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Your Pro Farmer newsletter is now available... President Trump’s 25% tariffs on Mexico and Canada go into effect on March 4, along with an additional 10% duty on Chinese imports on top of existing measures. Confirmation of the tariffs roiled markets, though negotiations are ongoing. USDA widened its forecast for ag trade red ink in fiscal year 2025, building on what was already expected to be a record deficit. USDA’s initial look at the 2025-26 balance sheets grabbed traders’ attention, though a lot will change before the end of the 2025-26 marketing year. Acreage forecasts are the most useful at this time. USDA’s Ag Outlook Forum also included discussions on other key agricultural topics. Meanwhile, the Trump administration issued a five-point plan to combat the highly pathogenic avian influenza outbreak and surging egg prices. We cover all of these items and much more in this week’s newsletter, which you can access here.
USDA’s Ag Outlook Forum: Industry focus remains on ag despite Trump tariffs... Those attending USDA’s 101st Agricultural Outlook Forum Thursday and Friday kept their focus on the industry even as the disruptions in Washington and across the country continued to come from the Trump administration. Aside from USDA’s commodity outlooks, which we covered early Thursday morning, key topics included trade challenges and opportunities for U.S. ag, biofuels policy and the Trump effect on USDA staffers and potentially on reports/data. Click here for more details.
Mexico open to new tariffs on China to avoid trump duties... Mexico is willing to raise tariffs on Chinese goods and find ways to buy more from the U.S. in a bid to avoid duties threatened by President Donald Trump, people familiar with the matter told Bloomberg.
Mexican President Claudia Sheinbaum’s administration plans to make the offer as part of ongoing talks with the Trump administration, one of the people said. Mexico’s potential China tariffs would focus on cars and auto parts, the person said. They could also include finished goods, a second person said.
Mexico’s bid is the latest effort to avoid 25% tariffs, slated to kick in March 4.
Bloomberg also reported U.S./Mexico talks on border security and counter-narcotics are further advanced than on trade and tariffs, citing two other people familiar with the discussions.
Trump, Zelenskyy fail to sign minerals deal after spat... Plans to sign a critical minerals deal between the U.S. and Ukraine were scrapped after a meeting between President Donald Trump and Ukrainian leader Volodymyr Zelenskyy turned into a heated exchange. Zelenskyy had doubts Trump’s efforts to broker a deal with Russia would yield lasting peace. Trump told Zelenskyy he was “gambling with World War III” by not accepting the U.S. offer to bring a peace agreement. Trump and Zelenskyy were scheduled to hold a news conference this afternoon, which was also canceled.
Trump wrote on social media, “We had a very meaningful meeting in the White House today. Much was learned that could never be understood without conversation under such fire and pressure. It’s amazing what comes out through emotion, and I have determined that President Zelenskyy is not ready for Peace if America is involved, because he feels our involvement gives him a big advantage in negotiations. I don’t want advantage, I want PEACE. He disrespected the United States of America in its cherished Oval Office. He can come back when he is ready for Peace.”
Fed’s inflation gauge falls to 7-month low... The personal consumption expenditures (PCE) price index rose 0.3% on a monthly basis and 2.5% annually during January. Core PCE, which excludes food and energy costs and is the Fed’s preferred inflation gauge, increased 0.3% from December and 2.6% from year-ago — the lowest since June 2024.
Meanwhile, U.S. consumer spending unexpectedly fell in January. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, dropped 0.2% last month after an upwardly revised 0.8% increase in December. January’s weak consumer spending likely reflected the fading lift from front-running as well as a drag from unseasonably cold weather and snowstorms across large parts of the country. Wildfires in California also likely hurt spending.
U.S. trade deficit reaches record level... The U.S. trade deficit in goods widened to a record $153.3 billion in January, exceeding market expectations of $114.7 billion and rising from a revised $122.0 billion for the previous month. Imports surged 11.9% to $325.4 billion, driven primarily by sharp increases in purchases of industrial supplies, consumer goods and capital goods. Meanwhile, exports rose 2% to $172.2 billion, boosted by higher sales of capital goods and consumer goods.
Soyoil use for biofuels declines in December... Soybean oil used to produce biofuels in the U.S. declined to 1.097 billion lbs. in December, down from 1.192 billion lbs. the previous month, according to the Energy Information Administration. Usage declined 3.9% from December 2023. Biofuel usage included 697 million lbs. by biodiesel plants and 400 million lbs. by renewable diesel facilities. Usage for biodiesel plants dropped 25 million lbs. while renewable diesel plants used 67 million lbs. less soyoil than during November.
For 2024, soyoil use for biofuels totaled 13.237 billion lbs., up 194 million lbs. (1.5%) from the previous year. Usage by biodiesel plants totaled 7.376 billion lbs., up 46 million lbs. (0.6%). Renewable diesel plants used 5.861 billion lbs. of soyoil, up 149 million lbs. (2.6%).
China will take steps to avoid big grain price fluctuations... China will strengthen regulation of grain purchase and storage to prevent drastic fluctuations in grain prices, said the head of the National Food and Strategic Reserves Administration. The expected actions were conveyed to representatives from 10 private Chinese grain enterprises who shared challenges the grain sector faces at a symposium.
Trump backs full-year stopgap spending bill amid GOP infighting... Signs are pointing toward a full-year government funding patch as Congress approaches the March 14 shutdown deadline without a deal. President Donald Trump endorsed a temporary funding bill through September, following a White House meeting with House Speaker Mike Johnson (R-La.) and Senate Majority Leader John Thune (R-S.D.). GOP leaders have tasked Senate Appropriations Chair Susan Collins (R-Maine) with drafting a stopgap measure, though its fate remains uncertain.
Of note: Collins and Sen. Patty Murray (D-Wash.) both oppose a year-long continuing resolution (CR), arguing it would be harmful, particularly for the Defense Department. While Republican appropriators are drafting a long-term CR, negotiations with Democrats are ongoing. The White House has submitted its requested exceptions (anomalies) for inclusion. Despite concerns, both Collins and Murray recognize the need for a short-term CR to extend funding past the March 14 deadline as talks continue.