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Your Pro Farmer newsletter is now available... USDA’s July crop reports featured the first all-wheat crop production estimate and updates to the old- and new-crop balance sheets. President Trump sent out letters to trading partners letting them know what their reciprocal tariff levels will be, though he delayed implementation until Aug. 1 to give countries more time to negotiate deals. Uncertainty on the trade front continues to add to pressure from favorable weather for crops, especially corn as the crop starts pollination with strong condition ratings. Based on the long-term outlook, atmospheric conditions will remain ENSO-neutral through the growing season. The labor situation remains unsettled for migrant ag workers, adding another layer of uncertainty for the sector. USDA released ag aggressive new plan for farm and food security. Just as the phased reopening of the southern border to Mexican cattle began, a ban was re-enacted due to another screwworm detection in Mexico. We cover all of these items and much more in this week’s newsletter, which you can access here.
Cut to corn ending stocks fails to attract buyer interest... USDA cut old- and new-crop corn ending stocks, with the reduction for 2025-26 more than expected. But corn futures failed to find support from the reduction, signaling traders feel USDA’s corn yield projection of 181 bu. per acre will be increased when the agency releases its first survey-based estimate in August. Soybean and wheat futures reacted negatively to the report data, as USDA raised soybean ending stocks, while the wheat crop estimate came in higher than anticipated. Click here to view full report details.
U.S., India in talks on interim trade deal that may cut tariff below 20%... The U.S. is working toward an interim trade deal with India that may reduce its proposed tariffs to below 20%, people familiar with the matter told Bloomberg, putting New Delhi in a favorable position against its peers in the region.
India doesn’t expect to receive a tariff demand letter — unlike many other nations this week — and anticipates the trade arrangement will be announced through a statement, the people said. The interim deal would allow for continued talks, giving New Delhi space to resolve outstanding issues ahead of a broader agreement expected this fall, they said.
Trump says he will speak to Brazil’s Lula at some point... President Donald Trump told reporters he might speak “at some point” to Brazilian President Luiz Inacio Lula da Silva, a day after Trump said he would slap tariffs of 50% on the country on Aug. 1 and Lula promised retaliation.
“Maybe at some point I’ll talk to him. Right now, I’m not,” Trump said.
Lula told Record TV in an interview aired late on Thursday “we’ll first try to negotiate, but if there’s no negotiation, the law of reciprocity will be put into practice.” Lula had already vowed to find new buyers for Brazil’s products, saying that “it is not like we cannot survive without the U.S.”
UBS Global Wealth Management says Trump’s threatened 50% tariff on Brazil is unlikely to become permanent, citing “possible legal hurdles” and questioning the justification under the International Emergency Economic Powers Act (IEEPA) given the U.S. trade surplus with Brazil. While Brazil’s industrial sector would feel the brunt, UBS expects the overall economic impact to be “manageable,” and does not see major risks to corporate earnings or emerging market equities.
Russia again sets wheat export tax as zero... For a second straight week, Russia’s ag ministry zeroed out the wheat export tax for July 16-22. The export tax for barley has been at zero since the beginning of May. As we reported Thursday, Moscow ordered “necessary measures” to boost ag exports after wheat sales to start 2025-26 fell to their lowest since 2008.
Senate Appropriations panel advances Ag funding measure... The Senate Appropriations Committee advanced its fiscal year (FY) 2026 Agriculture-FDA funding bill with strong bipartisan support, voting 27-0. The Senate’s version notably diverges from the House’s more conservative proposals, particularly in the areas of international food aid and domestic nutrition assistance.
Highlights:
- Food for Peace funding: The Senate bill allocates $1.5 billion to the Food for Peace program, a critical international food assistance initiative. While this represents a reduction from the $1.6 billion enacted for FY 2025, it is significantly higher than the House’s proposed $900 million, thereby avoiding the deep cuts sought by House appropriators.
- WIC program increase: The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) receives a boost to $8.2 billion in the Senate bill, up from $7.6 billion in FY 2025. In contrast, the House bill maintains WIC funding at current levels, opting not to increase support despite rising program needs.
Dallas Fed warns mass deportation would drag down U.S. economic growth... A new Federal Reserve Bank of Dallas study highlights the steep economic cost of large-scale migrant deportation, as the Trump administration voids work authorizations for hundreds of thousands and ends temporary protected status (TPS) for many Hondurans and Nicaraguans. USDA Secretary Brooke Rollins earlier this week reinforced a no-compromise stance on a “100% American workforce,” despite widespread reliance on immigrant labor in sectors like farming and hospitality.
The Dallas Fed’s analysis, based on historical immigration and economic data, finds that workforce growth from unauthorized immigration has historically increased U.S. GDP growth and slightly reduced inflation. The study models several policy scenarios and finds:
- High interior deportation (removals rising to 437,500/year) would reduce GDP growth by 0.83 percentage point in 2025 and 0.84 in 2027.
- Self-deportation wave (half of TPS holders leaving by mid-2026) would cut growth by 1.01 point in 2025 and 0.45 in 2027.
- Mass deportation (removals up to 1 million/year) would lower growth by 0.89 point this year and by 1.49 in 2027.
A warning: While the Trump administration argues that securing the border and enforcing immigration laws are priorities, the Fed’s report warns that sharp reductions in unauthorized immigration are “likely to significantly lower real GDP growth.” Businesses and farmers, who employ many of the workers at risk, have echoed these concerns. According to USDA data, about 42% of farmworkers in recent years lacked legal work authorization. Trump has hinted at possible exceptions for longtime employees, but the economic risks remain acute as deportation policy intensifies.
Terrain report: Farm equipment market downshifts, opening upgrade opportunities... The outlook for farm equipment is shifting as the market cools. While new equipment prices are still rising, the pace is slowing and used equipment prices remain subdued — creating a potential window for farmers considering upgrades. However, Terrain’s Matt Clark warns that tighter cash flow, lower trade-in values and elevated interest rates mean that “equipment deals will require cash.”
After a robust run in 2023 and early 2024, new equipment sales have “sharply contracted over the last year,” driven by weaker crop profits. “Sales of new combines and two-wheel drive farm tractors with more than 100 horsepower have declined 13 months in a row,” Terrain reports, with similar trends for four-wheel-drive tractors. Dealer inventories remain elevated, which usually “spur slower price increases in new farm equipment,” but manufacturers now face “higher costs... due to the impact of import tariffs onto their supply chain.”
While this softening market could create buying opportunities, Terrain cautions: “Farmers will need to balance the tension of lower trade-in values, elevated financing costs and longer maturities against their balance sheets and cash flow projections should they seek to take advantage of this window of opportunity.”
Interest rates for machinery loans are still near 8%, and Terrain does not expect major relief soon, Terrain’s Clark notes: “My expectation is for only minor cuts to the Federal Funds interest rate over the next 6 months, which means that rates for farm equipment are likely to decline only somewhat by the end of the year.”
Loan maturities have stretched, with the average now about 40 months and some anecdotal evidence of even longer terms. “The advantage of working with Farm Credit loan officers is that they can match maturity schedules with farm balance sheets, cash flows and planned depreciation schedules to limit financial and equity position gaps.”
With weaker trade-in values and tight margins, cash is essential for closing deals. “Make sure to assign a value, beyond the dollar amount, to having dry powder available to quickly consummate those deals,” advises Terrain.
Bottom line: Used farm equipment prices are likely to remain subdued over the next three to six months, and new equipment price increases will be less dramatic than in recent years. But Terrain concludes, “the decline in trade-in values, elevated interest rates and the mismatch between increasing loan maturities, aggressive depreciation and balance sheet concerns warrants careful planning with your Farm Credit relationship manager.”