Evening Report | Argentine crop sales surge ahead of export tax increase

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Argentine crop sales surge in rush to beat tax increase... Exporters in Argentina are rushing to get crop shipments on the books before President Javier Milei’s tariff relief expires on July 1. Trading houses, which must procure licenses for their future cargoes by listing them on a government register, are notching the biggest volumes of soybeans and corn since Milei temporarily reduced export tariffs at the beginning of the year, Bloomberg reported. Reuters noted soybean sales doubled last year’s levels through the first 18 days of June.

As of July 1, export taxes will return to 33% (26% now) for soybeans, 31% (24.5%) for soyoil and soymeal, and 12% (9.5%) for corn and wheat.

Ag groups in the country have asked Milei to extend the tax breaks.

Hogs & Pigs Report: Slightly bigger U.S. hog herd... USDA estimated the U.S. hog herd at 75.137 million head as of June 1, up 246,000 head (0.3%) from year-ago and 520,000 head more than the average pre-report estimate. Market hog inventories increased 274,000 head (0.4%), while the breeding herd contracted 0.5% from year-ago.

The spring pig crop increased 428,000 head (1.3%), despite a 0.4% reduction in the number of sows farrowed, as pigs per litter expanded 1.6% to a record 11.75 head. Producers indicated they intend to farrow 0.4% fewer sows than year-ago this summer, which fits with the breeding herd figure. But if efficiency in farrowing houses remains at record levels, the summer pig crop could expand from year-ago. Producers indicated intentions to expand farrowings by 0.7% during fall.

Based on market hog inventories, slaughter should run marginally above year-ago through summer and then rise about 1% by fall.

USDA reviewed all inventory numbers from June 2024 through March 2025 using final pig crop, official slaughter, death loss and updated import and export data. That produced upward revisions of 170,000 head for the December 2024 market hog inventory and 235,000 head for March 2025 market hogs.

The data is mildly negative compared to pre-report expectations, as the hog herd fractionally expanded instead of the modest contraction analysts anticipated. However, most of this pressure will be more psychological than fundamentally changing. While packers will need to work through a few more slaughter supplies than anticipated during summer and into early fall, it won’t be enough to overwhelm the market.

Corn, soybean drought footprint continues to dwindle... As of June 24, the Drought Monitor showed 49% of the U.S. was covered by abnormal dryness/drought, up three percentage points from the previous week. USDA estimated D1-D4 drought conditions covered 16% of corn area (down one point), 12% of soybeans (down one point), 25% of spring wheat (up three points) and 3% of cotton production areas (down three points).

Across major corn, soybean, spring wheat and cotton states, dryness/drought covered 55% of Iowa (no D3 or D4), 38% of Illinois (no D3 or D4), 23% of Indiana (no D3 or D4), 53% of Minnesota (no D3 or D4), 100% of Nebraska (no D3 or D4), 70% of South Dakota (no D3 or D4), 38% of North Dakota (no D3 or D4), 33% of Kansas (no D3 or D4), 60% of Colorado (5% D3, no D4), 76% of Montana (1% D3, no D4), 38% of Texas (15% D3 or D4), 24% of Wisconsin (no D3 or D4) and 28% of Michigan (no D3 or D4). No measurable dryness/drought was reported for Ohio, Kentucky, Tennessee or Arkansas.

Click here to view related maps.

IGC lowers global corn production forecast, raises wheat crop... The International Grains Council (IGC) trimmed its forecast for 2025-26 global corn production by 1 MMT to 1.276 billion MT, with Ukraine’s crop downgraded to 28.6 MMT from a previous forecast of 30 MMT. Global corn production is still expected to rise 51 MMT (4.2%) from last year.

IGC raised its global wheat production forecast by 2 MMT to 808 MMT. Global wheat production is now expected to rise 9 MMT (1.1%) from last year. This month’s increase largely reflected improved crop outlooks in India and Romania.

IGC kept its 2025-26 soybean production forecast at 428 MMT, which would be up 5 MMT (1.2%) from last year.

Trump’s tariff demands complicate Canada trade talks... President Trump’s insistence on including tariffs as a core part of any trade agreement is creating challenges for Canadian negotiators, according to Kirsten Hillman, Canada’s ambassador to the U.S. “The president really likes tariffs,” Hillman said, describing them as central to Trump’s economic agenda. Canadian officials are now searching for ways to satisfy the White House while protecting access to their largest export market.

Prime Minister Mark Carney this week appointed Hillman as Canada’s chief negotiator in talks with the U.S., aiming to secure a deal before the agreed July 21 deadline — a date suggested by Carney during a meeting with Trump at the G7 summit in Alberta. Negotiators from both countries met four times last week and have three sessions scheduled this week as they “dig into the substance of our respective concerns and demands,” Hillman noted. Canada’s immediate focus is persuading the U.S. to lift 50% tariffs on steel and aluminum and to drop levies on autos that have hit Canadian industries. Canada is also pushing for the removal of tariffs the U.S. imposed on certain Canadian goods over fentanyl trafficking concerns. Longer-term disputes — including Canada’s digital-services tax on U.S. tech companies and a controversial dairy quota system — are likely to be addressed in next year’s scheduled renegotiation of the U.S.-Mexico-Canada Agreement (USMCA).

Hillman said Canada’s strategy is to achieve a two-stage resolution: first, to address urgent tariff issues and stabilize bilateral trade, and then to tackle broader disputes during the USMCA review. She emphasized that Canada will continue to defend the largely tariff-free framework established by USMCA, arguing that open trade supports Trump’s priorities of energy security, access to critical minerals and increased U.S. investment. “We are deeply connected to the U.S. economically, geographically, from a security perspective and from a people-to-people perspective,” Hillman said. “All of those facets help us build a sense of common purpose — even when it might feel like at the outset there isn’t one. I think that that’s probably the best way to get to the best outcome for Canada.”

U.S. economy contracts for first time in three years in Q1... The U.S. economy contracted at an annualized rate of 0.5% in the first quarter of 2025, marking a steeper contraction than the previously estimated 0.2% decline and the first quarterly drop since 2022. The weaker GDP figure was largely driven by significant downward revisions to consumer spending and exports. Consumer spending edged up just 0.5%, the slowest pace since the pandemic-era declines of 2020, and well below the earlier estimate of 1.2%. Export growth was revised to 0.4% from 2.4% previously.

U.S. Treasury extends debt-limit maneuvers to July 24... The Treasury Department extended its use of “extraordinary measures” to avoid breaching the federal debt ceiling until July 24, giving Congress nearly another month to act before the government runs out of borrowing capacity. Treasury Secretary Scott Bessent informed lawmakers of the move in a letter to House Speaker Mike Johnson, shifting the end date for the current “debt issuance suspension period” from June 27 to late July.

Bessent again cautioned Congress that, according to Treasury’s latest projections, lawmakers must raise or suspend the debt limit before the scheduled August recess to avert a U.S. default. The so-called “X-date” — when Treasury could exhaust its cash and accounting maneuvers — is now expected as soon as August, barring legislative action.
Bessent emphasized that failing to address the debt ceiling would risk severe consequences, including disruption to financial markets, harm to the U.S. economy, and long-term damage to America’s global standing. The extension is also intended to keep pressure on lawmakers as they negotiate a broad tax-and-spending package alongside the debt ceiling issue.

With the national debt now exceeding $36 trillion, Bessent warned that waiting until the last minute could have “serious adverse consequences for financial markets, business, and the federal government.”