GRAINS:
May corn closed down 4 3/4 cents and July corn was down 4 1/2 cents. May soybeans closed down 12 1/2 cents and July soybeans were down 12 cents. May KC wheat closed down 13 1/2 cents, May Chicago wheat was down 11 cents, May Minneapolis wheat was down 11 1/4 cents.
After months of speculation, President Trump's promised tariffs against Mexico, Canada, and China went into effect Tuesday, officially setting off the latest escalation in the spat between the U.S. and its three largest ag trading partners. The silver lining -- if there is one -- is that at least at this point the market has concrete policy to trade, rather than speculation. Canada and China were both quick to retaliate with tariffs of their own, with Canada announcing an immediate 25% tariff on $30 billion worth of U.S. goods as outlined in the early February release from the government. This list includes U.S. products such as fruits and vegetables, alcoholic beverages, and ag products such as wheat, canola, and other small grains. Meanwhile, retaliatory tariffs from China have targeted U.S. corn and wheat for a 15% tariff, with a 10% duty on U.S. soybeans, as well as beef and pork products. Mexican President Sheinbaum announced Mexico's action will be announced in a press conference on Sunday. Unsurprisingly, Tuesday's whirlwind had equity markets tumbling, as investors grow increasingly anxious of a potential economic slowdown.
LIVESTOCK:
The live cattle complex weathered today's chaos amid 25% tariffs being imposed on Mexico and Canada rather well. Is it because traders believe imported beef/cattle from the two countries will carry enough of a price penalty that packers could need more domestic supply? One can only speculate at this point. However, seeing the live cattle complex trade well following the pressure endured on Friday is relieving.
Although the live cattle contracts seem somewhat unphased through the chaotic trade details of today, the feeder cattle contracts are now traded lower right up to the closing bell before muddling their way into the green. And though buyer demand is strong in the countryside, this week's pressure is coming from technical factors, which seem to be the most relevant factors on traders' minds currently.
As fully expected, the lean hog complex is trading yet again substantially lower as traders attempt to grasp what retaliatory actions are going to come from Mexico specifically following this morning's 25% tariff that was invoked on Mexico and Canada. And until the trade chatter simmers, it's unlikely that much else will matter to market participants as this is the biggest line item for today, and potentially this week.
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