BQC Afternoon Comments Feb 26.2025

Geopolitics:  The US Trade Representatives have proposed a $1.5 million charge for any Chinese vessel entering the US port to combat China’s increasing global trade dominance. Even other countries that only operate ships built by China would face fees. The fees range from $500K-1.5M depending on what percentage of the ship was built my Chinese manufacturers. The USTR is expecting to increase demand for US built ships. China has increased it’s global ship-building footprint from 5% in 1999 to over half of the ships built today. The US on the other hand has had a 90% decrease in their annual ships built since the 1970s.
Macroeconomics: NVIDIA Earnings are out this afternoon, expected around 3:00-3:20pm CST. it is the most anticipated and arguably one of the most important earning call this season. NVDA represents 6.5% of the S&P 500, 10.5% of the NASDAQ Composite and just over 20% of the S&P 500 Information Tech Index. Expectations are they will report $38.1 billion in revenue ($19.6B net income). That would mean revenue has grown 72% year-over-year and profit up 64% in that same time frame. Bears look at that and say even if they do hit those estimates today, it would be the lowest growth for the company since April 2023. 
Ag Fundamentals: Ethanol Stocks hit record high levels of 27.571 million barrels for week ending 2/21. Production was slightly lower than the week prior but at the top end of the 5-year range. Corn usage for ethanol and exports are both Export sales estimates, releasing tomorrow morning, are similar to last week and shown in the table below. Managed money has trimmed their corn length, but also covered some of their wheat shorts in the last couple weeks as the sidelines start to look more appealing. Canada and Mexico tariffs may be postponed to April, and new 25% tariffs on autos and other goods out of the EU are now in the conversation. These all still seem like ways for Trump to add leverage to negotiations. You can’t call a bluff without pushing your chips into the middle. President Trump also mentioned today that Zelensky will be in the White House on Friday to sign a “very big deal” which could move the wheat market. Logistics felt a breath of fresh air this week in the US as warmer weather allows for rail switches and outdoor personnel to operate more efficiently and the Ohio River has fallen below flood stages that decelerated river loading briefly.