rates.
| AG MARKETS |
— No ag markets today: All markets and government offices are closed today, Jan. 20, for Martin Luther King Jr. Day. Grain markets resume trading with the overnight session at 7:00 p.m. CT on Monday. Livestock markets reopen at 8:30 a.m. CT. on Tuesday, Jan. 21.
— Agriculture markets Friday and for the week:
• Corn: March corn futures surged 9 3/4 cents to $4.84 1/4, closing near session highs. That marked a 14 1/4 cent gain on the week.
• Soy complex: March soybeans rose 15 cents to $10.34 and gained 8 3/4 cents on the week. March soymeal closed up $2.80 to $297.20 but gave up $1.10 from a week ago. March soyoil rose 66 points to 45.69 cents but marked an 11-point weekly loss.
• Wheat: March SRW futures closed 1 1/4 cents higher to $5.38 3/4 and settled near mid-range. That marked an 8 1/2 cent gain on the week. March HRW futures rose 1/4 cent to $5.48 1/2 though lost 3 1/4 cents on the week. March HRS futures rose 2 cents to $5.83 1/2 but fell 3/4 cent on the week.
• Cotton: March cotton rose 87 points to 67.60, marking a weekly gain of 59 points.
• Cattle: Cattle and feeder futures traded mixed-to-lower on Friday. One exception was the nearby February live cattle contract, which rose 15 cents to $196.75. That represented a weekly drop of $2.025. Expiring January feeder futures inched up five cents to $273.50, while most-active March rallied 32.5 cents to $268.05.
• Hogs: Nearby February futures settled at $81.125, down $1.175 on the day and $1.425 on the week.
| TRADE & TRADE POLICY |
— How does FMD find in Germany impact global pork trade? Despite a 25% decline in pork production over the past decade, Germany remains a significant player in global pork exports, particularly within the European Union. However, the recent detection of foot-and-mouth disease (FMD) near Berlin has created new challenges for Germany’s export market and potential opportunities for others.
FMD was identified in a water buffalo herd at a small exotic farm, prompting immediate isolation and tracing efforts. Due to this detection, Germany faces restrictions on exporting livestock products outside the EU, potentially reshaping global pork trade dynamics.
According to U.S. Meat Export Federation (USMEF) Vice President of Economic Analysis Erin Borror, three primary German pork export markets — the United Kingdom, Vietnam, and South Korea — pose challenges for U.S. pork producers looking to capitalize. High tariffs and sanitary barriers in the UK and Vietnam, coupled with South Korea’s preference for pork belly imports, limit U.S. gains.
Germany’s pork production, once the highest in the EU, peaked at 5.6 million metric tons in 2011. Though surpassed by Spain in 2020, Germany still accounts for about 20% of EU pork production, with over 80% of its exports going to EU member states. This latest FMD case further emphasizes the fragility and interconnectedness of global pork trade.
| CHINA |
— China holds lending rates amid yuan concerns. China’s central bank has maintained its benchmark lending rates for the third consecutive month to stabilize the weakening yuan. The one-year loan prime rate (LPR) remains at 3.1%, while the five-year LPR stays at 3.6%. The decision comes amid potential risks of further yuan depreciation, particularly if incoming U.S. President Donald Trump follows through on his threats to increase tariffs on Chinese imports.
— China’s evolving crude-oil trade patterns in 2024. China’s crude-oil imports from Russia reached a record high in 2024, rising by 1% to 2.17 million barrels per day, reflecting strengthening economic ties between the two nations. Imports from Malaysia, a key hub for shipments from Iran and Venezuela, surged by 28%. Meanwhile, purchases from Saudi Arabia dropped by 9%, as Chinese refiners favored more affordable Russian and Iranian crude.
| POLITICS & ELECTIONS |
— Minnesota Supreme Court voids Walz’s decision for Jan. 28 special election. The Minnesota Supreme Court invalidated Governor Tim Walz’s decision to hold a special election on Jan. 28 for the House District 40B seat, declaring the announcement premature. The ruling, celebrated by Republicans, complicates efforts to resolve the power struggle in the state House and prolongs the absence of representation for Roseville-area residents.
The court sided with the state GOP and Minnesota Voters Alliance, stating Walz should have waited until the legislative session began to declare a vacancy and set an election date. House GOP Leader Rep. Lisa Demuth praised the decision as a correction of procedural missteps, while House DFL Leader Melissa Hortman criticized the delay as a partisan tactic to forestall the Democrats’ expected return to a 67-67 tie in the House.
The dispute arises amid broader political tensions, including DFL boycotts and Republican claims of House control following a legal challenge over the residency of the district’s previous Democratic victor, Curtis Johnson.
| WEATHER |
— NWS outlook: Dangerously cold temperatures in place from the Rockies to the East Coast... ...Rare, significant winter storm to bring a swath of heavy snow as well as areas of sleet and freezing rain to the Gulf Coast and Southeast... ...Extremely Critical Risk of Fire Weather for southern California Monday.
| KEY DATES IN JANUARY |
20: Inauguration Day
20: College football national championship
24: USDA Food Price Outlook
26: AFC and NFC football championships
27: First day IRS will begin accepting 2024 federal tax returns
28: Florida’s 1st and 6th special primaries
31: Employers and financial institutions should send out W-2 and 1099 tax forms
31: Federal Open Market Committee meets
31: USDA Cattle
| LINKS |
Economic aid for farmers | Disaster aid for farmers | Farm Bureau summary of aid/disaster/farm bill extension | 45Z tax incentive program | Poultry and swine line speeds | U.S./China Phase 1 agreement | WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | RFS | IRA: Biofuels | IRA: Ag | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |