GRAINS:
Following a weekend worth of speculation regarding how hard a potential trade war with Mexico, Canada and China would hit U.S. ag commodities, the actual event lasted less than one business day after both Mexico and Canada reached agreements with the U.S. administration to postpone tariffs for at least one month. The 10% tariff on China went into effect Tuesday, and China responded with tariffs of its own set to take effect on Feb. 10, albeit to a much more moderate degree than in 2018-19, mainly targeting energy inputs this time around. The “tariff trade” that had been developing Sunday evening and early Monday was quickly unwound Tuesday, with the U.S. Dollar Index lower and equity markets modestly higher. March corn closed up 5 3/4 cents and May corn was up 5 cents. March soybeans closed up 16 3/4 cents and May soybeans were up 15 1/4 cents. March KC wheat closed up 9 cents, March Chicago wheat was up 10 1/4 cents, March Minneapolis wheat was up 5 1/4 cents.
LIVESTOCK:
Live cattle futures started Tuesday morning with cautious optimism that the aggressive price tumble may have run its course. But despite the stability at opening bell, active selling pressure quickly and aggressively stepped back into the market, allowing for moderate to sharp losses through most of the day. Feeder cattle futures have added additional price pressure as the session continued Tuesday, although the initial indication was that market stability may be established following the aggressive price tumble Monday. But lack of underlying supportive buying activity just after opening bell allowed for additional gaps to develop. Lean hog futures rebounded Tuesday morning as traders retract most of Monday’s losses. Uncertainty remains about how overall trade will be impacted by all the tariff talk, but traders approached the hog market Tuesday in a much more calm fashion. Nearby contracts are still well below last week’s highs, but the fact that lean hog futures have not continued to adjust lower similar to moves in the cattle market is helping to create a slight sense of market stability.
