Good morning!
Grains firmer overnight... Corn futures extended their recent corrective gains overnight, while soybeans and wheat rebounded. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents higher, soybeans are 7 to 8 cents higher, winter wheat markets are unchanged to a penny higher and spring wheat is around 3 cents higher. The U.S. dollar index is trading just below unchanged and front-month crude oil futures are around 50 cents lower.
U.S. formally opens tariff probe into Brazil... The Trump administration has launched a formal Section 301 investigation into Brazil’s trade practices, raising the threat of sweeping new tariffs and intensifying bilateral tensions. The probe, targets Brazil’s regulatory actions against American tech firms and broader policies that Washington says discriminate against U.S. companies and products. The investigation will examine a wide array of Brazilian measures, including: digital trade restrictions, ethanol market access, intellectual property enforcement, judicial interference, tariff and non-tariff barriers and environmental policies. President Donald Trump announced the U.S. will impose a 50% tariff on all Brazilian imports starting Aug. 1, up from the prior 10%. The 50% tariff will severely impact key Brazilian sectors — beef, orange juice, coffee, steel, and drone components. The investigation could last several months and includes a public comment period. If Brazil is found to be harming U.S. commerce, the USTR could impose long-term tariffs or restrictions. Observers say further escalation is possible if no negotiated solution is reached.
Carney signals tariffs likely to stay, trade talks with U.S. to intensify... Canadian Prime Minister Mark Carney said Tuesday that while trade negotiations with the U.S. are expected to “intensify,” there’s little indication that President Trump is prepared to lift sweeping tariffs. Carney underscored his focus on Canada’s industrial base, saying a strong economy “includes a strong steel industry… auto industry… aluminum industry, and copper industry.” The White House has said the threatened tariffs would not apply to USMCA-exempt goods, though Trump has increasingly sidestepped the accord with unilateral import taxes.
Mexico pledges ‘other actions’ if no deal with United States... Mexican President Claudia Sheinbaum on Tuesday said Mexico will take action if an agreement with Washington regarding new tariffs is not reached by the Aug. 1 deadline set by Trump. “We hope to reach an agreement ... if an agreement is not reached on Aug. 1, we will be informing of other actions,” said Sheinbaum. She also hopes to announce measures next week in conjunction with tomato producers related to Washington’s announcement on Monday that it will begin charging a duty of 17.09% on imports of fresh tomatoes from Mexico. “We think we can reach a deal. But we have to prepare for every scenario... We have to have alternatives,” Sheibaum said.
Trump cuts Indonesia tariff to 19% in new deal... The Trump administration finalized a trade agreement with Indonesia, reducing the proposed tariff rate from 32% to 19% in exchange for $15 billion in U.S. energy purchases, $4.5 billion in agricultural imports, and an order for 50 Boeing jets. Trump also signaled that countries not negotiating tailored rates — mostly smaller U.S. trading partners — would likely face a flat tariff of “probably a little over 10%.” Commerce Secretary Howard Lutnick said the nations with goods being taxed at these rates would be in Africa and the Caribbean — places that generally do relatively modest levels of trade with the U.S.
French wheat exports to more than double... In its first outlook for the 2025-26 season, France’s ag ministry forecasts French wheat exports outside the EU will jump 114% from last year’s historic low of 3.25 MMT to 7.5 MMT. French wheat exports within the bloc are forecast at 6.72 MMT, down 0.5% from 2024-25.
Australia nears breakthrough canola deal with China... Australia is close to an agreement with Beijing that would allow suppliers to ship five trial canola cargoes to China, sources familiar with the matter told Reuters. Chinese and Australian officials are finalizing a framework deal to address Beijing’s phytosanitary requirements aimed at preventing the spread of blackleg disease, according to two Australian ag industry sources briefed on the negotiations. China, the world’s largest canola importer, sources nearly all of its imports from Canada but those supplies could be limited by an anti-dumping probe Beijing is conducting. Australia, the second-largest canola exporter, has been shut out of the Chinese market since 2020.
IATA criticizes EU’s SAF mandate... The International Air Transport Association (IATA) stepped up criticism of the European Union’s sustainable aviation fuel (SAF) mandate as a costly initiative that is not helping the environment as regional supplies remain low. IATA estimated in June that production of SAF, which is considered a low-carbon replacement for traditional jet fuel, is expected to reach 2 MMT, or 0.7% of airlines’ fuel consumption, in 2025. Under the ReFuelEU Aviation requirement, airlines need to have a 6% SAF blend in their jet fuel usage by 2030. “Mandating the use of a product that isn’t available doesn’t lead to any environmental benefit,” the head of IATA said, adding that fuel companies that have an obligation to produce SAF are also increasing the cost of traditional jet fuel. By IATA’s assessment, he said “the cost that they’re charging is way in excess of the actual cost of the limited supplies of sustainable fuel.”
Raizen shuts historic sugar mill to cut debt... Raizen SA, the world’s largest sugar producer, said it was shutting down for an indefinite period one of its largest plants in Brazil, the Santa Elisa mill, to help manage its 30 billion reais ($5.41 billion) debt. The company will sell 3.5 MMT of sugarcane to six firms, raising 1.045 billion reais ($188 million). The 90-year-old plant was key to Brazil’s ethanol program. Industry group CEISE Br warned the shutdown could disrupt equipment and service contracts. Raizen is also selling other assets as sugar prices hit a four-year low.
Texas braces for screwworm threat... Texas and federal officials are ramping up screwworm monitoring efforts as outbreaks in Mexico inch closer to the U.S. border, threatening the state’s $15 billion cattle industry. USDA and state labs, in partnership with Texas A&M, are deploying a five-point defense plan that includes border inspections, sterile fly releases and major facility upgrades. At a House Agriculture subcommittee hearing, lawmakers warned that a Texas infestation could cause up to $4.3 billion in producer losses annually, a total economic loss of over $10 billion and disrupt the national food supply.
Brazil beef exports to U.S. ‘under analysis’ after tariffs... Brazilian meatpackers are weighing whether to make new shipments of beef products to the U.S. after President Donald Trump announced a 50% tariff on Brazil last week, the president of Brazilian beef lobby ABIEC, said. Since Trump’s announcement, meatpackers have been scrambling to reschedule and redirect shipments and production, with some companies already deciding to temporarily halt production destined for the United States.
Cash hog index remains choppy... Since halting a pullback from the seasonal high, the CME lean hog index has alternated “up” and “down” days. The latest quote is down 6 cents to $107.19 as of July 14. August lean hog futures, which are now the lead-month contract, finished Tuesday at a $3.265 discount to today’s quote.
Overnight demand news... Taiwan purchased 89,650 MT of U.S. milling wheat. Jordan tendered to buy up to 120,000 MT of optional origin milling wheat. Thailand tendered to buy 60,000 MT of optional origin feed wheat.
Today’s reports
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Agricultural Chemical Usage - Vegetables — NASS
- 2:00 p.m. Catfish Production — NASS