Good morning!
Grains mildly firmer overnight... Corn, soybean and wheat futures firmed overnight amid broader risk appetite as the U.S./UK trade deal on Thursday and ahead of weekend talks with China. As of 6:30 a.m. CT, corn futures are trading 3 to 5 cents higher, soybeans are 1 to 3 cents higher and wheat futures are 2 to 3 cents higher. The U.S. dollar index is down around 250 points and front-month crude oil futures are around $1.10 higher.
Trump administration floats major tariff rollback in talks with China... The Trump administration is considering a significant reduction in tariffs on Chinese imports during high-level talks in Geneva this weekend, aiming to ease growing economic pain and reset the tone of U.S./China trade relations, Bloomberg reports. The U.S. delegation, led by Treasury Secretary Scott Bessent, has set a target to reduce current tariffs — some as high as 145% — to below 60%. Multiple officials told Bloomberg that such a move, if mirrored by Beijing, could take effect as soon as next week. Still, officials emphasized that the talks are exploratory and could mark the beginning of a prolonged negotiation process, not a resolution. The U.S. is also pressing for an end to China’s export controls on rare earth elements, critical for manufacturing defense and tech products, and discussions on restricting exports of fentanyl precursor chemicals may follow. White House spokesperson Kush Desai downplayed specific policy targets, stating: “Any discussion about ‘target’ tariff rates is baseless speculation.”
India offers steep tariff cut, other concessions to secure U.S. trade deal... India is analyzing a U.S. request to ease restrictions around the purchase of genetically modified crops as part of ongoing trade negotiations between the two countries, people aware of the matter told Bloomberg. India has offered to slash its tariff gap with the U.S. to less than 4% from nearly 13% now, in exchange for an exemption from President Donald Trump’s “current and potential” tariff hikes, sources with knowledge of the situation told Reuters. This would mean that the average tariff differential between India and the U.S., calculated across all products without weighting for trade volume, would be reduced by nine percentage points. New Delhi has offered to reduce duties to zero on 60% of the tariff lines in the first phase of the deal that is under negotiation, said one Indian government officials familiar with the matter. India also has offered preferential access to nearly 90% of goods imported from the U.S., including the reduced tariffs, another officials said. A team of Indian negotiators is expected to travel to the U.S. later this month to advance the deal.
Lutnick: Asian trade deals will lag UK pact... Commerce Secretary Howard Lutnick said Thursday that trade agreements with Japan and South Korea will take substantially more time than the newly announced U.S./UK framework deal. While President Donald Trump touted the UK agreement as a model for future trade pacts, Lutnick emphasized the complexity of other negotiations. Still, Lutnick expressed optimism the UK deal could serve as a template for other regions. Lutnick reaffirmed that Trump’s 10% baseline tariff remains the “bottom line,” but warned that countries would face even higher tariffs unless they significantly opened their markets.
China’s April soybean imports plunge to 10-year low... China imported 6.09 MMT of soybeans in April, up 73.9% from March but down 29.1% from last year and the lowest for the month since 2015, due largely to customs delays in clearing shipments. From January to April, China imported 23.19 MMT of soybeans, a 14.6% decline from the same period last year. Soybean imports are expected to rebound sharply in May and June around 11 MMT. Several crushing plants in northern and northeastern China had to cut output or halt operations due to a lack of supplies.
China’s April trade data reflects U.S. tariffs policy... China’s exports jumped 8.1% from year-ago to $315.7 billion in April, far exceeding expectations for a 1.9% rise, despite a 21% decline in shipments to the U.S. as exporters rushed shipments to Asia and Europe. China’s imports slipped 0.2% to $219.5. That left China with a $96.18 billion trade surplus, down from $102.64 billion in March. The trade surplus with the U.S. narrowed to $20.46 billion in April from $27.58 billion in March as exports plunged 21% from year-ago while imports fell 13.8%.
Politico: $60B farm bill package eyed for reconciliation... House Republicans are preparing a $60 billion agriculture reconciliation package that would deliver a major infusion of funding for farm programs — while shifting billions in food aid costs to states, according to Politico. The proposed framework includes: $50 billion to raise reference prices, a top priority for commodity groups seeking better safety net support in the face of rising production costs. There would also be additional funding for crop insurance, dairy and livestock programs, export market promotion (e.g., Market Access Program and Foreign Market Development Program) and “orphan programs” that were left out of prior farm bill iterations. To fund the package, Republicans are proposing a shift in Supplemental Nutrition Assistance Program (SNAP) costs to state governments, a controversial move that is expected to spark strong Democratic opposition and legal scrutiny. This plan comes as the House Ag Committee prepares for a May 13 markup of its farm bill provisions. Speaker Mike Johnson (R-La.) is under pressure to deliver both tax cuts and rural support in the broader GOP reconciliation bill without exploding the deficit. Shifting SNAP costs gives the GOP fiscal room to fund politically popular farm support while claiming overall budget restraint. Democrats are expected to fiercely oppose the SNAP shift, with some farm-state Democrats warning that a partisan farm bill risks unraveling longstanding coalitions that back agriculture policy.
Chinese companies line up to sell ‘innovation bonds’... Chinese banks, brokerages and private equity firms are among companies kicking off plans to sell so-called sci-tech innovation bonds. Beijing published detailed rules on Wednesday for a “technology board” in the bond market to fund innovation amid the U.S./China trade war. Tech companies can already issue such bonds, but financial companies have become eligible under the new mechanism. China’s central bank will provide low-cost funding to support bond sales, while local governments will help share losses in the event of defaults. People’s Bank of China Governor Pan Gongsheng said nearly 100 companies are planning to sell such bonds to raise more than 300 billion yuan ($41.46 billion) in total, and he expects the list to grow.
Brazil’s April beef exports to the U.S. soar despite tariffs... Brazil exported 48,000 MT of beef to the U.S. in April, despite a new 10% tariff, the head of Brazilian beef lobby Abiec said. The volume was “a big surprise” compared with shipments of roughly 8,000 MT of Brazilian beef to the U.S. in April 2024. For sales outside a predetermined annual quota of 65,000 MT, Brazilian beef was previously subject to a 26.4% tariff in the United States. An additional 10% tariff now applies. For Brazilian beef sales inside the quota, the U.S. administration imposed a tariff of 10%, from zero previously. The annual 65,000 MT low tariff rate quota was filled in January.
China’s meat import decline in April... China imported 513,000 MT of meat during April, down 35,000 MT (6.4%) from March and 31,000 MT (5.7%) less than last year. Through the first four months of the year, China meat imports totaled 2.16 MMT, down 64,000 MT (2.9%) from the same period last year.
Steer weights remain hefty... Steer carcass weights were unchanged at 946 lbs. from the prior week but 26 lbs. above year-ago and 47% over the five-year average. Feedlots have sharply increased the number of days cattle are on feed to increase carcass weights and take advantage of record cash prices. The added pounds are helping packers offset sharply reduced slaughter levels – and have resulted in a record level of prime-yielding cattle at nearly 12.5%.
String of cash hog strength ends... The CME lean hog index is down 9 cents to $90.07 as of May 7, ending a three-week string of gains. May lean hog futures, which expire next Wednesday and are settled against the cash index for May 16, ended Thursday at a 58-cent premium. June hogs held a $7.175 premium on yesterday’s close.
Overnight demand news... Exporters reported no tenders or sales.
Today’s reports
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Agricultural Chemical Usage - Field Crops — NASS
- 2:30 p.m. Commitments of Traders — CFTC