A daily market update from FS Insight — what you need to know ahead of opening bell.

“Farming looks mighty easy when your plow is a pencil and you’re a thousand miles from the corn field.” — Dwight D. Eisenhower

Over the Weekend

Trump to impose 25% tariffs on steel and aluminium imports FT

China’s retaliatory US tariffs loom as analysts warn of escalating trade war SEM

Consumer Financial Protection Bureau ordered to cease activity NYT

Macron unveils plans for €109bn of AI investment in France FT

China’s consumer inflation accelerated in January WSJ

FDA initiates massive recall of donut products, including those of Dunkin’ NYT

Super Bowl commercials rely on comedy and nostalgia to avoid potential missteps AP

TSMC tempers outlook on quake loss as AI concerns persist BBG

OpenAI set to finalize first custom chip design this year RTR

Trump backs reworked Nippon-U.S. Steel plan that won’t involve outright purchase WSJ

Google AI chief says DeepSeek’s cost claims are ‘exaggerated’ BBG

Singapore’s DBS reports record profits as long-serving CEO bows out FT

Baltic states begin historic switch away from Russian power grid BBC

Italian tycoons targeted by fake defence minister in suspected AI scam FT

China marriages fall to record low as demographic crisis deepens BBG

Minister blames monkey for Sri Lanka nationwide power cut BBC

Trump orders Treasury secretary to stop minting pennies NYT

Chart of the Day

MORNING INSIGHT

Good morning!

Last week was a positive test for equity markets. Our base case for 2025 is the S&P 500 reaches 7,000 by mid-year and probably sees a weaker 2H ending the year at 6,600. But this is just a “base case” and so far, 2025 is tracking better than this.

Click HERE for more.

TECHNICAL

• SPX and TNX both reversed course Friday, but this should prove short-lived.
• AAPL shares still look weak in the short run and might decline to 220-1.
• CFTC positioning shows Fixed income shorts reaching the highest since March 2023.

Click HERE for more.

CRYPTO

We explore a key emerging trend in crypto: the acceleration of token buybacks. We break down the factors driving this shift and its potential impact on the market.

Click HERE for more.

First News

The most-actively traded futures contracts for corn, soybeans and rice are off about 40% from their all-time highs. The dismantling of USAID and the potential adverse impact from tariffs now threatens to put U.S. grain prices in a deeper slump. 

USAID became the latest agency last week to see its funding slashed down. From its inception, a major part of the agency’s mission has been to help nations facing food insecurity and malnutrition. To do so, USAID throughout its history has purchased large quantities of corn, beans, and rice from U.S. farmers for distribution abroad. USAID said it bought 1.1 million metric tons of food from U.S. farmers and ranchers in 2023. This has been key to the economic survival of many American farms.

“We have huge agricultural surpluses in the United States,” Fundstrat Washington Policy Strategist Tom Block reminded us during last week’s research huddle. “And if those surpluses hit the market, they will drive down food prices. The way the agricultural community holds up food prices is by USAID distributing food around the world.”

Of course, the agency is nowhere near the biggest grains buyer, but it very well could be 10-20% of the total export market, according to an article from The Minnesota Star Tribune citing the CEO of a pea protein processing facility. The article also said agricultural giant Cargill, agribusiness company CHS Inc. and commodity trader Sinamco sold a total of $70 million in sorghum, wheat and peas to the agency’s Food for Peace program in 2024, according to records shared with the Minnesota Star Tribune.

With demand from a whale like the U.S. government gone, farmers would be forced to store large volumes of surplus grains in warehouses and silos, but this has its limits: Food has an expiration date and there’s only so much storage. Readers may remember when oil prices went negative in early 2020. Producers ran out of space to store the oversupply and were forced to pay consumers to take it off their hands. And oil doesn’t even go bad. 

The threat of an all-out trade war could also compound the problem. Just last year, the U.S. sold everything from corn to ethanol to soybeans to more than $30 billion in farm products to Mexico, $29 billion to Canada, and $26 billion to China, according to a Financial Times article citing American Farm Bureau statistics. 

Most of these grains sent abroad grow in the Midwest, where many Americans voted for President Donald Trump. That’s why some believe that Trump would step in to offer subsidies to his farmers to avoid upsetting a key voter base. 

But the last time he disrupted free trade, even with subsidies, it led to U.S. farmers losing market share. 

During Trump’s first trade war with China in 2018, for example, U.S. soybean exports slumped to $3 billion from $14 billion in 2016. China started importing soybeans from Brazil. Trump signed a deal with China in 2020, but by then it was too little too late. The Union of Concerned Scientists said that U.S. soybean-planted acreage decreased from 90.2 million acres in 2017 to 76.1 million acres in 2019. In fact, more than 90% of the proceeds from Trump’s China tariffs in 2018 had to be used to bail out angry farmers, according to the Council on Foreign Relations. 

In the last trade war, “a lot of our Asian buyers started developing relationships with soyabean producers in South America, and they’ve taken more and more of our market,” said Aaron Lehman, a soybean farmer who is also president of the Iowa Farmers Union, told the Financial Times. “And we haven’t got it back.”

Trade wars may boost Trump’s appeal as a savvy dealmaker, but farmers would be the ones getting caught in the middle, even as the rest of America enjoys lower food prices.