Good morning!
Grains firmer to open the week... Corn, soybeans and wheat rebounded from Friday’s losses during the overnight session. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents higher, soybeans are 4 to 5 cents higher and wheat futures are 3 to 6 cents higher. The U.S. dollar index is down nearly 900 points and front-month crude oil futures are around 65 cents lower.
Japan softens tariff stance amid U.S./U.K. and China trade deals... Nikkei Asia reports Japan is now open to negotiating a partial reduction — not full elimination —of U.S. tariffs, signaling a notable shift in Tokyo’s trade strategy following the Trump administration’s recent deals with the United Kingdom and China. Japanese officials had initially demanded the complete rollback of U.S. duties on automobiles, steel and aluminum. However, those ambitions were tempered after observing that both the U.K. and China had accepted reduced — but not fully rescinded — tariffs in their own bilateral agreements with Washington. The shift is partly motivated by concern that Japan could be left behind on a trade deal.
India examining U.S. request to end curbs on ethanol imports as trade talks begin... U.S. negotiators want India to allow shipments of ethanol for blending with gasoline, people familiar with the situation told Bloomberg, a change from current rules that promote domestic supply and permit overseas purchases of ethanol only for non-fuel use. Any relaxation of rules by India, however, could undermine the country’s efforts to cut a huge energy import bill that leaves it heavily dependent on outside nations and at the mercy of fluctuating markets, the people said. President Donald Trump has claimed India offered a trade deal with “no tariffs.” India has reportedly offered to eliminate tariffs on 60% of tariff lines in the initial phase and provide preferential access for nearly 90% of U.S. imports. However, the most sensitive sectors, including certain agricultural products and military equipment, may be addressed in later phases. Indian Commerce Minister Piyush Goyal is in Washington for high-level talks today through Thursday.
Moody’s downgrades U.S. credit rating... Moody’s Ratings downgraded the United States’ long-term credit rating from “Aaa” to “Aa1” on May 16, citing sustained increases in federal debt and chronic fiscal deficits. This marks a historic shift for the U.S., ending its decades-long run as a top-rated sovereign borrower at Moody’s and highlighting growing alarm over its long-term fiscal path. Moody’s joins Fitch and S&P Global as no longer having a perfect rating for the U.S. among major credit agencies. Treasury Secretary Scott Bessent dismissed concerns over Moody’s downgrade of the U.S. credit rating, calling it a “lagging indicator” and blaming the fiscal trajectory on “the spending that we have seen over the past four years that we inherited.” As of May 14, the U.S. Treasury has utilized over 75% of its authorized extraordinary measures, leaving only $82 billion available to manage government obligations under the $36.1 trillion debt ceiling.
Mostly favorable weather for U.S. crops... All U.S. crop areas are likely to receive rain at one time or another during the next two weeks, according to World Weather Inc. A few areas will remain a little too wet in the lower Ohio River Basin, northern Delta and parts of the Tennessee River Basin. Temps will be much cooler this week across the central United States. Some warming is predicted in key U.S. crop areas next week, though no excessive heat is predicted.
House Republicans advance Trump’s ‘One Big, Beautiful Bill Act’... House Republicans pushed President Trump’s ambitious legislative package — the “One Big, Beautiful Bill Act” — through the Budget Committee late Sunday night, narrowly overcoming internal party resistance. The bill heads to the House Rules Committee on Wednesday at 1 a.m. ET, where revisions are likely, particularly to appease moderates wary of SALT deduction limits. House Speaker Mike Johnson (R-La.) aims to hold a floor vote before Memorial Day, but further intraparty wrangling is expected. Any changes that Johnson negotiates will come in the form of manager’s amendment that Rules will have to make in order. House Republican leadership is saying they won’t send members home for the Memorial Day recess until the House passes the reconciliation bill.
The week ahead in Washington... Aside from the reconciliation measure, the focus in Washington this week will be the MAHA Commission’s initial report, titled the “Make Our Children Healthy Again Assessment,” which is scheduled for release on or before May 24 — the White House previously stated May 22. The economic focus will be a host of Fed speeches. Key agricultural reports include Friday’s updated food price outlook, Cattle on Feed and Cold Storage Reports from USDA.
China’s April industrial output eases less than feared, retail sales disappoint... China’s industrial production grew 6.1% from year-ago in April, ahead of expectations for a 5.5% rise, though marking a slowdown from March’s 7.7% increase. Over the first four months of 2025, industrial production rose 6.4%. China’s retail sales rose 5.1% from year-ago in April, down from March’s 5.9% and below the 5.5% market forecast. The deceleration reflects persistent consumer caution amid economic uncertainty, weak income growth and fears over escalating U.S. tariffs.
EU cuts growth outlook as tariffs fuel uncertainty... The European Commission downgraded its economic projections for the euro zone, forecasting GDP growth of 0.9% in 2025 and 1.4% in 2026, citing escalating global trade tensions and uncertainty stemming from new U.S. tariffs. The revised outlook reflects deeper-than-expected strain on exports, investment, and consumer confidence.
China’s pork imports slow in April... China imported 80,000 MT of pork in April, down 11.1% from March and 7.1% less than year-ago. Through the first four months of this year, China imported 360,000 MT of pork, up 3.8% from the same period last year.
Trade fallout from Brazil’s HPAI outbreak... The EU halted all poultry and poultry meat imports from Brazil due to its recent outbreak of highly pathogenic avian influenza (HPAI). Japan has suspended imports of poultry meat from the city of Montenegro and live poultry from the entire Brazilian state of Rio Grande do Sul following the HPAI outbreak. China on Friday banned poultry imports from Brazil for 60 days.
Cash cattle fundamentals continue to firm... Cash cattle trade was generally steady to $2 higher last week, which would be a fifth straight all-time record. Wholesale beef prices rose $2.59 to $352.49 for Choice and $3.21 to $342.39 for Select on Friday. Despite firming wholesale beef, packer margins remain buried in the red as prices haven’t kept up with gains in the cash market.
Cash hog index firms again, pork cutout above $100... The CME lean hog index is up another 24 cents to $91.26 as of May 15, marking a new for-the-move high. Pork cutout firmed 40 cents to $100.12 on Friday, despite losses in primal bellies and loins.
Weekend demand news... South Korea purchased 50,000 MT of U.S. wheat. Saudi Arabia purchased 621,0000 MT of optional origin wheat, most of which is expected to be sourced from the Black Sea region.
Today’s reports
- 10:00 a.m. Weekly Export Inspections — AMS
- 3:00 pm Crop Progress — NASS