Grain and livestock futures ended lower Thursday, with outside markets also selling off.
Jim McCormick, AgMarket.Net, says the markets saw risk off selling in response to President Trump’s Liberation Day tariff announcement and the fear of retaliation.
The president proposed 10% blanket tariffs on all countries starting April 5 with what he calls “reciprocal tariffs” on a long list of other trading partners starting on April 9.
Outside markets saw massive panic selling with the financial markets and crude oil down sharply.
In the grain markets, soybeans says the brunt of the selling pressure as China will now face additional tariffs of 34% on top of the 20% that was already in place and has threatened to retaliate.
China is still the top soybean exporter customer for the U.S. and McCormick says the market is fearful of another trade war like the one that played out in 2018.
Corn and wheat futures gapped lower on the open but put in a good performance, ending well off session lows according to McCormick, as those two products are USMCA compliant and are exempt from tariffs on Canada and Mexico.
He says this is good news as Mexico is a top customer for both commodities.
Despite tariffs slowing imports of beef into the U.S., cattle also ended sharply lower.
McCormick says the cattle market saw spillover from the sharply lower stock market and increased fears of global recession hurting protein demand.
“Tariffs are essentially a tax that will get paid by the consumer and that could hurt demand for many products including meat,” he explains.
Some light cash cattle trade surfaced at $335-$345 dressed and $213 live in the North and $208-$210 in the South.
Lean hog futures also got caught up in the selling with concerns about tariffs and possible recession.
That overshadowed a marketing year high for weekly pork exports at 53,000 MT and the fact that the top U.S. pork export customer, Mexico, would be exempt from tariffs.
How long will it take for the markets to price this in and go back to trading their own fundamentals?
McCormick says it may not happen until after the tariffs go into place on April 9 and the market sees which countries will apply counter measures.
After that the market may absorb the news quickly allow the grains to go back to trading weather and planting progress.
