Good morning!
Grain futures weaker overnight… As of 6:00 a.m. CST, March corn was down 2 cents. March soybeans were off 1 3/4 cents, while March SRW and HRW wheat futures were down 1 to 3 cents. Grain futures bulls are squeamish to start the holiday-shortened trading week as risk aversion in the general marketplace is keen, with stock and financial markets on edge (see below). The key outside markets today see the U.S. dollar index sharply down. Nymex crude oil futures prices are slightly firmer and trading around $59.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.287 percent—up significantly from last week.
Markets on edge as tensions between U.S., Europe rise amid U.S. threats to take Greenland… Global stock markets early this week have slumped and gold hit a fresh record high as tensions between the U.S. and Europe flared over President Trump’s push to take control of Greenland. Trump’s visit to the World Economic Forum annual meeting in Davos this week is set to be dramatic after he shook the foundations of the EU and NATO alliance and pledged new tariffs related to his Greenland ambitions. Trump unleashed fresh social media threats against European allies and threatened tariffs on French wine. Trump took a swipe at French President Emmanuel Macron for rejecting an invitation to back his latest peace initiative and suggested the U.S. would impose duties on France’s agriculture sector. Trump is heading to the World Economic Forum in Davos, including threatening eight European countries with tariffs for opposing his Greenland demands. “The European Union and the United States have agreed to a trade deal last July,” European Commission President Ursula von der Leyen said in a speech in Davos today. “In politics as in business, a deal is a deal. And when friends shake hands, it must mean something.” Trump announced a 10% tariff on goods from eight European countries beginning Feb. 1, rising to 25% in June, unless he has a deal for the purchase of Greenland. Gold futures neared $4,750 an ounce on safe-haven demand and the U.S. dollar index dropped sharply overnight. “Trump’s threat to impose levies on countries opposing his bid to claim authority over Greenland risks reigniting the volatility that rattled markets in the early months of his second term. The sell off deepened after European officials signaled they were unlikely to back down and were considering retaliation,” reported Bloomberg. “The standoff is happening at a time when risk appetite had been supported by resilient earnings and sustained investment in artificial intelligence. The markets outlook will hinge in part on the European Union’s response, with the bloc in talks to impose retaliatory tariffs on 93 billion Euros of U.S. goods,” said the report. Macron intended to request the activation of the EU’s so-called anti-coercion instrument, Bloomberg reported. German leader Friedrich Merz, however, said Monday that Germany’s heavier dependence on exports means it’s less willing to unleash the countermeasure. The tensions are also adding to the significance of a pending U.S. Supreme Court ruling on some of Trump’s earlier tariffs, with a decision possible as soon as today.
Shaky Japanese bond market pushing up global bond yields… U.S. Treasury yields rose to the highest in more than four months as a major sell off in Japanese bonds spilled over into global debt markets. Longer maturities led losses, with the U.S. 30-year yield rising nine basis points to 4.93% and 10-year yields up seven basis points to 4.287%, the highest levels since Sept. 3. Traders and investors are reacting to a tumble in Japanese bond prices, as well as the rising tensions between Europe and the U.S. “Concern around Japan’s fiscal outlook sent yields on the nation’s 40-year debt rocketing above 4% in the Asian session, the most on record. That’s weighing on long-dated debt around the world, with 30-year bonds also underperforming in Europe,” said a Bloomberg report.
Old Man Winter gripping much of United States, Europe and Asia... The National Weather Service today said cold west/northwesterly flow over the Great Lakes will generate snow showers downwind of the lakes for the next several days. Between 6-12 inches are probable for most areas, with isolated higher amounts possible. Meanwhile, the same frigid Arctic airmass will remain in place from the Midwest to the Northeast/Mid-Atlantic today. Highs in the teens and 20s will represent temperatures that are 15-25 degrees below average. Freezing to near- freezing temperatures prompted the continuance of freeze warnings from southern Georgia into central Florida for tonight. Meantime, unusually cold conditions are forecast to linger across northeastern and central Europe through early February, boosting heating demand and testing volatile gas markets. A wave of frigid Siberian air is set to push in, with average temperatures in some areas dropping below the long-term norm, according to weather models and data. The Arctic blast is forecast to overlap with a similar cold plunge in Asia, and weather analysts and energy traders are closely watching the polar vortex winds for signs of a possible split.
China’s U.S. soybean purchases pegged around 12 million tons: report… Bloomberg reports China has purchased roughly 12 million tons of U.S. soybeans in the last three months, clearing a closely watched trade hurdle and meeting a key pledge outlined by the Trump administration in November. “The world’s top consumer had been hovering close to the target for days and has now booked enough cargoes to meet it, according to traders familiar with the shipments. They asked not to be named as they are not authorized to speak with the media,” said Bloomberg. China had avoided U.S. crop purchases for months prior to trade talks between President Trump and Chinese leader Xi Jinping, as tariffs ratcheted higher — but it returned to the market in late October, just before a much-anticipated summit. The White House subsequently announced that Beijing had agreed to buy at least 12 million tons of American soybeans in 2025, a deadline that later shifted to February. The current tally reflects continued bookings by state-owned firms in recent weeks, the people said. Export data from the US Department of Agriculture, which lags real time, puts China’s purchases at just over 8 million tons as of Jan. 8. The majority of cargoes are slated to load through the first quarter, the traders said, with a significant amount expected to head into China’s massive state reserves.
Iran’s crackdown on protesters continues as the world watches… Top Iranian officials called for “leniency and compassion” for some of the protesters arrested during the latest wave of unrest, Bloomberg reported. Nearly 3,500 people have been killed in the Islamic Republic’s crackdown on the protests, according to rights groups, and almost 25,000 people have been arrested. Iran’s police chief Ahmad-Reza Radan said his forces will “pursue the rioters and terrorists to the very last person” and promised severe punishment for leaders and instigators of the protests. President Trump last week appeared to call off an attack on Iran over its use of deadly violence against protesters, saying he’d been assured that hundreds of planned executions and further killings had been called off.
IMF predicts slight uptick in global economic growth in 2026… The International Monetary Fund slightly raised its outlook for global economic growth this year, but it warned that concerns about an artificial intelligence bubble as well as trade and geopolitical tensions remain risks to the world economy. The Fund now expects global growth of 3.3% this year, up from the 3.1% it predicted in October, according to the World Economic Outlook report published Monday. The estimate for 2027 was unchanged at 3.2%. Some of the same factors that are seen keeping the world economy steady — an AI boom that’s fueling the stock market and a relative easing in trade tensions — could also become challenges if they reverse, the IMF said. In its report, the IMF highlighted the surge in spending on technology like AI, particularly in North America and Asia, as a growth driver. However, if the hoped-for productivity gains from the new technology don’t pan out, it could trigger an “abrupt” slump in markets that could spread to other sectors and erode household wealth, the Fund said.
China’s economy is losing steam… China’s economy lost more momentum last quarter even as it met the government’s target in 2025, in another year of lopsided growth that will be hard to sustain in an era of protectionism around the world, Bloomberg reports. While industrial production held up well in December, retail sales and investment worsened more than forecast. The world’s second-largest economy expanded 4.5% last quarter from a year earlier, the slowest pace since the reopening from Covid lockdowns in late 2022. For the full year, gross domestic product rose 5%, according to data released by the National Bureau of Statistics on Monday, confirming an estimate given by President Xi Jinping in a speech on New Year’s Eve and matching the expansion in 2024.
Major China hog producer may list shares in Hong Kong stock market… Muyuan Foods Co., one of the world’s biggest pig breeders and pork producers, has started gauging investor interest for a Hong Kong listing that may raise as much as $1.5 billion, according to people familiar with the matter and as reported by Bloomberg. The Chinese company, whose shares are already traded in Shenzhen, may list its shares in Hong Kong as early as February, the people said, asking not to be identified because they weren’t authorized to speak publicly. Deliberations are ongoing, and the size and timing of the deal may change, the people added. Muyuan didn’t immediately respond to a request for comment from Bloomberg.
China wants more Canadian canola… China has unblocked all major channels for oilseed imports by easing restrictions on Canadian canola, boosting supplies of feed for its vast numbers of livestock, said a Bloomberg report. “The plan to lower or suspend tariffs on Canadian shipments from March should reopen the Chinese market to its biggest source of the oilseed. Reestablishing diversity of supply in the market for oilseeds is likely to enhance competition and reduce prices,” said the report.
Malaysian palm oil futures gain… Malaysian palm oil futures hovered above MYR 4,100 per MT on Tuesday, reversing modest losses from the prior session as strength in edible oils on the Dalian and Chicago exchanges buoyed sentiment. Prices were further supported by expectations that January output could decline 15%–17%, coinciding with seasonal demand ahead of the Lunar New Year and the start of Ramadan in February. Demand from India, the world’s largest palm oil buyer, is also seen rebounding after December imports fell to an eight-month low. However, gains were capped by a firmer ringgit and caution ahead of cargo surveyors’ estimates for shipments in the first 20 days of January. Analysts note that inventories remain elevated, adding pressure to the market. Meantime, Reuters projects 2026 CPO futures to average slightly below 2025 levels. In top producer Indonesia, the government’s decision to shelve the B50 biodiesel mandate while maintaining B40 further dampened demand expectations.
Texas Ag Commissioner urges more vigilance on border after 8 new NWS cases in Mexico… Texas Agriculture Commissioner Sid Miller and the Texas Department of Agriculture (TDA) late last week alerted Texas livestock producers following confirmation from Mexico’s National Service of Agro-Alimentary Public Health, Safety, and Quality (SENASICA) of eight new cases of New World screwworm (NWS) in the state of Tamaulipas, which borders Texas. These new detections raise the total number of confirmed cases in Tamaulipas since December 30, 2025, to 11. “It’s just plain cowboy logic—when you’re seeing this many cases, this fast, it tells you there may be established screwworm fly populations in Tamaulipas,” Miller said in a press release. “We’re grateful sterile fly deployment has begun but make no mistake: Texas producers need to stay on high alert along our border.” Producers should be checking livestock every day and treating any wound as a potential entry point,” Miller said.
Cattle futures traders spooked as New World Screwworm moving north in Mexico… February live cattle futures last Friday fell $3.90 to $232.15, hit a nearly three-week low and for the week fell $1.575. March feeder cattle futures Friday lost $8.10 to $356.45 and on the week were up $1.75. Cattle futures traders on Friday were spooked by reports of an additional case of New World Screwworm in Mexico—seemingly worried about the northward movement of NWS and its potential impact on consumer demand for beef. Texas Agriculture Commissioner Sid Miller issued a warning to livestock producers after authorities in Mexico confirmed a NWS case just 215 miles south of the Texas border. Friday’s technically bearish low-range weekly closes in February live cattle and March feeders set the table for some follow-through, chart-based selling pressure early this week.
Lean hog futures bulls still in control… February lean hog futures last Friday rose 47 1/2 cents to $88.275 and hit a three-month high. For the week, February hogs rose $2.975. The lean hog futures market Friday saw technical buying amid firmly bullish technicals and an improvement in the cash hog and CME lean hog index prices late last week. Lean hog futures’ premium to the CME lean hog index remains a positive element for the futures market, suggesting hog traders expect the cash market to continue to improve. The latest CME lean hog index is up 11 cents to $80.50. Today’s projected cash index price is up another 50 cents to $81.00.