Perspective: Morning Commentary January 21

By: Arlan Suderman, Chief Commodities Economist

Wed, 21 Jan 2026, 14:33

January 21 – We saw modest follow-through selling in stock futures overnight as President Trump arrived in Davos, Switzerland to meet with world leaders, although they rallied when Trump spoke. The VIX pushed higher to trade near 21 as a result of recent tensions, but dropped as Trump spoke at Davos, while the dollar index traded lower near 98.5. Yields on 10-year Treasuries are trading near 4.28%, while yields on 2-year Treasuries are trading near 3.58%. Crude oil prices are trading firmer once again this morning, along with much of the commodity sector, with the grain and oilseeds firmer overnight as well with money flowing back into the hard assets overnight.

Over 60 heads of state are meeting in Davos Switzerland at the annual World Economic Forum, with President Trump addressing the group today. He does so at a time when tensions with European leaders are at a high level due to Trump’s expressed desire to take control of Greenland. Several European countries took steps to fight Trump’s efforts, resulting in him announcing tariffs against eight countries. The tariffs would start at 10% for those countries on February 1, rising to 25% in June if he does not have a deal by that time for the “purchase of Greenland.” Several of those countries have threatened a trade “bazooka” in retaliation, raising fears of an escalating trade war between the two economic powers. European leaders claim that the tariffs are a violation of the trade deal reached last year between Europe and the United States, while President Trump stated that he believes that the trade deal will be the factor that keeps those nations from retaliating. European leaders are more worried about keeping a united front to confront Russia in Ukraine, while President Trump says that the protection of Greenland is central to containing Russia (and China) longer term, and that Europe hasn’t shown the necessary commitment to protect Greenland to this point.

One can rightly argue that the strife over Greenland should have been settled behind closed doors. The fact is that presidents for the past 150 years have said similar things to Trump, but in private, without anything being settled. Melting of the ice around Greenland increases the significance of Greenland as a strategic region for the defense of both the United States and Europe. Greenland is strategic geographically, as well as militarily and resource wise with its rare earth minerals. Europe cannot protect Ukraine without the United States, nor can it protect Greenland without the United States. Certainly Denmark does not have that ability, and NATO itself cannot show sufficient power without the United States. In fact, Denmark has been dependent on the United States to defend Greenland for decades. The 1951 Greenland Defense Agreement allowed the United States to keep its military bases in Greenland, and to create new bases if necessary to support NATO. President Trump raised the topic of Greenland when he addressed leaders in Davos today, seeking negotiations to allow the United States to purchase the rights to Greenland so that the States can take the steps necessary to properly protect Greenland, and to maintain it for the strategic defense of both Europe and the United States. In fact, President Trump told leaders at Davos today that he will not use force to take Greenland, but rather that he wants to negotiate its purchase. For the above reasons, I believe that this issue will be settled behind closed doors without a major trade war or military conflict.

U.S. Trade Representative Jamieson Greer said today that he’s unsure if we’ll ever complete a comprehensive trade deal with China. President Trump and President Xi reached a handshake trade agreement on October 30 when they met in South Korea. We were told at that point that the final agreement would be completed by the next week. It still has not happened, and it likely will not happen. That said, China has essentially already completed the purchase of the 12 million metric tons of soybeans that were verbally included in the October 30 agreement. The fact is that both President Trump and President Xi have reasons to want a truce between each other this year. President Trump needs to focus on hanging onto Congress in the midterm elections, while President Xi needs to shore up his support at home amid a struggling economy. China made other purchases as well, but primarily it focused on those things that were verbally expressed on October 30.

USDA confirmed Chinese purchases of 221 million bushels of U.S. soybeans as of January 8, whereas cash sources indicate that total has reached 441 million bushels. Assuming that to be the case, that would be down from 832 million bushels the previous year, and down from 1.327 billion bushels in the 2016-17 marketing year. China has little incentive to purchase another bushel of U.S. soybeans that are much more expensive than Brazil soybeans. Reaching USDA’s target of 1.575 billion bushels of exports would therefore require non-China buyers to import 1.134 billion bushels of U.S. soybeans, which would be the second largest total on record, and require them to buy 229 million additional bushels the rest of the marketing year, as cheaper Brazilian supplies hit the market. That is still possible, but the risk is to the downside.

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Matt ZellerWed, 05 Aug 2026, 12:39

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Matt ZellerTue, 04 Aug 2026, 12:43

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Mike CastleMon, 03 Aug 2026, 15:10

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