Written Commentary
OPENING COMMENTS
GEOPOLITICS:
President Trump is expected to sign an executive order today to impose a 10% tariff on Chinese imports. China and their President Xi have chirped back by saying they will retaliate with a 15% tariff on US coal, liquefied natural gas, a 10% tariff on crude oil, agriculture machinery, and pickup trucks. Trump and Xi are expected to speak in the next couple days. I believe this one sticks if he signs the order today. It is difficult to unwind these tariffs once they are in place, and I imagine Trump wouldn’t want to show weakness. Both Mexico and Canada decided to work with the US and send appropriate enforcement to both he northern and southern US boarders. Their 25% tariffs have been postponed for one month.
AG FUNDAMENTALS:
Brazil’s central banks raised interest rates from 12.25% to 13.25%. The Real peaked on December 18th at levels around 6.30 and has has a losing streak since to 5.80. In the last 10 years, Brazilian farmers have experienced much different commodity prices than the US Farmer. Their values have increased over 100% while here in the US, we have seen a fraction of that. The Real pulling back in the last month has given the US a more competitive edge in the global marketplace. South Korea has bought 4.85M bushels of corn this morning in a flash sale. US export traders are hoping to see the negotiations between China and the US lead to similar ultimatums like the minimum $30-40 billion worth of US soybeans we saw in the last trade war. All of these announcements has created volatility in the agriculture space which tends to bring in outside money, which adds to the volatility. Aside from the ongoing negotiations, the next focus will be on the USDA’s February WASDE report coming out one week from today. Expectations are that they will raise soybean production in Brazil and possibly lower production in Argentina. The report comes out one day before the full moon so it could get interesting, if you trade off moon phases.
Brazil’s Central Bank raised interest rates from 12.25% to 13.25% on Wednesday last week. The Brazilian Real reacted lower to the news. They actually have a goal to reach 3% by 2026, but i doubt that happens.
The Brazilian Real has been bailing out the Brazilian farmer for the last 10 years now.
Canada’s Population is most concentrated east of Michigan and north of Montana.
EXPORT & WORLD NEWS
South Korea bought 132K Mt of corn from the US this morning in a USDA flash sale.
Malaysian palm oil futures were down 59 ringgit overnight, at 4308.
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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