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Update on U.S./Mexico NWS situation... Mexican President Claudia Sheinbaum said the country’s ag minister will update progress on reopening the U.S. border to Mexican cattle on Friday, Mexican newspaper Noticias Financieras reported.
A U.S. industry source told us, “It has been strangely quiet on the New World screwworm (NWS) front. From what I understand, Mexico has not done enough to meet U.S. criteria. I am hearing that many of the cattle that would have come across last year now may not. They are already on feed, and it sounds like even if the border fully opens up, they will keep many of them there. There are a lot of Texas feeders with lots that have many empty pens. Many people say it should already be open, but Mexico (justifiably or not) is getting the blame for the delay.”
Smaller cattle herd, but expansion likely starting... USDA’s Cattle Inventory Report Friday afternoon is expected to show the total U.S. cattle herd at 86.373 million head as of Jan. 1, down 0.9% from year-ago. The beef cow herd is expected to drop another 0.7%. The 2024 calf crop is expected to decline another 1.5% to 33.089 million head, which would be the smallest since 1940. Analysts expect beef replacement heifers to rise 1.3%, a sign herd rebuilding has begun. Pre-report expectations would suggest the supply of feeders outside feedlots will continue to shrink throughout 2025. The following estimates are from Urner Barry.
| Cattle Inventory | Average estimate (% of year-ago) | Range of estimates (% of year-ago) |
| All cattle/calves on Jan. 1 | 99.1 | 98.4 – 99.5 |
| Cow/heifers that have calved | 99.6 | 99.4 – 99.8 |
| Beef cows | 99.3 | 99.0 – 99.6 |
| Dairy cows | 100.2 | 99.8 – 100.5 |
| Heifers 500 lbs.+ | 99.5 | 99.1 – 99.8 |
| Beef heifer replacements | 101.3 | 99.2 – 105.0 |
| Dairy heifer replacements | 100.6 | 100.1 – 101.6 |
| Other heifers | 98.2 | 95.1 – 99.6 |
| Steers 500 lbs.+ | 98.6 | 96.9 – 99.8 |
| Bulls 500 lbs.+ | 99.7 | 99.0 – 100.0 |
| All calves 500 lbs. and under | 98.1 | 96.4 – 99.0 |
| Calf crop (2024) | 98.5 | 97.9 – 99.0 |
Somber outlook for U.S. agriculture... The U.S. farm economy is facing one of its worst downturns in decades, according to projections from the Agricultural and Food Policy Center (AFPC) at Texas A&M University (link to Southern Ag Today article). In over 40 years of analysis, AFPC said it has never seen such widespread financial distress among representative farms growing feed grains, cotton, rice and wheat. Unlike past downturns, it notes, farmers have no viable alternative crops to switch to for profitability. With nearly all major row crops projected to be unprofitable through 2025-26, experts warn that enhanced farm safety net programs are urgently needed to prevent a long-term crisis.
Vought’s OMB nomination advances amid Democratic boycott... Russ Vought is a step closer to leading the Office of Management and Budget (OMB) again, as the Senate Budget Committee voted 11-0 along party lines to advance his nomination. The vote, made up entirely of Republicans, followed a Democratic boycott of the meeting. Vought’s confirmation now moves to the Senate floor.
Senate Ag Committee shuffles leadership... The Senate Ag Committee announced subcommittee leadership changes, with significant Democratic reshuffling under ranking member Sen. Amy Klobuchar (D-Minn.).
- Commodities, Risk Management, and Trade: Sen. Cory Booker (D-N.J.) replaces Sen. Tina Smith (D-Minn.) as ranking member.
- Rural Development: Sen. Joni Ernst (R-Iowa) takes over as chair from Sen. Tommy Tuberville (R-Ala.).
- Nutrition: Sen. Ben Ray Luján (D-N.M.) steps in as top Democrat, replacing Sen. John Fetterman (D-Pa.), while Sen. Mitch McConnell (R-Ky.) takes over as top Republican from Mike Braun (R-Ind.).
- Livestock, Dairy, Poultry, and Food Safety: Sen. Elissa Slotkin (D-Mich.) becomes the top Democrat, replacing Sen. Kirsten Gillibrand (D-N.Y.).
These subcommittee leaders will shape hearings and influence key aspects of the upcoming farm bill.
Trump targets spending power limits... The Trump administration is considering a legal challenge to the 1974 Impoundment Control Act, aiming to expand presidential control over federal spending, according to a confidential document obtained by Bloomberg. The plan suggests using executive orders and legal challenges to weaken congressional budget authority, citing separation of powers concerns. It also proposes expanding executive influence over independent agencies and federal employee compensation. The White House appears prepared for a legal battle as it seeks to assert greater control over fiscal decisions.
U.S. economy slows slightly in Q4 2024 but remains resilient... The U.S. economy grew at an annualized rate of 2.3% in the fourth quarter of 2024, a slowdown from the previous quarter’s 3.1% growth. This figure fell short of economists’ expectations of 2.5%. GDP grew 2.8% in 2024, slightly below the 2.9% growth in 2023, amid slower consumer spending, reduced investment and steady government spending.
Despite the deceleration, the economy remained resilient amid high interest rates and inflation concerns. The data aligns with the Federal Reserve’s goal of a “soft landing,” avoiding a recession while slowing growth to sustainable levels. Further GDP revisions in the coming months may refine this picture. Looking ahead, economists expect continued moderation in 2025.
CME Group to launch micro-sized grain, oilseed futures in late February... CME Group announced it will launch a suite of micro grain and oilseed futures contracts on Feb. 24, pending regulatory review. These contracts will be cash-settled and one-tenth the size of CME’s corn, wheat, soybean, soybean oil and soybean meal futures.
ECB further cuts interest rates... The European Central Bank lowered its key interest rates by 25 basis points, as expected, reducing the deposit facility rate to 2.75%, the main refinancing rate to 2.90% and the marginal lending rate to 3.15%. This was the fifth rate cut in the past six monetary policy meetings as concerns over lackluster economic growth supersede worries about persistent inflation.
ECB President Christine Lagarde said the central bank remains “confident” it will get inflation down to the 2% target this year. Regarding a neutral-rate stance, she said, “If you’re asking me today whether we should go below neutral rate in order to stimulate the economy, I cannot tell you that – that’s pretty obvious. We decide meeting by meeting on the basis of data, and we are not pre-committing to any particular pace. We are not at neutral rate. When we get closer to that, we will operate on the basis of a staff research paper, on the basis of the analysis provided by staff, and then that will help us determine how close we are and what our monetary policy stance should be.”