U.S. Ag Trade Deficit Widens Amid Export Decline | USTR Nominee Hearing Today

Decision day for millions of federal employees re: offer to resign with benefits

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February 06, 2025 08:41 AM

News/Markets/Policy Updates: Feb. 6, 2025

Other topics include: (1) Record imports sharply widen U.S. trade deficit in December; (2) Lutnick’s nomination for Commerce secretary advances amid trade policy concerns; (3) Trump outlines vision for U.S. takeover of Gaza; (4) White House press secretary confirms Politico had been receiving substantial U.S. gov’t funding; (5) Treasury Secretary Bessent: focus on 10-year Treasury yield with regard to bringing down borrowing costs; (6) Fed official warns Trump tariffs could fuel inflation; (7) Ford beats Q4 estimates but warns of 2025 challenges; (8) Cargill expands in biofuels with SJC Bioenergia takeover; (9) BOE cuts rates amid tariff concerns; (10) Friday’s U.S. Jobs report: Expect major revisions; (11) Sales of U.S. soybeans to China continue; (12) USAID suspension threatens Ukraine’s ag sector; (13) Senate Ag panel hearing highlights tariff concerns for U.S. ag sector; (14) Oil prices fall amid rising U.S. stockpiles and trade tensions; (15) Mexico lifts restrictions on GM corn and glyphosate following USMCA ruling; (16) Update on resumption of Mexican cattle imports; (17) GOP budget battle: House vs. Senate standoff; (18) New HPAI strain found in Nevada dairy cattle; (19) OJ struggles for a comeback amid challenges; (20) Russia seizes grain trader’s assets; (21) U.S. set to unveil Trump plan to end three-year war in Ukraine; (22) China challenges U.S. tariffs at WTO; (23) More info on China’s tariff hikes which target U.S. energy and auto sectors.

— U.S. ag trade deficit widens amid export decline. In December, the U.S. agricultural trade deficit surged as exports dropped over 7% to $16.15 billion, while imports dipped 1.3% to $18.27 billion, resulting in a $2.12 billion gap — nearly double November’s deficit. For the first quarter of fiscal year (FY) 2025, the trade gap stands at $5.74 billion, with exports totaling $49.56 billion against $55.3 billion in imports. Meeting USDA’s FY 2025 forecast of $170 billion in exports and $215.5 billion in imports would require monthly averages of $13.38 billion for exports and $17.8 billion for imports. n FY 2024, U.S. ag exports averaged $14.05 billion over the Jan.-Sept. period with imports averaging $17.52 billion.

The sector has now seen trade deficits in 13 of the last 14 months, with consecutive monthly shortfalls exceeding $1 billion for 12 consecutive months. The trend highlights a pressing need to bolster agricultural trade, with the Trump administration signaling interest in new trade agreements to expand market access. However, concerns over potential retaliatory tariffs targeting U.S. agricultural goods remain high, adding uncertainty to an already strained sector.

— Record imports sharply widen U.S. trade deficit in December. The U.S. trade increased 24.7% to $98.4 billion in December, the highest since March 2022, from a revised $78.9 billion for November. Imports increased 3.5% to an all-time high of $364.9 billion, while exports declined 2.6% to $266.5 billion. For 2024, the deficit increased 17% from 2023 to $918.4 billion. Exports increased 3.9% to $3.192 trillion, and imports rose 6.6% to $4.110 billion.

— USTR nominee Greer to face Senate scrutiny amid trade policy shifts. Jamieson Greer, President Trump’s nominee for U.S. Trade Representative (USTR), will appear before the Senate Finance Committee today for his confirmation hearing. The timing is critical, as a new 10% U.S. tariff on Chinese imports took effect on Feb. 4 (China’s retaliation takes effect Feb. 10), while proposed 25% U.S. tariffs on Canada (10% on oil) and Mexico have been postponed for 30 days. Greer, an international trade attorney and former chief of staff to Robert Lighthizer, is expected to face questions on tariffs, trade strategy, and supply chain resilience. Senators will probe his approach to trade negotiations and how he plans to align with the administration’s economic goals.

As Lighthizer’s chief of staff, Greer was deeply involved in implementing tariffs on Chinese imports. This experience solidified his hawkish view on China, leading him to describe China’s economic strategies as a “generational challenge” to the United States. Greer has advocated for a strategic decoupling from China, emphasizing the need to prevent Chinese companies from relocating to other countries to avoid U.S. tariffs. Greer has recommended that Congress revoke China’s “permanent normal trade relations” (PNTR) status altogether. This would be a significant step beyond an annual review, as it would effectively remove China’s Most Favored Nation (MFN) status and allow the U.S. to impose higher tariffs on Chinese goods.

Greer was heavily involved in writing the U.S./China Phase 1 trade agreement and renegotiating the North American Free Trade Agreement, which resulted in the United States-Mexico-Canada Agreement (USMCA). This experience has given him practical knowledge in crafting and implementing major trade deals.

Greer has recommended negotiating new market-opening trade agreements with countries such as the UK, India, Kenya, and the Philippines.

In differing with Lighthizer, Greer appears to emphasize a more “pragmatic” approach to trade policy. He calls for an “active and pragmatic trade policy” to foster economic growth and job creation. Lighthizer, while also practical, seems to have a more ideological commitment to economic nationalism and protectionism. Meanwhile, Greer may adopt a somewhat more diplomatic tone, expressing eagerness to work “in close consultation with Congress.” Lighthizer was known for his more confrontational style in trade negotiations.

— Lutnick’s nomination for Commerce secretary advances amid trade policy concerns. The Senate Commerce, Science, and Transportation Committee advanced Howard Lutnick’s nomination to lead the Commerce Department in a 16-12 vote. Sen. John Fetterman (D-Pa.) was the only Democrat to side with Republicans.

Lutnick is expected to drive Trump’s trade agenda, advocating for broad tariffs and stronger trade reciprocity. He supports high tariffs on Chinese goods and dismisses concerns about inflation.

Democrats, however, worry about economic repercussions, including job losses and retaliatory measures. Sen. Maria Cantwell (D-Wash.), the ranking Democrat on the committee, voted against Lutnick’s nomination, citing concerns over Trump’s trade policies and the nominee’s lack of commitment to uphold federal funding and programs.

If confirmed as expected, Lutnick’s leadership could mark a significant shift in U.S. trade policy, particularly with China and the EU.

— It’s decision day for millions of federal employees who find themselves at a “fork in the road.” That’s the phrase the Trump administration used in an email telling federal workers they can either stay or go. If they resign by today, they can keep their pay and benefits until the end of September. As of last night, more than 40,000 employees, which is about 2% of the federal workforce, have said that they’ll quit. Many more are expected to take the offer today. The White House has said its target is for between 5% and 10% of employees to resign.

Differing views. The offer has pitted the Office of Personnel Management – which is working in conjunction with Elon Musk and the Department of Government Efficiency – against unions and lawmakers who are advising people against taking the offer, citing its vagueness, that it waives employees’ rights to challenge the terms of the deal in the future, and questions about where the money for a new, expensive buyout program will come from – especially since the government is only funded through mid-March.

As today’s deadline approached, the Trump administration has repeated its warning that most federal agencies are likely to be downsized, a message seen by workers as pressure to accept the buyout offer. Some 116,000 workers left government service in the 2023 fiscal year, according to the Partnership for Public Service, a nonprofit. Trump said on Tuesday he wants to shutter the Department of Education, which employs 4,245 people.

Those who do not accept the buyout could still be on the chopping block later on, as the federal government said it anticipates layoffs. “At this time, we cannot give you full assurance regarding the certainty of your position or agency but should your position be eliminated you will be treated with dignity and will be afforded the protections in place for such positions,” wrote the U.S. Office of Personnel Management.

Government workers who elect to stay on have to return to the office full time, meet new performance standards, be open to accepting furloughs and the reclassification to at-will status and adhere to “enhanced standards of suitability and conduct.”

The Office of Personnel Management said the move was part of Trump’s efforts to reimagine the federal government and said the changes to the federal workforce “will be significant.”

Federal agencies have been told to compile a list of those who have been hired within the last two years who lack full employment protection and would be easier to fire — roughly 13% of the workforce, according to government figures.

Some exemptions. Certain government positions — like immigration and law enforcement officials, national security employees and postal workers — are exempt from the “Fork in the Road” offer. But the Central Intelligence Agency is offering buyouts that are similar to the government-wide program. Other agencies could exempt specific critical positions from the resignation offer, but the extent of those exceptions is unclear.

— Trump outlines vision for U.S. takeover of Gaza. President Donald Trump detailed his plan for a U.S.-controlled Gaza Strip, insisting no military force would be required and that the move would bring stability to the region. In a Truth Social post, Trump stated that Israel would hand Gaza over to the U.S. after the fighting, and that Palestinians would be resettled in “safer and more beautiful communities” with modern housing. He emphasized that American soldiers would not be needed and proposed a large-scale redevelopment effort to transform the territory. While Arab nations have publicly opposed the plan, some analysts suggest they may support it privately to end Hamas’ rule.

— White House Press Secretary Karoline Leavitt confirmed that Politico had been receiving substantial U.S. gov’t funding, totaling between $8 million and $9.5 million through government subscriptions. As part of the Trump administration’s broader effort to cut federal spending, the White House announced the immediate termination of these payments. The Department of Government Efficiency (DOGE), led by Elon Musk, is overseeing the cancellation of these funds as part of a larger initiative to scrutinize federal expenditures. The revelation has sparked debate, with supporters praising the move as a crackdown on wasteful spending. Reports indicate that other media outlets, including Reuters and the Associated Press, have also reportedly received government funding in recent years.

FINANCIAL MARKETS

— Equities today: Asian and European shares were mostly higher overnight. U.S. Dow opened up around 75 points. In Asia, Japan +0.6%. Hong Kong +1.4%. China +1.3%. India -0.3%. In Europe, at midday, London +1.2%. Paris +0.7%. Frankfurt +0.9%.

Equities yesterday: U.S. stock indices finished with gains again Wednesday with a late push sending the Nasdaq higher at the close. The Dow gained 317.24 points, 0.71%, at 44,873.28. The Nasdaq rose 38.31 points, 0.19%, at 19,692.33. The S&P 500 was up 23.60 points, 0.39%, at 6,061.48.

— U.S. Treasury Secretary Bessent said the Trump administration’s focus with regard to bringing down borrowing costs is 10-year Treasury yields, rather than the Federal Reserve’s benchmark short-term interest rate. “He and I are focused on the 10-year Treasury,” Bessent said in an interview with Fox Business Wednesday when asked about whether President Donald Trump wants lower interest rates. “He is not calling for the Fed to lower rates.” Bessent repeated his view that expanding energy supply will help lower inflation. For working-class Americans, “the energy component for them is one of the surest indicators for long-term inflation expectations,” he said. “So if we can get gasoline back down, heating oil back down, then those consumers not only will be saving money, but their optimism for the future will” help them rebuild from the recent years of high inflation, Bessent said. The former hedge fund manager also said that when it comes to the Fed, “I will only talk about what they’ve done, not what I think they should do from now on.” He said that 10-year Treasury yields climbed after the Fed’s “jumbo rate cut,” referring to the 50 basis-point reduction that Chair Jerome Powell and his colleagues enacted in September.

“The bond market is recognizing that” under Trump “energy prices will be lower and we can have non-inflationary growth,” Bessent said of the drop in yields in recent weeks. “We cut the spending, we cut the size of government we get more efficiency in government. And we’re going to go into a good interest-rate cycle.”

Interviewed by Lawrence Kudlow, who served as Trump’s White House National Economic Council director in his first term, Bessent repeated his economic policy mantra of 3-3-3 — referring to getting the fiscal deficit down to 3% of gross domestic product from above 6% in recent years, boosting oil production by 3 million barrels a day, and sustaining economic growth at 3%. “Now that I’m in the seat, I believe in it more than ever,” Bessent said of the 3-3-3 program. He added that while government spending had boosted the economic expansion under former President Joe Biden, what the new team is aiming for is private sector led growth, fueled by capital spending and a return of manufacturing jobs from overseas.

— Fed official warns Trump tariffs could fuel inflation. Breaking from their usual reluctance to weigh in on fiscal policy, a Federal Reserve official has raised concerns about the inflationary impact of Trump’s proposed tariffs. Chicago Fed President Austan Goolsbee warned that if inflation rises or stalls in 2025, the Fed will face the challenge of determining whether it stems from economic overheating or trade barriers — an important factor in shaping interest rate decisions.

However, Richmond Fed President Thomas Barkin signaled it was far too early to be able to determine where any cost increases could emerge. Barkin told reporters that there continue to be several uncertainties, including the level of tariffs that are deployed, whether countries respond with retaliatory tariffs, and what degree of those costs could get passed back through to consumers.

— Ford beats Q4 estimates but warns of 2025 challenges. Ford Motor exceeded Wall Street’s fourth-quarter earnings and revenue expectations but cautioned that 2025 will be tough. The automaker cited headwinds like a 2% decline in industry pricing and slightly lower wholesales. However, its forecast did not account for potential new tariffs from the Trump administration. CFO Sherry House said the company is waiting to assess the impact of paused Mexico and Canada tariffs. Ford’s stock fell over 5% in extended trading.

— Cargill expands in biofuels with SJC Bioenergia takeover. Cargill has signed an agreement to acquire the remaining 50% stake in Brazil’s SJC Bioenergia, securing full ownership of the sugar and biofuel firm. This move strengthens Cargill’s position in renewable energy. The company has been a partner in Bioenergia since 2011. The deal is pending regulatory approval.

— BOE cuts rates amid tariff concerns. The Bank of England lowered its key interest rate by a quarter percentage point, to 4.5%, marking its third cut since August, as sluggish economic growth and President Trump’s tariff threats cast uncertainty over the global economy. The central bank also trimmed its UK growth forecast to 0.75% for 2025, down from 1.5% in November. The British pound fell over 1% against the dollar, while the FTSE 100 rose 1.6%. Despite inflationary concerns, policymakers signaled openness to further gradual cuts, wary of the impact of U.S. trade policies and a weak pound. The BOE’s move contrasts with the Federal Reserve, which has held rates steady, and the European Central Bank, which continues to ease monetary policy.

— Friday’s U.S. Jobs report: Expect major revisions. Friday’s jobs report will be unusually messy due to significant annual revisions. While forecasters predict 170,000 new jobs in January — down from December’s 256,000 — the real disruption comes from data adjustments. Some possibilities, according to reports:
· Payroll numbers will be revised down by around 800,000 jobs, correcting past overstatements.
· Household survey numbers will be revised up due to new Census Bureau population estimates, making direct comparisons difficult.

Bottom line: Confusion is inevitable, but the broader takeaway remains: the job market remained strong in 2024. Despite the political noise, these revisions reflect a statistical system functioning as intended, aligning estimates with more reliable data.

AG MARKETS

— Ag markets today:

· Grains firmer early this morning. Corn, soybeans and wheat traded on both sides of unchanged overnight but are mildly firmer early this morning. As of 7:30 a.m. ET, corn futures were trading fractionally to a penny higher, soybeans were 5 to 7 cents higher and wheat futures were 1 to 2 cents higher. The U.S. dollar index was up around 450 points, and front-month crude oil futures were about 45 cents higher.

· Packers pulling back on cash cattle bids. Amid highly negative margins, packers started with cash cattle bids well below week-ago, though feedlots are in no hurry to move cattle at lower prices. If packers don’t get more aggressive with cash cattle bids, it’s likely this week’s negotiated trade will be small, and packers will pull largely from contracted supplies.

· Traders growing more confident in extended cash hog rally. The CME lean hog index is up another 52 cents to $84.60 as of Feb. 4, increasing the rise from the seasonal low to $4.17. After strong gains on Wednesday, February lean hog futures finished $2.05 above the today’s cash quote, suggesting traders expect continued near-term price strength.

— Ag trade: South Korea purchased 30,000 MT of milling wheat – 22,700 MT U.S. and 7,3000MT Canadian – but passed on a tender to buy up to 140,000 MT of corn form the U.S., South America or South Africa as prices were deemed too high. Japan purchased 96,725 MMT of milling wheat via its weekly tender, including 64,545 MT U.S. and 32,180 MT Canadian.

— Sales of U.S. soybeans to China continue. USDA weekly Export Sales data for 2024-25 included another round of soybean sales to China. The data for the week ended Jan. 30 included activity of net sales of 6,300 metric tons of sorghum, 208,680 metric tons of soybeans, and 15,182 running bales of upland cotton. Activity for 2025 included net sales of 15,182 metric tons of beef and 785 metric tons of pork.

— USAID suspension threatens Ukraine’s ag sector. The Trump administration’s decision to suspend USAID funding is likely to have consequences for Ukraine’s agricultural industry. This funding freeze disrupts crucial support that has bolstered Ukraine’s agricultural production and exports in recent years.

USAID has played a key role in Ukraine’s agricultural development:
· 2023: Provided $12 million in equipment and distributed fertilizer and seeds to over 8,200 farmers.
· 2023: Allocated $150 million for future agricultural growth through the Harvest program.

A 90-day freeze on nearly all foreign aid, including USAID programs, has led to:
· The halting of funding for ongoing agricultural projects.
· Delays in equipment deliveries and financial assistance.
· Uncertainty for the AGRI-Ukraine initiative, which supports agricultural resilience during wartime.

Potential impacts:
· Reduced production capacity: Farmers may struggle without USAID-provided seeds, fertilizers, and equipment.
· Economic instability: Agriculture accounts for over 60% of Ukraine’s export revenue.
· Global food security risks: Ukraine plays a crucial role in global food supply chains.
· Halted modernization efforts: USAID has driven the modernization of Ukraine’s agriculture sector.

The Ukrainian government is seeking alternative funding from European allies and considering internal funding solutions. However, it remains uncertain whether these measures will fully compensate for the loss of USAID support. While the long-term effects are yet to be seen, the funding suspension threatens to reverse years of progress and undermine Ukraine’s economic stability and food security.

— Agriculture markets yesterday:
• Corn: March corn fell 1 1/4 cent to $4.93 1/4, closing nearer the session low.
• Soy complex: March soybeans fell 18 cents to $10.57, nearer the daily low after hitting a four-month high early on. March soybean meal fell $5.70 to $308.30 and near the session low. March soybean oil fell 67 points to 45.09 cents, nearer the session low.
• Wheat: March SRW wheat fell 4 3/4 cents to $5.72 1/4, while March HRW wheat fell 3 cents to $5.91 3/4. March HRS futures fell 3 1/4 cents to $6.18 1/2. All three forged low-range closes.
• Cotton: March cotton fell 90 points to 66.04 cents and near the daily low.
• Cattle: Futures rebounded strongly from recent losses, with expiring February live cattle jumping $1.725 to $203.60 and most-active April leaping $2.65 to $201.30. March feeder futures surged $2.475 to $270.725.
• Hogs: April lean hog futures surged $1.80 to $91.55 and closed near session highs. Nearby February futures closed $1.575 higher to $86.65.

FARM POLICY

— Senate Ag panel hearing highlights tariff concerns for U.S. ag sector. The Senate Ag Committee hearing on the economic situation for U.S. agriculture highlighted significant concerns about potential tariffs and their impact on the farming sector. Key topics:

· Tariff concerns and impact on input costs. Farm Bureau President Zippy Duvall warned that tariffs on Canadian potash could be “devastating” to U.S. farmers, as over 80% of potash comes from Canada. A tariff on Canadian potash could increase fertilizer costs by as much as $1.70 per acre for corn and $1.42 per acre for soybeans.

· Market access and retaliation. Both Farm Bureau and NFU expressed concerns about retaliatory tariffs and their potential to shrink market access for U.S. agricultural products. NFU President Rob Larew noted that even the threat of tariffs is already affecting the market, with some suppliers adding costs to goods and others not selling products for delivery beyond certain dates.

· China trade relations. Larew labeled China as a “bad actor” in trade relations but urged the U.S. to work with allies to address challenges collectively. He emphasized the importance of collaborating with other countries that also have poor trading relationships with China.

· Market access over aid. Farm groups expressed a clear preference for fair and open markets rather than government payments. Larew stated, “We want to receive our income from fair and open markets, not just payments.”

· Potential aid package. In the event of agricultural losses due to a tariff war, USDA Secretary-designate Brooke Rollins has pledged to provide aid. However, farm groups stressed that this should not be the primary solution.

· Lawmakers also sought feedback on the food aid pause by the Trump administration, with Keeff Felty, president of the National Association of Wheat Growers, noting the temporary pause in the Food for Progress program has affected more than 200,000 metric tons of wheat valued at over $65 million.

The hearing comes as USDA later this morning is expected to update its farm income forecast, likely showing continued financial strains for the sector. Factors contributing to these strains include lower prices, elevated input costs, and a mounting trade deficit.

ENERGY MARKETS & POLICY

— Oil prices fall over 2% amid rising U.S. stockpiles and trade tensions. Oil prices dropped over 2% on Wednesday as U.S. crude and gasoline inventories surged, signaling weaker demand, while escalating U.S.-China trade tensions fueled economic concerns. Brent crude fell 2.09% to $74.61 per barrel, while WTI declined 2.3% to $71.03 per barrel. The EIA reported a sharp rise in crude stockpiles as refiners, facing soft gasoline demand, reduced crude intake.

China’s imposition of tariffs on U.S. oil, LNG, and coal, in retaliation for U.S. levies, further pressured prices, causing a 3% drop in WTI on Tuesday. Analysts warn that rerouting U.S. crude exports could disrupt demand.

Meanwhile, Iranian President Masoud Pezeshkian urged OPEC unity as Trump pledged to revive sanctions on Tehran. Iran’s oil exports, at their highest since 2018, could face renewed restrictions, potentially tightening global supply. The market now grapples with both weaker demand from trade disputes and supply risks from Iran, adding uncertainty to price trends.

TRADE POLICY

— Mexico lifts restrictions on GM corn and glyphosate following USMCA ruling. Mexico has rolled back restrictions on glyphosate and genetically modified (GM) corn after a ruling by a USMCA dispute panel, marking a shift in its agricultural policy. The Ministry of Economy, led by Marcelo Ebrard, nullified key sections of the February 2023 decree restricting these products. The ruling follows a U.S. trade challenge, with the panel deciding in favor of the U.S. in December 2024.

The decision eases tensions with the U.S. and Canada. While it allows GM corn imports, Mexico retains a ban on GMO planting.

Upshot: Despite the reversal, Mexico still plans to phase out glyphosate and implement GMO labeling and traceability measures.

— Update on resumption of Mexican cattle imports. USDA’s APHIS announced on Feb. 1 that cattle and bison imports from Mexico would resume under a new comprehensive pre-clearance inspection and treatment protocol relative to New World Screwworm. The new protocol includes enhanced inspections, stricter treatment procedures, and increased monitoring at select APHIS-approved border facilities. Initially, imports will be limited to specific ports of entry. Cattle and bison will cross at the Santa Teresa and Douglas Ports of Entry after undergoing multiple inspections and treatments. The U.S. and Mexico are working to approve additional pre-export inspection pens and reopen trade through other ports of entry. The gradual nature of the reopening suggests that it may take some time before imports return to pre-ban levels.

CONGRESS

— GOP budget battle: House vs. Senate standoff. House Speaker Mike Johnson (R-La.) is heading to the White House today with a group of House Republicans to discuss the budget resolution with President Trump, but tensions between House and Senate Republicans are evident. The Republican-controlled House and Senate are at odds over Trump’s legislative agenda, with Senate Budget Chair Lindsey Graham (R-S.C.) moving forward with his own $300 billion budget plan, undercutting Johnson’s strategy.

Graham’s proposal prioritizes defense and border security and energy policy, while House Republicans push for a single package that also includes tax cuts. Trump has so far backed Johnson’s one bill approach but is open to the Senate’s alternative. Graham’s proposal would include $150 billion for the Pentagon and other defense programs, plus $150 billion for border security, including Trump’s border wall. There’ll also be energy policy provisions. Graham says the new spending will be offset by cuts to mandatory programs, but he didn’t say which ones.

Trump is slated to meet with House Republicans later this morning on the budget. Here is a list of House Republicans invited to meet with President Donald Trump today about the reconciliation process: Speaker Mike Johnson, House Majority Leader Steve Scalise, Budget Committee Chair Jodey Arrington (R-Texas), Ways and Means Committee Chair Jason Smith (R-Mo.), Reps. Kevin Hern (R-Okla.), Lloyd Smucker (R-Pa.), Ben Cline (R-Va.), Jack Bergman (R-Mich.), Chip Roy (R-Texas), Blake Moore (R-Utah), Josh Brecheen (R-Okla.), Jay Obernolte (R-Calif.), Mike Carey (R-Ohio), Erin Houchin (R-Ind.), David Valadao (R-Calif.), Don Bacon (R-Neb.), Mike Lawler (R-N.Y.) and Andrew Garbarino (R-N.Y.).

Bottom line: Senate Majority Leader John Thune (R-S.D.) told his colleagues the move preserves “optionality” in the conflict with the House. One Republican senator conceded it might also be a “trainwreck.” With government funding expiring March 14 and the debt ceiling looming early this summer, this intra-party struggle threatens to complicate Republican priorities in the 119th Congress.

HPAI/BIRD FLU

— New HPAI strain found in Nevada dairy cattle. USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed the first detection of highly pathogenic avian influenza (HPAI) H5N1 clade 2.3.4.4b, genotype D1.1 in dairy cattle in Nevada. This discovery follows state investigations and testing under the National Milk Testing Strategy (NMTS). The genotype, which has been prevalent in North American wild birds, mammals, and poultry, is now identified in dairy cattle for the first time. Four cases were confirmed on Jan. 31, prompting quarantine measures in Nye and Churchill Counties. APHIS is conducting further investigations and will release a technical brief on the findings in the coming week.

FOOD & FOOD INDUSTRY

— OJ struggles for a comeback amid challenges. Once a staple of the American breakfast, orange juice has seen its popularity plummet, with consumption more than halving since the late 1990s, Bloomberg reports (link). Concerns over sugar content, inflation-driven price hikes, and devastating citrus diseases have battered the industry. Despite efforts from major brands like Tropicana and Minute Maid to innovate with new products and marketing campaigns, demand remains weak. Meanwhile, climate challenges and potential trade disputes threaten to push prices even higher, leaving OJ makers scrambling to reclaim their place in consumers’ refrigerators.

RUSSIA & UKRAINE

— Russia seizes grain trader’s assets. A Russian court ruled in favor of a lawsuit filed by the General Prosecutor’s Office to transfer all the assets of Rodnie Polya, which exported 14% of Russian grain in the 2023-24 season, to the state. Published materials cited the foreign citizenship of a former owner as a key reason for the move, aimed at preventing foreign control over strategic assets. The decision creates an important precedent as some other grain sector assets in Russia are still controlled by foreign-registered firms. Rodnie Polya, formerly known as TD RIF, controls a major grain-loading terminal in the Black Sea region, classified as a strategic asset that, by law, cannot be controlled by foreigners. It also owns 17 grain-transporting vessels.

— U.S. set to unveil Trump plan to end three-year war in Ukraine. U.S. allies expect the Trump administration to present a long-awaited plan to end Russia’s war on Ukraine at the Munich Security Conference in Germany next week, Bloomberg reported, citing people familiar with the matter. The blueprint would be set out for allies by Trump’s special representative for Ukraine and Russia, Keith Kellogg, the people said. Speaking to Newsmax on Wednesday evening, Kellogg said he’ll be having discussions with European leaders on his trip to Munich and report back to the president. He won’t be presenting the plan publicly, as that’s for Trump to do. Kellogg and others have dropped hints in recent weeks of what Trump allies have referred to as “peace through strength.” Elements include potentially freezing the conflict and leaving territory occupied by Russian forces in limbo while providing Ukraine with security guarantees to ensure that Moscow can’t attack again. Kellogg has signaled the U.S. would like to see elections held in Ukraine after a ceasefire, while Trump has indicated that access to critical minerals in return for U.S. support could be part of a settlement. Trump has also threatened Moscow with massive sanctions if it doesn’t engage in talks.

CHINA

— China challenges U.S. tariffs at WTO. China has formally requested consultations with the U.S. through the World Trade Organization (WTO) over new 10% tariffs imposed this week. Beijing argues that the measures, including the removal of the de minimis exemption for shipments under $800, are baseless and violate WTO rules by being discriminatory and protectionist. The request marks the first step in the dispute process, which could take over a year if unresolved in initial consultations.

— More info on China’s tariff hikes which target U.S. energy and auto sectors. Beijing has announced new tariffs of 10-15% on 80 U.S. products, focusing on fossil fuels and automobiles — key industries former President Trump has pledged to revive.

15% tariffs apply to eight U.S. imports, including coal and liquefied natural gas (LNG).

10% tariffs cover 72 products, including crude oil and high-emission vehicles.

In 2024, China imported $13.9 billion worth of these products from the U.S., accounting for 8.5% of total U.S. exports to China. However, U.S. energy exports make up a small portion of China’s overall imports — just 5.4% of its LNG, 2% of its coal, and 2% of its crude oil.

Once in effect on Feb. 10, China’s tariff rates on U.S. coal, LNG, and crude oil will rise to 43%, 40%, and 15%, respectively. SUVs, the most impacted vehicle type, saw $2.9 billion in exports to China in 2024, but U.S. auto exports have already been declining.

Bottom line: These tariffs echo Beijing’s previous moves during Trump’s first term, signaling a renewed trade standoff.

WEATHER

— NWS outlook: Cooling Winter storm to impact the Great Lakes, northern Mid-Atlantic and Northeast with a combination of snow, sleet and freezing rain today... ...Next round of unsettled weather to enter the West today with the threat of heavy rainfall/snows for California before snowfall chances spread across the Northern Rockies and Northern Plains into Saturday... ...Record high temperatures are expected across much of the Southern U.S. over the next few days.

KEY DATES IN FEBRUARY

6: USDA Farm Income forecast (11 a.m. ET)
7: January Employment | USDA Ag Trade Data Update
9: Super Bowl
11: USDA Crop Production, WASDE, world market circulars
12: Consumer Price Index report
13: Producer Price Index-FD | USDA outlook reports for several commodities
14: Retail Sales | Valentine’s Day
16: Daytona 500
17: Presidents Day; U.S. gov’t and market holiday
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

LINKS