April 22 – Stocks rebounded modestly overnight following sharp liquidation on Monday. Sentiment improved modestly overnight after fears that President Trump might fire Federal Reserve Chair Jerome Powell led to a massive “risk-off” day on Monday. Even so, gold prices continue to surge higher amid the uncertainty, setting fresh record highs again overnight. The VIX remains elevated as it trades near 32 this morning, while the dollar index trades near 98.6, which is just above yesterday’s three-year low. Yields on 10-year Treasuries are trading near 4.38%, while yields on 2-year Treasuries are trading near 3.79%. Crude oil prices continue to follow the equities thus far this week, with generally 1% gains seen this morning. The grain and oilseed markets were quietly mixed, with the soybean complex posting modest gains overnight, while corn and wheat were a bit lower for the most part.
The US set anti-dumping and anti-subsidy tariffs on solar cells and panels imported from Southeast Asian, with anti-dumping duties of 6.1% to 271.28% and anti-subsidy duties between 14.64% and 3403.96%. The move is intended to crack down on unfair China trade practices of exporting to the United States through other factories in Southeast Asia. Those duties are expected to be imposed after the US Commission votes in June. That means China’s overseas investments are also exposed to US tariff threats, adding another layer of complexity to the negotiation between the US and China, with the negotiation spectrum extending beyond bilateral trade. I continue to see evidence that containing China is part of the overall objective in trade negotiations with various other trading partners as President Trump increasingly applies pressure on China. This puts more pressure on China’s economy, and therefore its overall debt burden necessary to sustain its economy, but it also increases tensions ahead of potential negotiations. President Trump’s strategy appears to be one of getting China to the negotiating table sooner rather than later. China dragged out the process for several years before agreeing to a trade agreement late in Trump’s first term, that it failed to fulfill. Trump likely wants an agreement early enough this time that will allow him to be around to see it fulfilled.
One of China’s weak links in its independence chain is its inability to produce enough food for its population, leaving it dependent upon imports. As such, it adopted genetically modified technology in recent years in an attempt to boost yields. An Outlook report released by the Ministry of Agriculture projects all grain production to rise to 753 million metric tons by 2034, up from 706.5 mmt in 2024. Tillable land is expected to remain stable near 190 million hectares over the next 10 years, but authorities expect improved seed technology to boost yields. China’s corn yield was 104.95 bushels per acre last year. It expects that to rise by 11% to 117.15 bpa over the next 10 years, helping to reduce its need to import corn, although that is still below the U.S. trend yield of 181.0 bpa. Its soybean yield in 2024 was 29.68 bpa. It expects it to rise by 40% over the next decade to 41.28 bpa, although that is still well below the trend U.S. yield of 52.5 bpa. Nonetheless, that would be expected to dramatically close the deficit, reducing import needs in the years ahead if China can reach these goals.
Inflation in Argentina is currently estimated to be 56%, and they’re celebrating. That’s because the current rate is down from nearly 300% inflation in 2024. Voters ousted the socialist government of the past and replaced it with President Javier Milei in late 2023, giving him a mandate for change. That meant painful change. Voters were tired of the high taxes and high inflation, with the younger generation leading the way in calling for change to save their country, and their future. The question was, could he slash social programs and taxes, while still making payments on its debt obligations without defaulting. Argentina isn’t out of the woods yet, but it is making progress. It just received a reprieve from the International Monetary Fund that allowed it to temporarily ease export taxes while releasing currency controls. That timed well with the approaching harvest, providing an incentive for farmers to sell soybeans as they harvest them to increase exports. More than 5,000 trucks per day have been seen entering the port area at Rosario, with that expected to climb to 6 – 7,000 per day in the days ahead. The exports are increasing demand for pesos as the conversions are made, providing stability for the currency in the absence of controls for the first time in years, while also helping to build foreign exchange reserves for meeting international debt obligations.
U.S. soyoil prices continue to trend higher, approaching levels not seen for more than a year. Much of the strength is tied to market rumors that the U.S. Environmental Protection Agency will soon release favorable biomass diesel production mandates – possibly as soon as this week. Failure to do so could leave this market vulnerable until that announcement is actually made. Meanwhile, timely showers continue to nurse Brazil’s corn crop along, with NDVI scores remaining high. The central and western Midwest will be wet over the next week to 10 days, but the Midwest forecast has shifted significantly drier beyond that level, which should set up an ideal planting situation.
