Good morning!
Grains firmer overnight... Corn, soybeans and wheat firmed amid bargain buying during the overnight session. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 2 to 3 cents higher and wheat futures are 7 to 10 cents higher. The U.S. dollar index is nearly 500 points lower and front-month crude oil futures are about 50 cents lower.
Trump pushes Asia to import more U.S. ag goods amid tariff tensions... The Trump administration is intensifying efforts to boost U.S. agricultural exports to Asia, pressing countries like Japan, South Korea, India and Thailand to lower tariffs and expand imports of American rice, soybeans, corn, pork and beef. Japan and South Korea made up 20% of U.S. rice exports in 2024 and were also top buyers of U.S. pork, with Japan importing 2.5 times more than China. Beef exports to Japan, South Korea and Taiwan accounted for 47% of total U.S. beef shipments. Six Asian countries represented 41% of total U.S. wheat exports. “Asia has already opened up quite a lot where it can,” said Keisuke Sano of Nomura Research Institute, adding that deeper agricultural shifts will require cultural adaptation.
U.S. presents draft trade framework to Japan amid stalled tariff talks... In this week’s Washington negotiations, the U.S. handed Japan a draft framework for a potential trade agreement, according to Nikkei. Despite the exchange, the talks — led by top officials including U.S. Treasury Secretary Scott Bessent and Japan’s Ryosei Akazawa — yielded no breakthrough after over two hours of discussion. Tokyo proposed increasing U.S. imports of corn, soybeans and rice and reviewing non-tariff barriers affecting American autos. But the U.S. showed no sign of easing tariffs on cars, steel and aluminum—raising Japanese concerns. Ministerial-level talks resume in mid-May, with speculation a basic agreement could emerge by the June G7 summit.
China ‘evaluating’ U.S. offer to talk tariffs... Beijing is “evaluating” an offer from Washington to hold talks over President Donald Trump’s tariffs, China’s commerce ministry said. The ministry said the U.S. has approached China to seek talks over tariffs and Beijing’s door was open for discussions. However, it warned the U.S.: “Attempting to use talks as a pretext to engage in coercion and extortion would not work.” National Economic Council Director Kevin Hasset told CNBC, “We’re hopeful for progress,” and noted that he was pleased to see China had pulled back tariffs on many U.S. products, signaling a potential thaw in trade tensions. This sentiment aligns with President Trump’s recent comments indicating a willingness to negotiate and possibly reduce the steep tariffs currently imposed on Chinese goods. Hassett suggested that news regarding tariff talks could emerge soon, although he was careful not to confirm specifics. “We are very optimistic about China, and particularly optimistic about our relations with nearly everyone else,” Hassett said.
Trump ends ‘de minimis’ tariff loophole, targeting Chinese e-commerce imports... President Donald Trump’s executive order eliminating the “de minimis” tariff exemption takes effect today, ending duty-free treatment for small-value packages ($800 or less) shipped from China and Hong Kong. This move is expected to hit discount platforms like Temu and Shein, raise costs for U.S. consumers and disrupt independent e-commerce sellers. Packages will be taxed at 120% of value or face a flat fee starting at $100.00, rising to $200.00 by June 1. It applies to shipments from China and Hong Kong first, with other countries likely to follow.
China reduces U.S. Treasury exposure while diversifying reserves... China has steadily trimmed its direct holdings of U.S. Treasuries — down to around $759 billion by late 2024, its lowest level since 2009 — as part of a long-term strategy to reduce reliance on dollar-denominated assets. Though the reduction has been gradual rather than abrupt, it signals Beijing’s intent to diversify financial risks amid heightened geopolitical tensions. China is believed to be reallocating into U.S. agency bonds and non-dollar assets, while also using offshore custodial accounts. But China still needs large dollar reserves to manage yuan stability.
Status and extension of the 45Z tax credit... Section 45Z of the Internal Revenue Code, established by the Inflation Reduction Act (IRA), provides a technology-neutral tax credit for producers of clean transportation fuels-including both sustainable aviation fuel (SAF) and non-SAF transportation fuels-based on the lifecycle greenhouse gas (GHG) emissions of the fuel produced. The credit is available for fuel produced at qualified U.S. facilities and sold to unrelated parties between Jan. 1, 2025, and Dec. 31, 2027. However, significant uncertainty has surrounded its implementation due to delays in Treasury guidance, especially regarding emissions calculations and registration requirements. Extension of the 45Z tax credit is being considered as part of the broader congressional budget reconciliation process, which allows for expedited passage of budget-related legislation. Supporters are pushing for inclusion of the extension in upcoming reconciliation bills to ensure timely passage and avoid further uncertainty for the clean fuels sector.
Sharp slowdown in jobs growth expected... Economists polled by Reuters expect the Labor Department to report non-farm payrolls increased 130,000 in April, down sharply from the 228,000 jobs added the previous month. The unemployment rate is expected to hold at 4.2%.
Global food prices increase in April... The UN Food and Agriculture Organization global food price index increased 0.9% in April and was 7.6% higher than last year. Increases in cereal grain, dairy and meat prices outweighed decreases in sugar and vegoils. Compared to year-ago, prices rose 4.3% for meat, 22.9% for dairy and 20.7% for vegoils, while values fell 0.8% for cereal grains and 10.9% for sugar.
India’s April palm oil imports plunge 24%... India’s palm oil imports in April fell 24% from the previous month to 322,000 MT, according to estimates from dealers. Traders have been opting for lower-priced soyoil for several months, and imports increased again in April, rising 2% from March to 363,000 MT.
Brazil surpasses U.S. to lead global cotton exports for first time... Brazil now holds a record 30.5% share of global cotton exports, overtaking the U.S. (25.8%), according to USDA data analyzed by Brazil’s Center for Advanced Studies on Applied Economics. This marks the first time in history that Brazil leads global cotton shipments. Analysts credit Brazil’s surge to robust domestic production and increased competitiveness in global markets.
Sharply higher cash cattle trade... Cash cattle have traded $5.00 to $6.00 higher in the Southern Plains and as much as $10.00 higher in the northern dressed market this week. Prices will shatter what was a new record last week as packers continue to bid up for supplies despite highly negative margins.
Cash hog index rises, pork cutout chops... The CME lean hog index is up another 33 cents to $89.57 as of April 30, the 11th straight daily gain during which prices have firmed $4.49. Pork cutout slipped 15 cents to $96.46 on Thursday, remaining near the middle of the roughly $10.00 trading range that’s contained prices for five weeks.
Overnight demand news... South Korea purchased 35,800 MT of U.S. milling wheat.
Today’s reports
- 7:30 a.m. Employment Situation — BLS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Noncitrus Fruits and Nuts - Annual — NASS
- 2:30 p.m. Commitments of Traders — CFTC