Written Commentary
GEOPOLITICS:
Over the weekend, the US government sent multiple planes to Columbia holding Colombian migrants who entered the United States illegally. Columbia immediately denied the flights and released a statement that they will not allow American planes carrying Colombian migrants into their territory. President Trump responded with a 25% tariff on all Colombian imports, told US importers to heavily inspect anything coming in from Columbia and said the tariffs would continue to increase each week that they didn’t comply. Later yesterday evening, Colombian President Gustavo Petro accepted all US military planes and even offered the US planes of their own for additional transportation of illegal migrants. It is obvious Trump will continue to set this strong arm tone putting America first.
MACROECONOMICS:
A Chinese startup, DeepSeek, was launched for free in December and claimed to have cost them $6 million to develop. NVIDIA stock is down 11% in pre-market trade, and it also is bringing into question the large investments the major American tech companies have been spending on AI models and data centers. They created a program faster and cheaper then Open AI’s Chat GPT model. Tech stocks broadly fell on the news.
AG FUNDAMENTALS:
Up to 15 % of the hard red winter wheat crop is in critical condition following the cold surge that engulfed most of the wheat belt. Chicago wheat added over 3000 call options to both their 560 and 600 strike price levels in anticipation of a drop in yield estimates. The cold weather hit early 40% of the total SRW wheat regions and over 60% of the HRW wheat regions in the US. The Market will be anticipating the US government’s next moves expected to be announced on Saturday February 1st regarding tariffs. The nations that Trump has already mentioned are: China (10%), Canada (25%), Mexico (25%), Russia (large sanctions and tariffs), and levies on EU trade. Mexico bought 139K MT of corn from the US this morning, but of the 620 million bushels of corn the US has sold to Mexico for this marketing year, just over 300 million of that has been delivered. Will they threaten to cancel contracts if a tariff is imposed on Saturday? China denying cargoes from 5 different ports in Brazil seems to be less of a market mover than initially thought. China’s Ag ministry mentioned the volumes were small and Brazilian officials are working to solve the quality issues. The effects of the recent hot/dry weather in Argentina and Brazil are starting to cause quality concerns and possibly could reverse some yield estimates below 220 MMT between the two countries.
Export & World News
US sold 139K MT of corn to Mexico this morning in a flash sale. Algeria is believed to have bought up to 35K MT of soymeal in an international tender.
Malaysian palm oil futures were basically unchanged, up 2 ringgit overnight, at 4218.
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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