Rollins Prioritizes Avian Flu Response as USDA Chief

Updates: Policy/News/Markets, Feb. 18, 2025

— Trump administration fires thousands of federal workers. The Trump administration has fired thousands of federal employees across various agencies, including those involved in wildfire prevention and medical research. The White House has not disclosed an official tally. Agencies have until 8 p.m. ET tomorrow to fire probationary workers, though some exceptions may be made. Roughly 200,000 probationary workers — those employed for less than one to two years — could be affected. Dismissals follow 75,000 deferred resignations linked to Elon Musk’s DOGE initiative. Many firings are being conducted via email. Most affected employees are probationary or term-limited, but some permanent civil servants have also been let go. Workers from the IRS, CFPB, and USDA have reported terminations or received notices, with more expected.

Of note: A newly created DOGE USDA account on X (link) is requesting public help, asking anyone “with insights on finding and fixing waste, fraud and abuse relating to the U.S. Department of Agriculture.”

— Social Security chief resigns amid Musk team’s data push. The acting commissioner of the Social Security Administration, Michelle King, has stepped down following efforts by Elon Musk’s Department of Government Efficiency to access sensitive personal data on millions of Americans. This marks the latest high-profile departure in response to Musk’s team embedding within federal agencies to investigate fraud and waste. King’s resignation comes as Musk’s group also seeks access to data at the Treasury Department and IRS. Privacy advocates warn that granting such access could pose serious risks. King has been replaced by Leland Dudek, a career anti-fraud official who previously praised Musk’s efforts.

Social Security payments account for about $1.5 trillion, or a fifth, of annual federal spending in the United States. President Trump has pledged not to enact cuts to the program’s retirement benefits, but he has indicated that he is willing to look for ways to cut wasteful or improper spending from the retirement program that pays benefits to millions of Americans.

An audit produced by the Social Security Administration’s inspector general last year found that from 2015 to 2022, the agency paid almost $8.6 trillion in benefits and made approximately $71.8 billion, or less than 1%, in improper payments that usually involved recipients getting too much money.

Of note: Speaking at the White House last week, Musk alleged that a cursory examination of the Social Security Administration found that people listed in its systems as being 150 years old were receiving benefits. And in a post on X on Saturday evening, Musk posted an image that he said was from a Social Security database that he suggested indicated dead people were collecting payments. The New York Times reports that Martin O’Malley, who served as commissioner of the Social Security Administration in the Biden administration, said in an interview that the claims of Musk and his team about the agency were not true. “They’re just making” things up, he said, referring to Musk’s suggestion that more than a million people in the Social Security database are in the 150 to 159 age range.

— Equities today: Asian and European shares were mostly higher in trading overnight. U.S. stock indexes are set to open firmer. In Asia, Japan +0.3%. Hong Kong +1.6%. China -0.9%. India flat. In Europe, at midday, London +0.1%. Paris flat. Frankfurt -0.1%. European shares hit record highs on Tuesday as defense stocks soared on expectations of a spending bump and as investors switched more cash into non-U.S. markets to avoid the inflationary pressures of trade tariffs. Chinese shares listed in Hong Kong extended their recent surge after President Xi Jinping’s embrace of tech bosses in a rare public meeting. The gathering fueled hope that Beijing is shifting its stance to give the private sector a freer hand as it fights a trade war with Donald Trump.

— Gold prices rose for a second straight session on Tuesday, but traded below the all-time high, as uncertainty around President Donald Trump’s tariff plans continued to fuel economic growth concerns and safe haven flows into bullion.

Meanwhile, gold prices are expected to remain high in 2025, with major banks predicting potential peaks above $3,000 per ounce due to geopolitical uncertainty and strong central bank demand. Goldman Sachs revised its year-end 2025 gold price forecast to $3,100, citing sustained buying by central banks. Spot gold has already hit multiple record highs in 2024, rising 11% year-to-date.

Key drivers of this surge include President Donald Trump’s aggressive trade policies, which have fueled market uncertainty, and an increased appetite for gold as a safe-haven asset. Goldman Sachs estimates central bank demand could add 9% to gold prices, and if policy uncertainty persists, prices could reach as high as $3,300.

Other major banks have also raised their outlooks: Citi revised its near-term gold target to $3,000, while Morgan Stanley sees the potential for prices to approach $3,400 if tariff fears persist. The World Gold Council reported a record 1% rise in global gold demand to 4,974.5 metric tons in 2024.

— RBA cuts interest rates amid easing inflation. The Reserve Bank of Australia (RBA) has reduced the cash rate by 25 basis points to 4.10%, marking its first rate cut since November 2020. This shift follows a series of rate hikes that began in May 2022. The RBA cited a decline in inflation, with underlying inflation at 3.2% in Q4. Despite the cut, the RBA maintains a restrictive stance, warning that inflation risks remain. Concerns over household consumption, labor markets, and global risks contribute to a slow easing strategy. The RBA will assess economic data before further cuts, with a focus on sustaining inflation within its 2-3% target range.

— Ag markets today:

• Corn higher, beans and wheat lower to open the week. Corn futures rebounded from earlier losses to trade slightly higher early this morning, while soybeans and wheat are under pressure. As of 7:30 a.m. ET, corn futures were trading around a penny higher, soybeans were mostly 2 cents lower and wheat futures were 2 to 6 cents lower. The U.S. dollar index was around 425 points higher, and front-month crude oil futures were about 50 cents higher.
• Cash cattle weaken. Cash cattle averaged $202.91 last week, down $4.14 from the previous week and the second straight weekly decline. Given highly negative packer margins that have caused packers to slow slaughter runs, cash cattle prices are expected to weaken again this week.
• Cash hog index continues upward path. The CME lean hog index continues to rebound off the seasonal low posted in early January, with the latest quote as of Feb. 13 at $88.77, up 71 cents. April lean hog futures, which took over as the lead-month contract on Friday, hold a $3.83 premium to the cash index.

— Ag trade: Saudi Arabia purchased 920,000 MT of optional origin wheat, of which the bulk is expected to be sourced from the Black Sea region. Taiwan tendered to buy up to 65,000 MT of corn from the U.S., Argentina, Brazil or South Africa. Japan is seeking 96,160 MT of milling wheat via its weekly tender.

— The recent weather developments in South America have brought mixed conditions for soybean crops across the region.

Argentina and Southern Brazil. The weekend brought beneficial rainfall to Argentina and southern Brazil, providing much-needed relief to soybean crops that had been struggling with dry and hot conditions. This precipitation is likely to improve crop prospects in these areas, potentially boosting yield potential for soybeans that were under stress.

In Argentina specifically, the rains have helped alleviate concerns about crop damage from the previous dry spell. This is positive news for Argentina’s soybean production outlook, which is crucial for global supply.

Northern Brazil. While southern regions received rainfall, northern Brazil experienced favorable harvest weather. This dry weather is beneficial for soybean harvesting operations, allowing farmers to make good progress in collecting their crops. The conducive harvest conditions in northern Brazil are important, as this region is a major soybean-producing area and timely harvesting can help maintain crop quality.

Impact on soybean markets. The improved weather conditions in South America appear to be influencing soybean prices and basis levels. The soybean prices offered in Europe suggest a weaker basis level. This implies that the market is reacting to the potentially improved crop prospects in South America, particularly in Argentina and southern Brazil. This could be a result of expectations for increased soybean supplies from South America, as the recent rains may have eased some production concerns.

— Brazil’s soybean harvest, safrinha corn planting ramp up but still lagging. Brazil’s soybean harvest reached 23% done as of last Thursday, according to AgRural, with notable progress in Mato Grosso. Harvest remained well behind 32% on this date last year. Safrinha corn planting jumped 16 percentage points to 36% as producers worked to get as much seeded before the ideal window closes, though the pace remained far behind last year’s 59% at this time.

— Modest slowdown in NOPA soy crush expected. Analysts expect the National Oilseed Processors Association (NOPA) will report January soybean crush slowed to 204.5 million bu., down 1% from the all-time record in December but up 10.1% from year-ago. At that level, crush would be a record for the month and the second highest monthly figure behind December 2024. Soyoil stocks are expected to rise to 1.289 billion pounds.

— India urged to lift ban on broken rice exports. India’s inventories of 100% broken rice reached a record 67.6 million metric tons (MMT) in early February — nearly nine times the government’s target — according to Reuters. The Rice Exporters’ Association (REA) is pushing for the government to lift its export ban on broken rice, citing an oversupply. REA President BV Krishna Rao emphasized that “the government has way more rice than needed,” urging officials to allow exports. India halted 100% broken rice exports in 2022 and restricted other rice varieties in 2023, though most limits have since been lifted. In 2022, India exported 3.9 MMT of broken rice, primarily to China for animal feed and African nations for human consumption.

— Oil prices stall amid uncertainty over Ukraine talks and OPEC+ output. Oil prices lost early gains on Tuesday, hovering near previous levels due to uncertainty surrounding Ukraine-Russia peace talks, trade tariffs, and OPEC+ crude output decisions (see next item for more).

Brent crude futures edged up just 1 cent to $75.23 per barrel, down from an earlier peak of $76.07. U.S. West Texas Intermediate (WTI) crude rose 51 cents to $71.25 per barrel, with no Monday settlement due to the U.S. holiday.

Market volatility persists, with short-term trading dominating price movements. U.S. and Russian officials met for talks in Riyadh, but Moscow demanded NATO rescind its 2008 promise on Ukraine’s membership. Ukraine, absent from the negotiations, insisted no peace deal could be made on its behalf.

A Ukrainian drone strike on a Russian pipeline that transports about 1% of global crude supply added to market concerns. The damage could cut Kazakh oil transit by 30% for up to two months, according to Transneft.

Meanwhile, speculation over a potential OPEC+ delay to scheduled output increases continues, though Russian media denied any such plans.

— OPEC+ dilemma: Balancing oil strategy amid uncertainty. OPEC+ faces tough choices as oil prices remain volatile. Over the weekend, reports suggested a potential delay in restoring output, only for Russia to push back against the idea. The group, currently cutting 5.85 million barrels per day, extended its curbs into 2025, but internal tensions are rising, particularly with the UAE seeking higher quotas. Meanwhile, U.S. production remains at record levels, and shadow fleets continue supplying major buyers like China and India. With global demand uncertain, OPEC+ is likely to tread cautiously in the months ahead, analysts signal.

— Shipping giants urge IMO to reject crop-based biofuels. Hapag-Lloyd AG and other major shipping firms are urging the International Maritime Organization (IMO) to steer clear of crop-based biofuels in its push for industry decarbonization. In a joint statement with the European Federation for Transport and Environment (T&E), the companies warn that without strict safeguards, biofuels such as palm and soy could be even more harmful to the climate than traditional fuels due to deforestation and land-use changes. The IMO, which oversees global shipping regulations under the UN, is working toward net-zero emissions by mid-century. However, the debate over biofuels is intensifying as the IMO hosts discussions in London this week. Conservation groups have also opposed a Brazilian-backed proposal promoting biofuels as a long-term solution for the industry.

— Indonesia conducting studies to implement B50 in 2026. Indonesia is studying the implementation of a biodiesel blend that contains 50% palm oil in 2026 and is also looking at a 3% blend for jet fuel next year, an energy ministry official told the country’s parliament. Indonesia is in the process of fully implementing the mandatory mix of palm oil in biodiesel to 40% (B40) from 35% to reduce reliance on imported diesel fuel.

— Trump’s tariff strategy: A real-world experiment. In a recent episode of The Daily (link), New York Times writer Ana Swanson interviews Peter Navarro, a key Trump adviser, who argues that tariffs have proven effective and will be even more critical in a second Trump term. Navarro contends that foreign companies will absorb costs rather than passing them to consumers and that tariffs will incentivize domestic manufacturing. However, skepticism remains, with some Republican senators working to curb Navarro’s influence. With Trump moving forward on tariffs, this sets the stage for a high-stakes economic test with competing predictions on its impact. Navarro says that the strong economic performance and the low inflation during Trump’s first term — when he imposed tariffs on China — show that tariffs don’t have the downsides many economists forecast. “It’s not going to be painful for America,” Navarro said. “President Donald John Trump has proven that tariffs work for the American people, and they’re going to be even more — much more — important this second term.” Specifically, Navarro argues that the U.S. is such an important market that foreign companies will cut their prices and accept lower profits rather than pass along the cost of tariffs to consumers. He also predicts that suppliers, such as those that sell parts to automakers, will relocate to the U.S.

— WTO braces for trade showdown under Trump. The World Trade Organization’s General Council convenes its first meeting today since Donald Trump’s return to the White House, with a packed agenda that includes a heated dispute over new U.S. tariffs on Chinese imports. Beijing is expected to challenge Trump’s 10% levy, which has already sparked retaliatory measures and WTO dispute consultations. Meanwhile, Trump’s push for reciprocal tariffs is rattling European allies, adding uncertainty to global trade relations. Amid concerns about U.S. commitment to multilateralism, some question whether America’s WTO membership remains viable.

Of note: While this General Council meeting is taking place, the WTO also has other meetings and events scheduled throughout February 2025, including sessions of the Dispute Settlement Body, Informal Council for Trade in Goods, and Trade Policy Review Body.

— Where do we stand with tariffs? Tom Essaye of the Sevens Report notes that for the first time in weeks, we didn’t face new tariff threats from the White House. He says this pause offers a chance to reassess where things stand:

• Tariffs implemented: A 10% tariff on all Chinese imports, including electronics and consumer goods, took effect on Feb. 4. Consumers haven’t felt the impact yet due to existing inventory, but prices will likely rise soon.
• Upcoming tariffs: A 25% tariff on all steel and aluminum imports, not limited to China, will begin on March 12. This will increase costs for U.S. manufacturers relying on foreign steel.
• Delayed but not canceled: A 25% tariff on imports from Canada and Mexico, set to take effect on March 4, remains in limbo. Key exemptions —s uch as for cars and energy — could reduce its impact.
• Uncertain tariffs: Early April will be crucial as trade reviews and tariff recommendations come due. This period carries the highest risk of new reciprocal and widespread tariffs.

Bottom line, according to Essaye: While tariffs haven’t derailed the stock market rally, they have contributed to volatility. If economic data remains stable and markets expect a Fed rate cut, tariff risks alone won’t trigger a downturn. However, any shifts in growth or interest rate expectations could amplify trade concerns and impact stocks. Expect continued outperformance in tech and an expansion into cyclical and value sectors.

— Canada reports HPAI outbreak in backyard flock. Canada has reported an outbreak of highly pathogenic H5N5 avian influenza on a non-commercial backyard layer poultry farm in the eastern part of the country, the World Organization for Animal Health (WOAH) said. Analysis of the H5N5 virus detected in Canada’s Newfoundland and Labrador province showed it was similar to the H5N5 one which hit Canada in 2023, the Paris-based WOAH said. It also showed that it was related to the H5N1 (2.3.4.4b) lineage that has affected some farms in Canada and has been spreading in other parts of world, mainly in the United States and Europe.

— Why your Valentine’s chocolate was more expensive. Cocoa futures have climbed more than 80% since this time last year. “The price of a ton of cocoa butter is practically the price of a small car,” Judy Ganes, an agriculture commodity analyst, told the Wall Street Journal (link).

— CIA expands secret drone surveillance over Mexico. The U.S. has intensified covert drone flights over Mexico to locate fentanyl labs, an effort that began under Biden but has escalated under Trump, the New York Times reports (link). CIA Director John Ratcliffe has prioritized targeting drug cartels, though the drones are not authorized for airstrikes. Intelligence is shared with Mexican officials, but concerns over sovereignty and U.S. intervention persist.

Meanwhile, the U.S. military has also expanded surveillance along the border, with Trump considering broader counterterrorism measures against cartels. Mexican President Claudia Sheinbaum insists on national sovereignty, as diplomatic tensions rise.

— NWS outlook: Cooling Winter storm to track from the central Plains to Mid-Mississippi Valley today through tonight before impacting the southern Mid-Atlantic on Wednesday with accumulating snow and areas of sleet/freezing rain... ...Record cold temperatures and dangerously cold wind chills to spill further southward into the Plains with below average temperatures spanning across much of the East... ...Next round of mountain snow and lower elevation rain expected to affect the Pacific Northwest and northern Rockies Wednesday into Thursday.

(NWS)

21: Univ. of Michigan Consumer Sentiment | Existing Home Sales | USDA Cattle on Feed
25: Consumer Confidence | USDA Food Price Outlook
27: Durable Goods Orders | GDP | USDA Outlook Forum | Outlook for U.S. Agricultural Trade report
28: Personal Income and Outlays (PCE Price Index) | International Trade in Goods | USDA Outlook Forum concludes

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 | Eggs/HPAI | NEC task force on HPAI, egg prices | Trump tariffs | Greer responses to lawmakers | Trump reciprocal tariffs |