Written Commentary
GEOPOLITICS:
Scott Bessent was confirmed yesterday as the new US Treasury Secretary. Bessent has expressed he is not on the same page as Trump on tariffs. Bessent would like to enact an universal 2.5% tariff and gradually increase as needed over time. This would soften the blow and allow time for US companies, foreign companies, and other countries react and adjust business decisions as more policy unfolds. Canada’s former finance minister Chrystia Freeland is in the running to replace Justin Trudeau as Canada’s Prime minister. She said yesterday that Canada needs to come up with a “retaliation list” in response to any tariffs Trump puts on Canadian goods. So far the contents of that list is unknown, but she did mention: Florida oranges, Wisconsin dairy, and Michigan dishwashers.
AG FUNDAMENTALS:
As the market waits for the US government’s plan on global trade policies coming out on Feb 1st (or later), many are looking for a sound voice in the crowd. The Funds are long over 300K contract of corn. During the 20/21 and 21/22 crop years the funds also increased their position to over 300K contracts of corn. Both crop years they held their length over 300K until the mid May. The corn price in those time frames rallied through March and peaked in April/May. Argentina made cuts to crop exports recently and they will last now through the end of June. The Argentina government cut taxes on beans from 33% to 26% and soybean oil/meal from 31% to 24.5%. Expectations are that this will spark selling from the farmers and could bring 10 million MT to the market quickly.
Export & World News
The USDA reported private sales of 132K MT of corn to be delivered to South Korea. Bangladesh is looking to purchase up to 50K MT of rice in an international tender. Japan and Jordan have both showed interest in buying wheat and Barley in the international market.
Malaysian palm oil futures were up 61 ringgit overnight, at 4279. Malaysia markets will be closed tomorrow and Thursday on Holiday.
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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