1.31.25 Tredas Recap
Weekly Action:
March25 Corn down 2 at $4.83
March25 Beans down 5 at $10.45
March25 KC Wheat up 22 at $5.81
March25 Hogs up 1.825 at $103.525
April25 Fats down 0.875 at $202.275
March25 Feeders down 1.40 at $276.375
Dec25 Corn up 1 at $4.61
Nov25 Beans up 8 at $10.52
July25 KC Wheat up 23 at $6.01
Tariff Talk:
President Trump planned to implement 25% tariffs on both Canada and Mexico this weekend citing the countries are not doing enough to impede illegal aliens and fentanyl from crossing our borders. Trump also notes the trade deficits we have with them. As of around noon on Friday it appears to now be delayed until March 1 as the parties negotiate a deal or terms of tariffs.
Let’s look at the trade relationship when it comes to agriculture between these three countries:
Mexico, Canada, and China are the three largest ag trade partners of the United States and account for more than 50% of all US ag exports.
Mexico $28 billion
Canada $26 billion
China $23 billion
Mexico is our number one corn buyer and the number one corn importer in the world. Of all the corn they buy from the U.S., 65% of it is shipped via rail. This is a problem for Mexico because their infrastructure is not set up to import all their corn needs via ports. It would be virtually impossible for them to do anything but continue to buy our corn regardless of any tariffs. In the last 25 years, an average of 1.15 million head of cattle have been imported from Mexico each year. These imports represent an average of 3.3 percent of the U.S. calf crop.
Canada is our number one ethanol buyer (700 million gallons annually). Canada exports 105 million bushels of wheat (durum) into US. The price of pasta domestically could rise, but we *could* source durum from other countries if needed. Over 40% of Canadian beef production is exported to the US while over 300,000 American feeder cattle are fed in Canada. Canada sells US $2.43 billion worth of beef products and $1.14 billion of pork products.
The US imports over 90% of its annual potash fertilizer, most of which comes from Canada. Nutrien, based in Saskatchewan, has not been taking US potash orders that would not be delivered by this weekend to avoid any uncertainty once tariffs are implemented. Some in the industry think tariffs will add at least $25/ton.
One odd thing to note, the Ontario Premier has already began pulling American alcohol off the shelfs. This may sounds trivial, but Canada is our second largest buyer of American distilled spirits.
Mexico plans to retaliate with action on pork products, cheese, apples, grapes, potatoes, and whiskey. Manufactured steel and aluminum. The automotive industry is reportedly exempt for now.
USDA will release the monthly Oilseeds Crushings report on Monday. The average trade estimate of U.S. crush in December is 217.6 million bushels. If realized, it would be an all-time monthly record (of any month) and 6.5% above December 2023.
Wheat has the tightest major exporter balance sheet since 2007/08. The majority of these stocks are sitting in the US.
Farmland values have lowered the 7th time in the last 8 months and farm equipment sales dropped for the 17th straight month, according to Creighton University’s Rural Mainstreet Report. On average, farm loan delinquency rates have risen 1.2% over the past six months.
Weather:
Needed rainfall is expected next week in key areas of Argentina. Brazilian soybean harvest has been slowed by slow maturing plants but should have favorable harvest weather after next week.
The Plains will remain dry to start February.
Economy:
This week, The FED decided to leave interest rates unchanged for the time being between 4.25-4.5% (much to the ire of Trump). FED Chair Jerome Powell said inflation and jobs data justified this decision. Despite 1.0% reduction in rates by the FED since September, the average 30-year mortgage rate has increased 1.1% as investors see inflation as a bigger issue/problem than the Federal Reserve.
Across the pond, the European Central Bank cut interest rates and kept more easing on the table. This is the fifth ECB cut since June. The ECB is now paying 2.75% on deposits. The Bank of England is also likely to reduce rates next week. The BoE is expected to lower rates from 5.0% to 4.75%. European GDP last quarter was just 0.9% vs America’s +2.3%.
The FED’s preferred measure of inflation (Core PCE) remained at 2.8% in December. Their stated goal is still to get to and maintain PCE at 2.0%. The market does not expect the FED to change rates at their next meeting in March.
UPS forecasted 2025 revenue below expectations as it takes measures to lower exposure to their largest customer, Amazon. UPS said Americans are now more commonly opting for cheaper and slower ground-based deliveries. They reached an agreement to lower Amazon usage 50% by the end of the year.
Apple Q1 revenue is forecast to be $124.3 billion compared to 2022 Q1 revenue of $123.9 billion. This is 0.3% growth over three years while inflation has been ~15%. iPhone sales are down year over year and are now flat for the last decade.
US Auto Insurance rates have increased by 93% over the last decade, compared to the 34% increase in overall consumer prices.
In 2024, only 67% of 8th graders scored at a basic or better reading level, which is the lowest since testing began in 1992.
Something That Probably Means Nothing:
We’ve got three STPMN this week!
Americans spent over $113 billion on lottery tickets last year. This is more than we spent on movies, books, concerts, and sporting events *combined*.
Nebraska volleyball announced they are adding about 1,500 seats to the Devaney Center. Athletic Director Troy Dannen said only 40 season ticket holders did not renew their tickets for next season. He said someone donated $125,000 but didn’t have enough priority points to secure season tickets.
The U.S. leads the world in antidepressant users per 1,000 people.
Quote of the Week:
“I’ll give you a prediction: It’s gonna be cold, it’s gonna be grey, and it’s gonna last you the rest of your life.” – Bill Murry in Groundhog Day
Groundhog day is Sunday. If Punxsatawney Phil sees his shadow, it’s a sign winter will last six more weeks. If he doesn’t, it is a sign spring is on the way.
Enjoy your weekend!
