AM Comments April 3 2025
Good morning. It has been 'red Thursday' across the commodity space overnight and to start this morning, with most every market, ag or otherwise, trading lower to sharply lower. President Trump's tariff announcements at the White House yesterday afternoon have sent fear and concern through most all sectors, which has created a clear risk-off environment to start Thursday. That being said, and despite chart gaps being made on the open for both corn and soybeans, it would appear by our digestion of yesterday's events that US ag largely avoided the worst case scenario, as Canada and Mexico were generally left alone when it came to the new trade measures. This remains an ongoing matter, and like we've said all week, will produce considerable increases in volatility that don't likely end with today's closing bell as retaliatory measures from other countries are now awaited. Corn futures to start Thursday are trading 6-8 cents lower, soybean futures are trading 20-22 cents lower, and the Chicago wheat market is down 9-10 cents. Products are lower, soybean meal is down $2-3/ton, and soybean oil is down around 1.10 cents/lb. Outside markets are seeing even more selling, with crude oil futures down $4+/bbl, the Dow Jones index down 1,200(!) points, and the US$ index down 210 points. The S&P500 is down 190 points, the NASDAQ is down 750 points, and gold futures are down $30/oz. On a percentage basis, crude oil has been hit the hardest, down more than 6%.
Today's Reports: Weekly Export Sales; Weekly Jobless Claims
- At a White House Rose Garden ceremony yesterday afternoon, President Trump unveiled his much-anticipated reciprocal tariff plan, which at the core, included a new 10% baseline tariff with all US trading partners, with some countries seeing this new duty start as high as 50%. Of note, China's rate was pegged at 34% (brings total to 54%), while the EU's rate was pegged at 20%; Canada and Mexico did not get new duties yesterday, other than separate measures that were applied to autos and steel/aluminum, but previous 25% duties applied will remain in place.
- According to White House officials, the baseline 10% tariff will go into effect on Saturday, April 5th, and will apply to roughly 60 countries in total; then, next week on April 9th, any additional levies above the 10% baseline will go into effect. Also of note, Trump yesterday signed an order to remove the 'de minimis' tariff exemption on low-cost products, which was enacted during his first round of trade measures shortly after he took office, but it is unclear this morning when that will go into effect.
- Reactions from around the world to this point have been somewhat muted, but leaders from the EU have announced that they plan to announce countermeasures in the days ahead, while China's Commerce Minister rebuked the new US measures and also pledged some form of retaliation. As is the case with most details surrounding this topic, it is unclear this morning when these countermeasures should be expected, what level they will be at, or what goods they will effect. Treasury Secretary Bessent told reports that if nations don't retaliate, this would be the high-water mark on the tariffs.
- This morning's weekly export sales report for the week ending March 27th is expected to show corn sales in the week in a range of 800k-1.6 mil mt's, soybean sales in a range of 250k-800k mt's, and wheat sales in a range of (100k)-300k mt's. New crop sales are estimated between 0-100k mt's for corn, 0-50k mt's for soybeans, and 0-200k mt's for wheat.
- USDA's ag attaché to Mexico on Wednesday said they see the country's soybean imports in the 2025/26 season increasing by 1% from this year due to increased crush demand on rising demand for veg oils and animal feeds. In a separate report, the USDA's attaché to India indicated wheat production here was expected to reach a new record for the third consecutive season at 115 mmt's on increases in planted area and optimal weather conditions so far.
- There was also some confusion on non-tariff related news coming out of the White House on Wednesday, as reports that Elon Musk, who has been heading DOGE since Trump took office in January, would soon be leaving that role were later dismissed by both Musk and President Trump, with Trump saying Musk would stay until the cost-cutting mission of DOGE was finished. The fact of the matter is that Musk is on a 130-day special government employee exemption that ends in May, while he has also made mention that the $1 trillion savings goal was already more or less within reach; DOGE is not a permanent agency, nor was it intended to be.
- In weather news, a majority of the central and eastern Corn Belt picked up good rains on Wednesday (though it came quicker than desired for some), with satellite data showing totals ranging from a couple tenths to an inch in the north, while the southern and eastern areas picked up a more general 1-2"; heaviest totals of 4-6" were seen in southwest TN, where forecasts still show an additional 6-9" possible between now and Monday night which is keeping the risk of flooding in place.
- Models have added in some light precip for the southern Midwest the back half of next week (Friday the 11th into Saturday) but otherwise, continue to show a generally drier pattern for the bulk of the country once this lingering low pressure system in the southeast makes its way out into the Atlantic early next week. There could be chances at minor disturbances through the Midwest into mid-April, but overall, ridging in the west that creates northwest flow should in general keep Midwest weather on the cooler/drier side. As the ridge expands east in another couple weeks though, warmer air will likely shift east with it.
- Still not a lot new to discuss with the South American forecast, as drier conditions continue to be a positive for harvest activities in Argentina and a negative for the developing safrinha corn crop in Brazil. Concern levels in Brazil are still relatively low at this point due to good soil moisture build-ups over the previous few months, but it remains that additional rainfall will be needed between now and when the crop is harvested in June/July to avoid potential yield loss.