By Kirk Maltais
--Corn for March delivery fell 1.2%, to $4.84 a bushel, on the Chicago Board of Trade on Wednesday, falling back from recent strength on news of Trump making new threats to apply tariffs to Chinese shipments to the U.S., expected to then spark retaliatory countermeasures.
--Soybeans for March delivery fell 1%, to $10.56 3/4 a bushel.
--Wheat for March delivery fell 0.9%, to $5.53 3/4 a bushel.
HIGHLIGHTS
New Day, New Threats: A sigh of relief felt across markets Tuesday after President Trump didn't include new tariff actions in his wave of executive orders was short-lived, as Trump on Wednesday added to the list of countries he may target with such actions. Trump said Tuesday evening that he was considering a 10% tariff on imports from China starting Feb. 1, unless Beijing cooperates in stopping the flow of fentanyl into the U.S. That is on top of the 25% tariffs on goods from Mexico and Canada, and also mentioned tariffs on the EU. Today, Trump used tariffs as a threat to compel Russia to make peace in its conflict with Ukraine.
Explaining the Edge: U.S. agriculture market is expected to be one of the main industries to be hit by the economic fallout of new tariffs, provoking differing reactions among market participants today. Traders are re-acclimating with the way Trump handles global trade, said Jason Britt of Central States Commodities. "We've had four years. We're going to have to dust off our Trump playbook," he said. Britt adds that the comments are indicative of Trump's typical method of dealmaking, in which he starts with a bigger threat and uses it as leverage to negotiate. "Trump has a history of floating trial balloons and seeing how they react," he said.
INSIGHT
A Beacon of Light: Prices for U.S. corn had a tough 2024, but appear to be rebounding ahead of the next planting season for U.S. farmers. Many farmers lost money on their planted corn acres last year, resulting in a drop in farm incomes despite nearly record-high production and yields for corn and soybeans. The same is expected for grains in 2025, according to estimates published by universities and trade groups ahead of the spring season. But prices for farm commodities remain flat, although corn has had a high production year in the U.S. in 2024. That is because threats of tariffs are making these futures less attractive.
Applying the Brakes: Lower margins for ethanol production are making it less attractive for producers to make ethanol, which analysts surveyed by The Wall Street Journal this week expect means that average daily production shrank in Thursday's report from the EIA. Surveyed analysts forecast that average daily production landed anywhere from 1.074 million barrels a day to 1.097 million barrels a day. By comparison, last week's average daily production landed at 1.095 million barrels a day.
AHEAD
--The EIA will release its weekly ethanol production and stocks report at noon ET Thursday.
--The USDA will release its weekly export sales report at 8:30 a.m. ET Friday.
--The USDA will release its monthly Cattle on Feed report at 3 p.m. ET Friday.
--The USDA will release its monthly Cold Storage report at 3 p.m. ET Friday.
--The CFTC will release its weekly Commitment of Traders report at 3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
01-22-25 1605ET