BQC Afternoon Comments Mar 6.2025

Geopolitics: President Trump signed an executive order this afternoon that adjusted the list of goods included in the 25% tariffs established Tuesday to comply with the US-Mexico-Canada-Agreement. Steel and aluminum tariffs will not be modified and may begin next week, and the automobile tariffs are still expected to take effect on April 2nd. About half of Mexican imports are covered in the USMCA and 38% of Canadian imports. Nothing has changed regarding Trump’s plan to apply reciprocal tariffs on April 2nd as well. 
Macroeconomics: Interest rates have taken on a new tone since the beginning of the year. In the last 4 weeks, the odds of the fed cutting interest rates has increased. Jerome Powell, the head of the Fed, is expected to speak tomorrow about the state of the economy and the market will be paying close attention to his tone. A month ago, many said we may not see another rate cut until December, but now it is likely we see a cut in June and possibly a 2nd 25 basis point cut in July as well. To fed official, Waller said this afternoon he expects 2 more rate cuts this year.
Ag Fundamentals: Row crop continue to recover from the lows established on Tuesday. Corn held the 100-day moving average support in this afternoon’s close. The Census report for January 2025 reported corn at 243 million bushels, beans at 191.5 million bushels, and wheat at 49 million bushels. This was the highest Jan corn export number in the last 5 years, the lowest soybean export census in 6 years and the lowest January wheat export number in over 25 years of data. Next week’s WASDE report will be released on Tuesday March 11th at 11:00am CST. Corn supply is expected to tighten, with US corn ending stocks looking to drop -17 million bushels from 1.54 billion bushels to 1.523 Bil bu. US soybean stocks are expected to remain flat to slightly higher with average estimates increasing bean stock +1 million bushels to 381M bu. US wheat stocks also expected to remain flat to slightly higher with average estimates increasing wheat stocks +2 million bushels to 796M bu.
Weather: The updated drought monitor did not have any good news this week. 60% of US land used for corn production is affected by drought, 61% of durum wheat-growing areas, and 50% of soybean production areas are also experiencing dryer than normal weather. Snow is expected to drop a couple inches in northern Nebraska and central Iowa tomorrow which may help those more concerning areas.