Evening Report | February 10, 2025

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February crop reports expected to feature modest fine tuning to balance sheets... Analysts expect USDA to make modest changes to its domestic usage and ending stocks forecasts in Tuesday’s Supply & Demand Report. Traders expect slightly smaller ending stocks for corn and soybeans; modestly bigger carryover for wheat. USDA’s global production and ending stocks forecasts may attract more market attention. The following pre-report estimates are from Reuters; Bloomberg for cotton.

U.S. foreign aid: WSJ deep dive into spending and strategic shifts... The U.S. has long been the world’s largest funder of foreign aid, with nearly $65 billion allocated in 2023 alone, according to a Wall Street Journal in depth report. While traditionally aimed at supporting education, health, human rights and humanitarian assistance, a significant portion also strengthened militaries in allied nations and addressed global challenges like opioid production and fossil fuel reduction.
The U.S. Agency for International Development (USAID) — which historically oversaw two-thirds of foreign assistance — was significantly dismantled, raising questions about oversight and program continuation. A 90-day freeze on most foreign aid followed, with a partial waiver granted for lifesaving humanitarian projects.
Key highlights:

• Biggest aid areas: Economic development, humanitarian assistance, peace and security, and health received the most funding.
• Global comparisons: While the U.S. spent more in total than other countries, it ranked lower as a percentage of its national income (0.24%).
• Top recipients: Ukraine ($17.2B), Israel ($3.3B), Jordan and Egypt were major recipients, reflecting both humanitarian needs and strategic U.S. interests.
• Pepfar success: Since its launch in 2003, the U.S.-funded President’s Emergency Plan for AIDS Relief (Pepfar) has saved 26 million lives and transformed HIV from a death sentence to a manageable chronic disease.

Despite successes, U.S. aid efforts have faced setbacks in regions like Africa’s Sahel, where U.S.-trained militaries were toppled by coups, leading new regimes to pivot toward Russia.

Trump administration freezes funding for several USDA conservation programs, including EQIP... The freeze affects contracts funded through the Inflation Reduction Act (IRA). Some farmers have already purchased materials and signed contracts for conservation projects, expecting reimbursement through EQIP. The funding freeze has caused confusion and uncertainty among farmers and conservation groups.

Courts have temporarily lifted the funding freeze while litigation plays out, but there are reports of inconsistencies in how funds are being distributed.

The freeze has had significant impacts on farmers who were relying on EQIP funding:

• Some farmers are at risk of losing their farms due to financial commitments made based on expected EQIP contracts.
  
• There are reports of farmers being unable to pay for materials they’ve already purchased or fulfill contracts they’ve signed.
  
• The Iowa Soybean Association has stated that farmers in their state are contractually owed $11 million for practices implemented in 2024.

Bottom line: The current freeze on EQIP funding represents a significant disruption to modern conservation efforts, highlighting the importance of these programs in supporting sustainable agricultural practices.

Nevada reports state’s first human case of HPAI in dairy worker... Nevada has confirmed the state’s first human case of highly pathogenic avian influenza (HPAI) in a farm worker who was exposed to infected dairy cattle, the Central Nevada Health District said. USDA last week confirmed the first detection of a second strain of HPAI in dairy cattle in Nevada.

Australia seeks U.S. tariff exemption, citing jobs and defense ties... Australia’s Trade Minister Don Farrell emphasized that Australian steel and aluminum exports to the U.S. support “thousands of good paying American jobs” and play a critical role in shared defense interests. His comments come as Australia presses for an exemption to President Donald Trump’s newly announced 25% tariffs on all steel and aluminum imports, which escalate his trade policy overhaul.

Australia, a key U.S. Indo-Pacific ally, hopes to secure the same exemption it received in 2018. Australian officials have been lobbying U.S. counterparts for months, with Prime Minister Anthony Albanese set to discuss the issue with Trump. Meanwhile, Defense Minister Richard Marles recently met with his U.S. counterpart, highlighting Australia’s $500 million contribution to U.S. submarine production under the AUKUS pact.

NY Fed survey: Year-ahead consumer inflation expectations unchanged for third straight month... U.S. consumer inflation expectations for the year ahead remained at 3% for a third consecutive month in January, according to a New York Fed survey. Price expectations rose for gas, food, medical care, college and rent. Meanwhile, inflation expectations for the three-year horizon were also steady at 3% while those for five years ahead rose by 0.3 percentage point to 3%, the highest since May 2024.

The Philly curse?... Past Philadelphia sports championships have led to economic downturns. While past performance is no guarantee of future outcomes, history suggests the Philadelphia Eagles’ NFL championship may not be a good omen for the U.S. economy. Note: The following list is not the entirety of Philadelphia sports championships, just the ones that were associated with economic downturns.

• 1910-1911: Philly Athletics win; leads to 1911 recession
• 1913: Philly Athletics win; year-long recession follows
• 1929-1930: Philly Athletics win; onset of the Great Depression
• 1980: Phillies win; U.S. enters recession
• 2008: Phillies win; Great Recession occurs
• 2018: Eagles win; Stocks worst year since 2008
• 2025: Eagles win; Crash imminent?