Weekly Market Update 1/23/2025

Here is your weekly market update from the Garden City Co-op Grain Origination Team.

Trivia

1.  What year was the DVD invented?

2. Who patented a steam engine that produced continuous rotary motion?

Answers at the bottom.

Market New
 

TRUMP’S TRADE VISION: On Monday, President Donald Trump announced a memorandum for federal agencies to study trade policies and evaluate U.S. trade relationships, particularly with China, Canada, and Mexico. While concerns about new tariffs arose, the memo does not impose them, offering temporary relief. It instructs agencies to address trade deficits, assess China's compliance with its 2020 trade agreement, and prepare for the USMCA review in 2026. A senior adviser called the memo a measured approach to Trump's trade agenda. Federal agencies will focus on trade deficits, unfair practices, currency manipulation, counterfeit goods, and exemptions for goods under $800. The incoming administration will also review Section 232 tariffs on steel and aluminum, which Biden has maintained since 2018. Some advisers suggest selective tariffs, while others advocate for a national emergency declaration to raise tariffs significantly. The memo highlights potential tensions with China regarding its compliance with the "Phase One" trade deal, especially U.S. agricultural purchases. The memo includes a review of China's compliance and informs Canada and Mexico about the upcoming NAFTA review. It also requests agencies to assess the feasibility of establishing an "External Revenue Service," a new federal agency proposed by Trump to collect tariff revenue. The specifics of how this agency would differ from U.S. Customs and Border Protection, which has managed this responsibility for decades, are still unclear. Additionally, Trump plans to take other actions, including declaring a national emergency at the U.S.-Mexico border and lifting restrictions on drilling.

BEANS OUTLOOK: The soybean balance sheet for the 2025-26 marketing year considers various factors. While uncertainties remain about planted acreage, it is evident that farmers intend to shift some land from soybeans to corn in the coming year. Decisions will depend on factors like prices and weather conditions, with corn seed sales in the Midwest significantly outpacing soybean sales. Key issues include crush rates and exports. The balance sheet forecasts a crush increase to 2.530 billion bushels, driven by greater demand for soy oil in biodiesel and renewable fuels. However, this is uncertain as the implementation of the Biden Administration’s 45Z guidance for liquid biofuels is now dependent on the Trump Administration. The 45Z guidelines are tied to the Inflation Reduction Act, and it is unclear if they will be adopted or modified, creating risks for processors who may face losses if production exceeds mandated levels. Regarding exports, South American soybeans are expected to be much cheaper for China to import than U.S. soybeans, largely due to currency exchange rates, whenever supplies are available. Brazil's soybean crop is nearing completion, with projections of around 170 million metric tons, but there remains considerable uncertainty regarding the range of possibilities for Argentina's crop. This will significantly influence U.S. export dynamics. exports as the residual supplier, unless we see a trade deal with China that mandates import levels - a yet unknown variable. We can discuss 2025 Midwest weather risks at a later date.
 
SOUTH AMERICAN WEATHER: The trade continues to keep a sharp eye on our southern neighbor’s weather. Argentina is facing ongoing dryness in parts of the country, but there is a rain chance moving into key growing areas in the coming days. The 6-10 day forecasts move the chances back to far north and northwest with most areas missing out. Meanwhile, moisture in northern Brazil has kept their harvest slow and delayed the planting of the safrihna corn crop. Rain looks to be widespread into the weekend and early next week, but shift south in the extended forecast. This should aid some of the drier areas there, with mild temps to boot. Right now, analysts are expecting that shortfalls in Argentina will be offset by gains in Brazil. Brazil is currently on track to have a record soybean harvest.

EXPORT INSPECTIONS: Wheat inspections for exports totaled 9.6 million bushels this week, a decrease from last week’s values at 11.9 million bushels. Of the total quantity of wheat bushels inspected for exports, 1.8 million bushels are set for exports to Mexico, 1.7 million bushels to South Korea, 1.3 million bushels to the Japan, and 0.9 million bushels to Taiwan. Corn export inspections were reported at 60.7 million bushels. Total corn inspections this week are 20.4 million bushels above the running 10-week average calculated by the USDA. A total of 35.8 million bushels of soybeans were inspected for exports this week. Of the total 35.8 million bushels inspected, 18.2 million bushels are destined for export markets in China, followed by 3.3 million bushels to Mexico, 2.6 million bushels to Italy, 2.5 million bushels to Egypt, and 2.2 million bushels to Germany. A total of 0.4 million bushels were inspected for exports, as of reported totals the week of 1/16/202, with those bushels destined for export markets in Sudan.

EXPORT SALES: No export sales report this week with the holiday to start the week.



WEATHER: Cold temperatures bring a chance of flurries with them this afternoon but the remainder of the day remains partly sunny, with a high temperature near 35°F. Skies overnight are mostly clear with a low temperature around 12°F and wind chill values possible as low as zero. Friday appears to be a bit warmer with sunny skies and a high temperature of 49°F. Throughout the early morning hours, wind chill values as low as 1°F are expected. Overnight, skies are looking partly cloudy with an evening low around 19°F. The weekend forecast presents itself with mostly cloudy and mostly sunny skies, Saturday and Sunday, respectively, with the high at 37°F both days. Evening temperatures dip to around 16°F throughout the overnight hours. The first half of next week seems like temperatures might be making a positive upward trend, with sunny skies predicted Monday and Tuesday, and temperatures in the low- to mid-50s. Overnight hours will be mostly clear to partly cloudy, with a low overnight temperature right around 22°F. Wednesday presents the area with a 20% chance of rain, with partly sunny skies and a high temperature of 47°F.

Trivia Answers

1. 1995

2. James Watt