Grains and hogs see early pressure with cattle mixed.
Randy Martinson, Martinson Ag, says grain and hog markets opened lower reacting to President Trump announcing Thursday afternoon the U.S. would be moving ahead with 25% tariffs on Mexico and Canada on Feb. 1.
Trump did say that crude oil will be exempt from the tariff.
Canada has not responded at this point with what they will use as retaliatory tariffs, but Mexico has. Mexico will retaliate by imposing anywhere from a 5%, 10% to a 20% tariff on the following items: pork products, cheese, fruits, whiskey, potatoes, manufactured steel, and aluminum. So far Mexico will exempt the auto industry.
However, corn, soybeans, wheat and cattle were not on the lineup which is important because Mexico is the top customer for corn and wheat and a leading importer of U.S. soybeans and beef.
Corn and soybean markets are also watching South American weather with growing concerns about heat and dryness in Argentina and too much rain in central Brazil slowing soybean harvest and second crop corn planting.
The wheat market has been supported this week by fund short covering and concerns about the poor crop in Russia and their attempts to limit exports with quotas.
The markets may also be seeing some end of the month profit taking or positioning as the funds are long corn, soybeans, cattle and hogs, but short wheat.
Cattle are mixed despite sharply higher cash in the South at mostly $208, which was $6 to $7 higher than last week’s weighted averages.
Feeder cattle futures are seeing some support from ideas that when Mexican cattle finally start to come across the border they could be subject to a 25% tariff.
The market is also awaiting a bullish USDA Cattle Inventory Report which will confirm historically low herd numbers.
