Evening Report | Trade tensions flare with EU

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Your Pro Farmer newsletter is now available... The Make America Healthy Again (MAHA) Commission released its long-awaited report addressing the childhood chronic disease crisis, which attacked ultra processed foods but did not label ag chemicals as unsafe. U.S. farm groups broadly criticized the report’s findings, calling for the commission and the Trump administration to make scienced-based decisions in future actions. On the trade front, tensions flared between the U.S. and EU, with President Donald Trump saying he favors a 50% tariff on EU goods starting June 1. The U.S. and China held a high-level call, signaling momentum in efforts to stabilize bilateral trade relations, but frictions remain. Brazil is dealing with an outbreak of highly pathogenic avian influenza, which would have significant ramifications as it accounts for 39% of global poultry exports. However, Brazil hopes its eradication and prevention measures can allow it to be HPAI-free within 28 days. We cover all of these items and much more in this week’s newsletter, which you can access here.

Memorial Day weekend schedule... All markets and government offices are closed on Monday, May 26, for Memorial Day. There will be no Pro Farmer updates on Monday. Grain markets reopen with the overnight session at 7:00 p.m. CT on Monday. Livestock markets resume trade at 8:30 a.m. CT on Tuesday, May 27. Pro Farmer salutes those who lost loved ones serving our great country.

Cattle on Feed Report: Neutral... USDA estimated there were 11.376 million head of cattle in large feedlots (1,000-plus head) as of May 1, down 178,000 head (1.5%) from year-ago. April placements declined 2.6%, while marketings dropped 2.5%.

Placements declined in four of the six weight categories, with lightweights (under 600 lbs.) down 7.5%, 7-weights down 1.3%, 8-weights down 1.8% and 9-weights down 4.9% from year-ago levels. Placements of 6-weights increased 2.3%, while heavyweights (1,000-plus lbs.) were unchanged.

In a state-by-state breakdown, placements declined 20,000 head in Texas, 15,000 head in Colorado and 18,000 head in “other states.” Kansas placements increased 10,000 head, while Nebraska moved the same number of cattle into feedlots as April 2024.

The report data is fully neutral and will should have no impact on price action, especially after an extended holiday weekend.

Cold Storage Report: Red meat inventories build in April behind bigger-than-normal rise in pork... USDA estimated there were 893.6 million lbs. of red meat in frozen storage as of April 30, up 39.5 million lbs. from March but 56.0 million lbs. less than last year.

Beef stocks totaled 418.1 million lbs., down 7.0 million lbs. from March, which was less than the five-year average decline of 16.5 million lbs. during the month. Still, beef inventories declined 8.2 million lbs. (1.9%) from last year and 52.1 million lbs. (11.1%) from the five-year average.

Pork stocks totaled 455.8 million lbs., up 46.3 million lbs. from March. That was more than double the five-year average increase of 21.7 million lbs., though some of that was due to a 12.8-million-lb. downward revision to March stocks. Still, pork stocks declined 43.5 million lbs. (8.7%) from April 2024 and 92.5 million lbs. (16.9%) from the five-year average.

Poultry stocks stood at 1.076 billion lbs., including 224.1 million lbs. of chicken breasts.

USDA lowers food price outlook as grocery costs decline... USDA forecasts prices for all food will rise 2.9% this year, down from the expected 3.5% increase last month. The lower price forecast was driven by a sharp cut for food-at-home (grocery) prices, which are now projected to rise 2.1%, down the 3.2% gain forecast last month. Food-away-from-home (restaurant) prices are projected to increase 4.0%, up from 3.8% previously.

A decline in egg prices helped fuel the overall decline in the grocery price forecast. Retail egg prices dropped 10.5% from March to April but were still 49.3% higher than year-ago. USDA expects egg prices will increase 39.2% this year, down sharply from a 54.6% increase projected last month. USDA projects price increases of 6.6% for beef/veal (up from 6.3% last month) and 2.1% for poultry prices (up from 1.0%). Pork prices are now predicted to decrease 0.2% (down from a 1.8% rise).

Trump threatens ‘straight 50% tariff’ on EU... President Donald Trump announced plans to impose a sweeping 50% tariff on all imports from the European Union starting June 1, citing persistent trade imbalances and what he described as the bloc’s unfair practices. Calling the EU “very difficult to deal with,” Trump criticized trade barriers, VAT taxes, and lawsuits targeting U.S. firms, claiming a $250 billion annual trade deficit.

This followed a report from the Financial Times saying U.S. Trade Representative Jamieson Greer is preparing to inform European Trade Commissioner Maros Sefcovic that the latest EU proposal for resolving transatlantic trade tensions does not meet U.S. expectations. The U.S. has rejected a recent “explanatory note” from Brussels, arguing it falls far short of what Washington expects, according to sources cited by the Financial Times. The EU, for its part, has pushed for mutual tariff reductions and a jointly agreed negotiation framework, but has refused to lower tariffs independently — a step some other U.S. trading partners have taken to defuse tensions.

The U.S. is also frustrated the EU has left its digital tax policy off the negotiation table, despite U.S. insistence that it be addressed as part of any broader deal. Talks are ongoing, but insiders say the exchange of documents has yielded little real progress, with one source telling the FT, “Exchanging letters is not real progress. We are still not really getting anywhere.”

Both sides claim to want a “fair and balanced” outcome, but the U.S. is dangling the threat of broader tariffs on European products, including pharmaceuticals and semiconductors, if its demands are not met. The EU, meanwhile, is wary of what it sees as a U.S. “go-it-alone” approach and is ready to resume countermeasures if negotiations fail.
The next meeting between Greer and Sefcovic in Paris is seen as a potential turning point in the escalating trade dispute.

U.S./China diplomatic call marks renewed trade dialogue but frictions remain... The U.S. and China held a high-level call on Thursday — the first since their Geneva meeting earlier this month — signaling momentum in efforts to stabilize bilateral trade relations. U.S. Deputy Secretary of State Christopher Landau and Chinese Vice Foreign Minister Ma Zhaoxu discussed a range of issues, though official readouts didn’t specify whether tariffs were addressed.

The renewed communication channel, established during the Geneva talks, is seen as a “positive sign,” especially after both countries issued a rare joint statement there to temporarily ease tariffs.

The conversation follows China’s meeting earlier this week with newly appointed U.S. Ambassador David Perdue, where Trump administration priorities — especially opening Chinese markets and curbing fentanyl precursor exports — were emphasized. Perdue said he looks forward to delivering “concrete outcomes” for Americans.

But frictions remain. Chinese officials criticized a recent U.S. advisory discouraging use of Chinese-made AI chips, calling it “unilateral bullying.”

EPA denies mass SRE approvals... EPA dismissed rumors it plans a mass approval of 163 outstanding small refinery exemptions (SRE) from biofuels blending mandates. EPA told OPIS the rumors were believed to be an attempt to influence the compliance credit (RINs) market.

Given the EPA’s recent actions and public statements, there is no indication that the agency intends to reverse its current policy or issue a blanket approval for outstanding SRE petitions. The EPA’s consistent denials and its commitment to a rigorous, evidence-based review process underscore its position against mass approvals.

RFK Jr. slams UPFs, sugar in interview... Health and Human Services Secretary Robert F. Kennedy Jr. was asked, “If you had a magic wand right now, what’s one thing you would change about the way people eat in America?”

RFK Jr.’s response: “I think ultra-processed foods (UPFs). I think that is the root cause and sugar, I think, if we could get rid of those, we could virtually get rid of diabetes in this country.” Kennedy has previously emphasized his belief that current government dietary guidelines allow for dangerously high sugar consumption, especially among children. He has linked sugar intake to a range of health issues, including obesity, diabetes, heart disease and the alteration of children’s taste preferences.

While Kennedy has acknowledged that an outright ban on refined sugar is unlikely, he has threatened regulatory action against companies that market sugary products and has signaled support for stricter labeling requirements. He has also encouraged states to seek waivers to exclude sugary items like soda from federal nutrition assistance programs and has already seen Nebraska, Iowa and Indiana move to eliminate soda from food stamp eligibility.

The Sugar Association said: “America’s hardworking sugarbeet and sugarcane farmers agree that chronic diseases are serious and warrant attention and rigorous scientific review to determine their root causes. We are confident that continued evaluation of gold-standard evidence will reaffirm what hundreds of years of history have indicated — that balanced diets have room for moderate amounts of real sugar, which plays many important functional roles in foods and generally cannot be removed without adding industrial additives like artificial sweeteners that Americans prefer to avoid.

“Added sugars currently make up around 12% of Americans’ total calories - the lowest level in 40 years and near the lowest level ever recorded (11% in 1909). The steep decline in added sugars intake over the past 25 years has coincided with rising rates of childhood obesity and chronic disease.”

“We support effective, evidence-based strategies that focus on reducing overconsumption of products that most contribute to excess calorie intake, while avoiding unintended consequences like the proliferation of industrial additives like artificial sweeteners in food - far beyond their well-known and easily recognized use in diet beverages and colorful packets in restaurants.”