Written Commentary
OPENING COMMENTS
MACROECONOMICS:
Tensions between the US and our neighboring countries has been brought to light following President Trumps announcement of 25% tariffs on all goods originating from both Mexico and Canada. The tariffs are set to be implemented tomorrow so there is some time to negotiate. Canadian marketplaces were posting Canadian flags and patriotic stances on which goods consumers should buy to support Canada first. You even saw Canadians booing the US national anthem during a Ottawa Senators and Minnesota Wild hockey game on Saturday. British Columbia’s premier announced that the province would take alcohol produced in red states off the shelves. Justin Trudeau responded with 25% tariffs on $106 billion worth of US goods. Mexico has vowed to retaliate with their own tariffs on US goods, but have not shared details. Canada is our number 1 trade partner for ethanol, biodiesel, and prepared goods. Mexico is the our number one trade partner for corn, wheat, pork, poultry, dairy, distillers gains, and sugar. In addition to the tariff announcement, Trump also flipped his script on the Fed’s decision to hold off cutting rates further last week. This is in contrast to his previous remarks at the World Economic Forum on January 23rd, and this could also be a part of the reason we saw a drop in higher risk assets. In addition to focus around monetary and trade policies, the US government has sent thousands of government employees notices of their plan to clean house and cut jobs. In the Ag space you saw Cargill cut 5% of their workforce (8K jobs), and now Reuters has reported that ADM is expected to announce job cuts following their earnings call tomorrow.
AG FUNDAMENTALS:
The first month of 2025 offered farmers opportunity to sell another 15-20% of their old crop corn and beans. Estimates suggest the US producer is about 70% sold for both corn and beans. Gulf exporters are long due to the last month of producer selling. China has been absent of global trade in the last few days due to their new year holiday, but they return today with alot to digest. Expectations are China will also retaliate against the 10% tariffs; China being our number one importer of soybeans. The dollar’s strength moving forward into these global trade negotiations has grown increasingly important. The Dollar is up to 109’10 this morning following the weekend announcement.
WEATHER:
Argentina will see showers in their major growing areas today through Wednesday. Central Brazil is seeing both soybean harvest delays and second corn plantings delays due to heavy rains over the weekend. The US is beginning to feel concern over the north central region’s lack of rain since August. Drought discussions are being thrown around.
EXPORT & WORLD NEWS
Iran is in the market to buy up to 120K MT of corn, 120K MT to barley, and 60K MT of soybean meal.
Malaysian palm oil futures were up 78 ringgit overnight, at 4367.
Daily Trading Limits: Corn $0.30 (expanded $0.45); Soybeans $0.85 (expanded $1.30); Minneapolis Wheat $0.60 (expanded $0.90); KC Wheat $0.40 (expanded $0.60); Chicago Wheat $0.40 (expanded $0.60)
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