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Your Pro Farmer newsletter is now available... President Donald Trump didn’t immediately enact tariffs on major U.S. trading partners. Instead, he issued a Feb. 1 potential timeline for such actions. If tariffs are enacted on China, Mexico, Canada and/or the European Union, there are likely impacts on agricultural markets and market volatility could be extreme. Trump’s immigration reform could also have a major impact on the ag sector. South American crop concerns fueled gains in the corn and soybean markets. Argentine crop prospects are dwindling amid drought stress, though the government will lower grain and soy export taxes through mid-year. Brazil is going to produce a record soybean crop, though quality concerns are mounting as rains persist through central production areas. Winter wheat crops in the U.S. faced bitterly cold temps, while warm conditions in Europe and the Black Sea region make wheat vulnerable to potential winterkill if a cold blast hits. We cover all of these items and much more in this week’s newsletter, which you can access here.
Additional perspective on Argentine grain tax cuts... An Argentine ag source told us, “This is more of a boost for farmers than exporters. Even with the export tax cut, our soybeans are still too expensive to actively compete in the export market. The reduction in export taxes will improve farmer selling, but it does not bring an additional offer for exports.”
The source forecasts 2024-25 Argentine exports at 4 MMT to 5 MMT for soybeans (USDA: 4.5), 33 MMT for corn (USDA: 36 MMT) and 10 MMT to 12 MMT for wheat (USDA: 11.5). The biggest potential impact will be for soymeal and soyoil, which our source forecasts exports at 29 MMT to 30 MMT (USDA: 28) and 7 MMT to 8 MMT (USDA: 5.8), respectively.
Cattle on Feed Report: Bullish placements figure... USDA estimated there were 11.823 million head of cattle in large feedlots (1,000-plus head) as of Jan. 1, down 107,000 head (0.9%) from year-ago and 71,000 head less than analysts expected. The drop in feedlot supplies was driven by a 3.3% decline in the number of cattle placed in December, with that category coming in below the bottom end of pre-report expectations. Note: Mexican feeder cattle were banned from entry into the U.S. during the entirety of December. Marketings increased 1.0% during December, modestly less than expected.
| Cattle on Feed Report | USDA(% of year-ago) | Average Estimate (% of year-ago) |
| On Feed on Jan. 1 | 99.1 | 99.7 |
| Placements in December | 96.7 | 101.1 |
| Marketings in December | 101.0 | 101.2 |
December placements were divided, with the lower three weight categories down from year-ago, while the upper three increased. Placements declined 9.2% for lightweight calves (under 600 lbs.), 7.3% for 6-weights and 1.3% for 7-weights. Placements increase 3.2% for 8-weights, 4.5% for 9-weights and 5.9% for heavyweights (1,000-plus lbs.). That should help fill some of the “hole” created by the ban in Mexican feeder cattle in late 2024 and early this year.
As of Jan. 1, the number of steers on feed totaled 7.248 million head, up 53,000 head (0.7%) from year-ago. Heifers in feedlots totaled 4.575 million head, down 160,000 head (3.4%). The decline in heifers could suggest the process of herd rebuilding may have started over the past quarter.
The placements figure is fully bullish, especially for deferred live cattle futures. With that said, futures rallied sharply into the report, so some of the bullishness may already by worked in.
Cold Storage Report: Meat stocks rise seasonally in December... Red meat supplies in frozen storage increased 23.2 million lbs. during December to 878.4 million lbs., though that was still 50.7 million lbs. (5.5%) under year-ago. It’s typical for red meat supplies to build seasonally in December.
Beef stocks totaled 457.3 million lbs., up 16.6 million lbs. from November, which was slightly less than the five-year average increase of 18.3 million pounds. Frozen beef inventories declined 23.0 million lbs. (4.8%) from year-ago and stood 53.2 million lbs. (10.4%) below the five-year average
Pork stocks stood at 400.4 million lbs., up 9.3 million lbs. from November, more than the five-year average increase of 2.5 million lbs. for the month. Frozen beef inventories declined 27.0 million lbs. (6.3%) from last year and were 54.9 million lbs. (13.7%) below the five-year average.
Poultry stocks increased 9.9 million lbs. from November but declined 92.6 million lbs. from year-ago. Chicken breast meat stocks rose 7.6 million lbs. from November to 243.1 million lbs., though that was 5.5 million lbs. less than last year.
Trump freezes Energy Department spending and loans amid policy review... The Trump administration froze spending, loans and actions at the Department of Energy as part of a sweeping review to align its activities with the president’s priorities, according to a Jan. 20 memo obtained by Bloomberg. Acting Secretary Ingrid Kolb directed a halt on grants, funding, rule publications and personnel moves until reviewed for consistency with administration goals, including budgetary considerations.
The freeze affects the department’s $50 billion budget, which includes $41.2 billion in conditional loan commitments, nuclear waste cleanup and energy technology commercialization. The memo underscores Trump’s push to dismantle climate-focused initiatives from the Biden era, favoring fossil fuels and budgetary restraint. Similar freezes were also issued by the Interior Department targeting renewable energy projects on federal lands and waters.
Food price inflation falls sharply in 2024, expected to moderate more this year... Food prices increased 2.3% during 2024, with food-at-home (grocery) prices rising 1.2% and food-away-from-home (restaurant) prices increasing 4.1%. That was down from gains of 5.8% for all food, 5.0% for grocery prices and 7.1% for restaurant costs in 2023. In December, food prices increased 2.5% from year-ago, with food-at-home prices rising 1.8% and food-away-from-home prices up 3.6%.
For 2025, USDA forecasts food inflation will increase 2.2%, with grocery costs expected to moderate to a 1.3% rise and restaurant prices projected to increase 3.6%.
Beef prices are expected to rise 1.5% this year, down from a 5.4% gain in 2024. Pork prices are projected to decline 0.8% versus a 1.3% rise last year. Poultry prices are seen climbing 2.0%, up from a 0.8% gain in 2024. Egg prices are forecast to jump 20.3% amid supply constraints due to highly pathogenic avian influenza – up from an 8.5% increase in 2024.
GOP eyes trillions in spending cuts to fund tax reductions... House Republican committee chairs proposed sweeping spending cuts and budget savings, totaling $2.5 to $3 trillion, during a closed-door meeting to support their reconciliation package, according to Punchbowl News. The package aims to fund massive tax cuts while addressing deficit concerns.
Key areas for cuts:
- Medicaid: Up to $2 trillion, including work requirements and per capita funding caps.
- Student loans: $500 billion through reduced borrowing limits, caps on forgiveness programs, and repealing Biden-era repayment plans.
- SNAP (Food Stamps): $100–250 billion, with expanded work requirements and increased state cost-sharing.
- Federal benefits: $66 billion, targeting employee retirement contributions and health programs.
- Immigration fees: $27 billion via asylum, visa, and parole application fees.
- Infrastructure and energy: $31 billion through higher tonnage fees, EV charges, and resource sales.
Republicans’ ambitious roadmap seeks to appease deficit hawks and comply with reconciliation rules that prohibit increasing deficits after a decade. However, achieving consensus within the narrow GOP majority remains a political challenge, with Democrats vocally opposing cuts to social safety nets.
Of note: The House Budget Committee will consolidate these proposals into reconciliation instructions, aiming to finalize the bill before April.
Shein details cotton sourcing to comply with U.S. forced labor law... Fast-fashion retailer Shein informed the UK parliament that it strictly sources cotton from locations outside China to comply with the U.S. Uyghur Forced Labor Prevention Act (UFPLA). The company stated it obtains cotton from Australia, Brazil, India, the U.S. and in limited cases, from parts of the Middle East, Europe, Africa and Southeast Asia. The U.S. law, aimed at preventing forced labor in supply chains, has led to several Chinese companies being barred from exporting textiles to the United States. Shein noted that the U.S. is its largest market.
Saudi Arabia’s poultry boom: A bid for food self-sufficiency... Saudi Arabia is investing billions to expand its poultry industry, aiming for food self-sufficiency as it diversifies its economy beyond oil. The country has nearly doubled poultry production over the past decade, emerging as one of the world’s fastest-growing chicken producers, Bloomberg reports. In Shaqra, a key hub of this transformation, Tanmiah Food Co. processes around 150,000 chickens daily for global chains like McDonald’s, Popeyes and Subway. Advancements in farming have dramatically improved outcomes, reducing chicken mortality rates from 20% to under 4% in just 10 years. This shift underscores Saudi Arabia’s ambition to become the leading agricultural producer in the Middle East.