- SCOTUS Tariff Opinion with Jonathan Coppess
- Eric Snodgrass, NutrienAgSolutions.com
From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report. It's the February. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzlow. The supreme court issued an opinion on the Trump tariffs this morning.
Todd Gleason: 00:18It opposed them, and then we'll take up the weather forecast too with Eric Snodgrass. I'll remind you as well to pick up your tickets for the All Day Outlook. They're online now at willag.org. In Chicago, corn futures today up about three cents. Soybeans down around 3, and the wheat futures are up just about 14 at the end of the day.
Todd Gleason: 00:42Mike Zuzlow, globalcomresearch.com out of Atchison, Kansas now joins us to take up what's happened in the marketplace today, and it's really about the outside markets today. The supreme court delivered a decision, against president Trump's tariffs earlier this morning. The president says he will use a one section one twenty two program to continue to impose at least a 10% tariff. That can only happen for a hundred and fifty four fifty days before congress would need to take it up as an approval process. Let's skip by that.
Todd Gleason: 01:16But what was the reaction really in Chicago to this news?
Mike Zuzolo: 01:21Yeah. I think that's the key when it comes to what we do with our marketing plans. And I think what I'm starting to feel pretty strongly about, Todd, is this isn't gonna be a one day or one week or one month type scenario. This is going to be probably a a situation that goes all the way through the midterm elections. And to give you an idea of how serious this policy issue is becoming in terms of driving our prices, we know about the tariffs.
Mike Zuzolo: 01:47We know about some of the other policies with the biofuels and the agricultural outlook meeting this week talking about fresh policy. But we also saw where what we have gotten in terms of implications from the president Trump, president Xi conversation about a week ago about trade from The United States side. From the Chinese side, I've dug into it, and I have a pretty strong view that the the Chinese side is almost solely based upon Taiwan. And if we want extra soybean sales, we cannot sell arms to Taiwan. And that's essentially, in my opinion, what president Xi tried to reflect or elucidate to president Trump and their conversation.
Mike Zuzolo: 02:31So my point being, we've got these massive policy initiatives and uncertainties that are seemingly growing, and they're getting more intense in the marketplace. And so we've got to look at a couple three key assets to keep a bearing and a gauge on this market. And I'd say the precious metals, the dollar, and the equities are the three keys for both grains and livestock because I'm attaching so much importance to the equities markets with the beef and the cattle market especially. Knowing that this week, we came in again after the holiday and pushed to new highs in soybean oil, pushed to new highs, record highs in cattle. And so those are two the main leaders again, and they have been up pretty much all year.
Mike Zuzolo: 03:17But the US dollar reaction was lower. The gold went above 5,000. The silver was up 5.5% as you and I were talking, and the equities markets were on both sides of the market. And so the net reaction has been very friendly, very commodity friendly, if you ask me, very risk on in terms of both the equities and the gold and silver going up. And this initial wave of reaction has not damaged the upside potential led by the crude and the wheat this week, and that was the big story for me as we finally got those two two things to come together.
Todd Gleason: 03:54Yeah. So wheat is leading. That's probably big news for you. Given USDA and its ag forum put forward a $5 season's average cash price, which would really keep a cap on corn prices, do you think there's a possibility that wheat can manage to continue to gain?
Mike Zuzolo: 04:12I think there is. I I think it but it it's probably almost solely based upon weather and geopolitics, geopolitics. And I've got a couple neat statistics for you. Crude oil got above $67 on Friday for a high as we went on the air. That's the best since 2025.
Mike Zuzolo: 04:28Soft red wheat, best since early June twenty twenty five. March hard red wheat getting to just under $5.80, $5.78 and a half, best price since mid July twenty twenty five. Notice all three of those are within about a month, month and a half of one another, and that's how closely associated they are with Russia, the Black Sea, the Russian ruble, and now also the Middle East. And I I think the door is closing, and many have said this, but the door is probably closing for a peace deal with Iran, and especially with Russia seeming to come in and underpin Iran by doing navy military drills in the Sea Of Hormuz and Iran shutting that Sea Of Hormuz on their side for a time period this week. It's interesting how much Russia is involved in our commodity markets.
Mike Zuzolo: 05:15It's really not changed since 2223.
Todd Gleason: 05:18How much do you suppose wheat is dependent upon what happens with Iran at this point? And if there is kind some kind of settlement, does it drop back substantially? Yeah. I think it can. Because what would happen,
Mike Zuzolo: 05:31I think, is if we had a settlement with, with Iran and we did not have an issue that would be a regional conflict, and that's what the market, I think, starting starting, not done, but starting to build in to the price is that the the dollar would probably firm up, and the the stock market would probably wanna firm up even more. And then the commodities probably wanna take a back seat and and see a liquidation phase. And that could be led by the gold, because I think part of the reason why the gold market and the silver market were rallying so much is because we're going into a weekend that's really critical for the Middle East piece. But yeah, I started hedging in twenty twenty six wheat this week. On Friday, I put out the first 20% sale because we got to just around $6 in July hardwood wheat.
Mike Zuzolo: 06:17I think that's a fair price. The other thing we have to be watching is these weather models have not been performing very well in the Plain States, both temperature and the precip. And if we come in with a surprise rain, that could, I prob think, probably knock us back $30.35 cents. Would we rebuild after that? Well, I think that goes back to the Middle East.
Todd Gleason: 06:36Finally, of course, we followed the numbers as they were released by USDA for the coming year on acreage. 95, 84, 45 corn, soybeans, wheat. Was there anything else that you watched? I wasn't paying attention today.
Mike Zuzolo: 06:54Yeah. I mean, the big thing was, did we get anything to feed the bull when it came to the biofuel policy, and how low were the bean acres? And I think I still am two and a half million acres bigger than USDA with 87.5 on the soybeans because that's where we were in 2022, 87.3 in 2024, 87.2 in 2021. I just think we're going to grow these bean acres, especially given that they took 1,300,000 acres out of the total for corn, beans, and wheat this year versus last year. I think we'll see those sneak back in or part of it sneak back in.
Mike Zuzolo: 07:27Biofuels, I don't think we got anything to feed the bull on the biofuels, and so the big high close to 60 in the soybean oil putting us up to levels not seen since mid late twenty twenty three, that's gonna be the key that I'm gonna ping off of. If I'm gonna do any more soybean selling, it's gonna be because I get a sell signal in the bean oil, and that and I'm gonna be watching for that next week.
Todd Gleason: 07:49Hey. Thanks much. I appreciate it.
Mike Zuzolo: 07:50You too, Todd. Thanks so much for navigating all this news.
Todd Gleason: 07:53Indeed. That's Mike Zuzlow. He's with globalcomresearch.com out of Atchison, Kansas. The United States Supreme Court today issued an opinion which strikes down president Trump's tariff policy. The question before the court was whether or not the International Emergency Economic Powers Act, sometimes called IEPA, authorizes the president to impose tariffs.
Todd Gleason: 08:20The chief justice delivered the opinion of the court writing, because the constitution specifies the congress shall have power to lay and collect taxes, duties, imposts, and excises, that the framers recognize the unique importance of this taxing power, a power which very clearly includes the power to impose tariffs and that they gave congress alone access to the pockets of the people. Now the government, the Trump administration, the supreme court writes in the opinion, thus concedes as it must that the president enjoys no inherent authority to impose tariffs during peacetime, and it does not depend the challenged tariffs as an exercise of the president's war making powers, I e, the nation's not at war, and that's not why these tariffs were imposed. Therefore, the justice is right, quote, our task today is to decide only whether the power to regulate importation as granted to the president in IEPA embraces the power to impose tariffs. It does not, unquote. The court closes the opinion in this way.
Todd Gleason: 09:27We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article three of the constitution. Fulfilling that role, we hold that IEPA does not authorize the president to impose tariffs. Chief justice Roberts announced the judgment of the court and delivered the opinion in the court. Justices Gorsuch, Barrett, Kagan, Sotomayor, and Jackson wrote concurring opinions.
Todd Gleason: 09:54Justices Thomas, Kavanaugh, and Alito dissented. We're now joined by Jonathan Koppas. He is an agricultural policy specialist at the University of Illinois and a lawyer. Thank you, Jonathan, for taking some time to help explain exactly what the opinion of the court means today. Can you give me a bottom line from your experience, please?
Jonathan Coppess: 10:18Yeah. Thanks, Todd. It's always good to talk to you and nothing like a a big supreme court decision on a Friday morning. So I think the you you got the bottom line. Right?
Jonathan Coppess: 10:28The court struck down the president's tariff or struck down the usage of the International Economic Emergency Policy Act as a justification for an issuance tariffs. And and basically just says that's not what the statute says. That is not the authority provided by Congress. And most importantly, Congress and only Congress has the power under the constitution to raise taxes. And so tariffs are taxes, and the president cannot make up his own tax in this case.
Todd Gleason: 11:03How important was it that this was a six to three decision?
Jonathan Coppess: 11:06You know, a six to three decision is a pre is a strong decision. And I think that, you know, the chief justice with the opinion, as you noted. And so I think you do see this fairly broad ideological understanding
Jonathan Coppess: 11:25it brought brought across the ideological divides on the court that that in fact, congress did not authorize the president to do this, and therefore he can't. I mean, there's and then this is based on a quick read. I mean, there's some different way you know, there's some different views within those six justices as to exactly how that, you know, this this issue called the major questions doctrine, I think, is a little bit still obviously an issue of dispute. But the bottom line is regardless of what doctrine or what reading you use, all six of them are saying quite clearly the president does not have this authority. And so you have to, you know only Congress has the authority to to raise taxes, and this statute specifically does not delegate any aspect of that authority to the administration, to the executive, to the president.
Jonathan Coppess: 12:14And so that part's pretty clear. It's actually relatively straightforward. We did a a FarmVoc Daily article a while back looking into some of legislative history. And and, again, that that's pretty clear that congress is not opening this up as a tariff, you know, a a unilateral tariff power for the president. That's not what this act was.
Jonathan Coppess: 12:35So I think that's pretty I think it's pretty strong in that respect. I have not had a chance to look at the dissent, so I can't really speak to that. But it it's a pretty straightforward interpretation of statute and constitutional powers.
Todd Gleason: 12:52In the opinion of the court that the chief justice wrote, he does take time to lay out other avenues that the administration might pursue, including one that president Nixon used and some others. Is it important that those were included?
Jonathan Coppess: 13:11You know, it's a great question. I don't know what the chief justice is trying to communicate there. I mean, I I think there are there are obviously other statutes and other powers and authorities, but I I don't know what that brings to this opinion. So I I don't know that I have a good answer for you, but it is interesting to note. I mean, there's a there are some assumptions that the administration has backup plans or other alternatives.
Jonathan Coppess: 13:38But again, you'd have to I think part of what you see here, right, is is we're dealing with with a constitutional power to levy taxes. I mean, that is as clear cut as it gets. Only congress has that power. And so for the administration to do any tariffs, like, there has to be a really good, clear, explicit justification explicit delegation of of power authority by congress to do that. And the courts are usually gonna be pretty skeptical of any attempt by administration to read into the statute things that aren't there.
Jonathan Coppess: 14:12And and that is really, you know, looking at some of the cases they cite, like famous cases like the youngs Youngstown sheet and tube case. Right? The the the administration, executive branch finds itself in really difficult territory whenever it is making these things up as it goes, as as it's kinda creating a power for itself because of the way our system is designed to check and balance those powers amongst the branches. So I don't quite understand, and I'm gonna you know, I guess it'll be part of the weekend reading journey to to try to get a better sense of what the chief justice is saying on that in that stretch. But in general, I I think taking a broad perspective of this decision, the it's gonna be tough for the administration to come up with its own taxes, in this case, tariffs, without a real clear authority by Congress.
Jonathan Coppess: 15:06And, again, this this issue of the impact of this is is part of what weighs on the court's mind here.
Todd Gleason: 15:11With one exception that the court clearly says would be the case if war is declared.
Jonathan Coppess: 15:18Well, I mean, again, that's that's first off, let's just hope that's not an issue we have to address anytime soon. But it you know, there is generally a lot of leeway granted the administration in wartime. I would note the Youngstown sheet and tube case was was during the Korean War and the Truman administration. So again, the court the Supreme Court back then was pretty clear that while, you know, they're gonna grant a lot of discretion to the administration and the operation of war, you know, how they would you know, how that would impact their view of of raising taxes and tariffs is really an open question. And what we're what I think you see in between the lines are pretty clearly in some of the writing in this case is is a is a real healthy skepticism by the court that there's much justification for doing this.
Jonathan Coppess: 16:12This is a power for congress that is that is vested in congress to raise taxes. It's gonna be tough to work around that. And, again, that that Korean War case laid that out quite clearly that, you know, that that that that that one branch can't just take up powers granted to the other. Like, just can't do that without some real clear direction, in this case, by congress.
Todd Gleason: 16:40Thank you very much, Jonathan. I appreciate it.
Jonathan Coppess: 16:42Yep. Absolutely.
Todd Gleason: 16:43Jonathan Kappas is a lawyer and specializes in agricultural policy in the College of Agricultural Consumer and Environmental Sciences on the University of Illinois campus in Urbana Champaign. You're listening to the closing market report from Illinois Public Media. I need to point you to our website, of course, for a couple of events. The first one, naturally, is the all day ag outlook at the beef house. That's coming up on the March.
Todd Gleason: 17:21It's a Tuesday, not next Tuesday, but the following one. Buy your tickets today at willag.org, willag.org. And when you're there, you'll also be able to register for an event tomorrow. If you've ever wondered how meteorologists actually predict the weather, maybe days or weeks out, or maybe you're just trying to figure out how the shifting climate patterns will affect, things this spring, you can join Andrew Pritchard, meteorologist behind, Chambana weather. He forecasts for IPM and, of course, is with Nutrien Ag Solutions.
Todd Gleason: 17:56He's hosting a special AMA. That's an Ask Me Anything event. Ask Me Anything happens at 2PM tomorrow at the Sola Gracia Farm greenhouse on Filo Road in Urbana. Registration is required. That link is on our website at willag.org.
Todd Gleason: 18:14Eric Snongrass is with us now. He's with NutriNAg Solution as well, a colleague of Andrews. Hi, Eric. Thanks for being with us on a Friday afternoon.
Eric Snodgrass: 18:23Yeah. Thanks for having me on. Although, I gotta be honest, Todd. I I got no sleep last night. I I flew back from Little Rock in an event.
Eric Snodgrass: 18:31We flew over the thunderstorms that hit last night, which were impressive to see. I mean, we had seven reports of tornadoes, a lot of damage across Southern Illinois getting Indiana. But then when I drove home, I drove through that second round of storms up by Kankakee and got here, and then the winds just were nonstop. I don't know about you, Todd, but something about being a homeowner, I now can't sleep when there's terrible weather wondering what might happen to the house. And we just I mean, it ushered in much, much colder air, and it was just so windy.
Eric Snodgrass: 19:00We're still dealing with those strong winds, you know, right now behind this system. But Todd, listen. This same system that just came through us was the one that put over, I mean, in some places, a 100 inches of snow into California, Sierra Nevada. It's the same storm system that created the red flag warnings, the critical fire risk, the elevated fire risk, all of those problems in Oklahoma, in Kansas, and Texas earlier this week, which if you have not seen the fire from that, we we were measuring that those fires were spreading on the strong winds at a rate of one acre per second for a while. Incredible to see that.
Eric Snodgrass: 19:35And so it's just, you know, we're kicking off spring. And, Todd, all these winds have me thinking like, oh my gosh. We're gonna have another one of those just nonstop windy springs because last wind excuse me. Last spring set a record for the windiest spring we've ever had.
Todd Gleason: 19:48Well, it bring rainfall with it. That's the important part because it's dry. I mean, really dry in our part of the world.
Eric Snodgrass: 19:54Yeah. We're we're you know, Trent down the road, he keeps keeps reinforcing how dry things are and making sure that we're taken care of on the drought monitor. But I would just say this. The forecast going forward is wetter a bit farther to our east. It's wetter to our south.
Eric Snodgrass: 20:09I do not have an overly wet forecast for us. Doesn't mean dry, but there are more systems that are gonna try to come across the country. And by the way, Todd, we may we may, with the colder air coming down, see some snowflakes this weekend. Some of the folks listening may see some snowflakes this weekend. But is are we gonna break drought near term?
Eric Snodgrass: 20:29Answer to that is no. And, unfortunately, it's no for the plains as well, which continue to be very, very dry going forward. But, Todd, as we all know, in Illinois, we could all of a sudden find ourselves in early April or late March. Right? Maybe this year right around Easter.
Eric Snodgrass: 20:47And the pattern for ten days turns on its head, gives us just phenomenal, you know, summer thunderstorm or excuse me. Spring thunderstorm activity. And all of a sudden, we're no longer talking about travel. We're like, man, shut this off. We did it.
Eric Snodgrass: 21:00Please get me back over to some drier weather. That's just Illinois. So I'm not hitting the panic button yet because I do know there's still some lingering, very, very dry ground, but we just have to remember where we are in the year and know we still have time to recover.
Todd Gleason: 21:14Do you have any thoughts about what the spring actually might look like?
Eric Snodgrass: 21:18Well, I'll tell you this. Between now and when we fully get into spring, which again, we we typically say spring starts on March 1, even though astronomically, doesn't start until March 21. But I can tell you that the temperature pattern is gonna be volatile. You're gonna just see pretty I mean, we we're used to this, but, you know, like last week, so very, very mild. I mean, Todd, I don't know if you saw this, but I I tweeted out my Ring doorbell camera.
Eric Snodgrass: 21:43I was in where the heck was I? I was in Tucson, and it was colder in Tucson than in Illinois. And this kid from the neighborhood runs up. He's gotta be every bit of nine years old, wearing swim trunks, no shirt, and ding dong ditches me and runs down. And I I post them like, I wonder I hope they got the whole neighborhood.
Eric Snodgrass: 22:03You know? These kids are just having the time of their lives, you know, ringing everybody's doorbell. I don't know if he knew how a Ring doorbell works because I certainly saw but, I mean, no shirt on in on, what, February 16.
Todd Gleason: 22:14Wow.
Eric Snodgrass: 22:14And now, you know, we're gonna drop the temperatures back off, and it's gonna get cold again. And it but I I think we're gonna spend more days on the mild side of average for late February, early March than on the cold. So the cold is coming in shots rather than the sustained cold we saw for most of January.
Todd Gleason: 22:31So we'll wait and see if things change here. A quick note on South America, please.
Eric Snodgrass: 22:36Yeah. So in South America, I actually do think there's gonna be a story emerging out of Argentina. So there was some rain that happened in the last month, but they've not been overcome the fact that there are less than half a normal rainfall across key geographies. And the new fifteen day forecast just released today is drier throughout almost all of Argentina's key growing areas. So if that becomes newsworthy at some point to compound against what could be some issues on the safrinha crop, we could be staring down something in the corn market going into spring.
Eric Snodgrass: 23:07But it's just speculative. It's based on weather at this point. I just would tell folks, keep an eye on it because it could be an opportunity, and I don't want you to miss it.
Todd Gleason: 23:15Alright. And we won't because on Tuesday, March 3, you're gonna tell us more about it at the beef house. I'm almost positive.
Eric Snodgrass: 23:22I will be definitely talking about that. Just the question is, will I have polished the crystal ball enough to to have any sort of clairvoyance going into spring at that point? But by the way, Todd, the forecast for your event has swung. The temperature forecast for your event in the models has changed over 40 degrees just in the last two days. So one point, it was forecasting really, really warm, like, in the mid to mid mid sixties, and then I saw one the other day was below freezing.
Eric Snodgrass: 23:50So I don't know what you're hoping for to make sure attendance is good, but it's been pretty wild forecast for early March.
Todd Gleason: 23:56Attendance is always good.
Eric Snodgrass: 23:57That's all
Todd Gleason: 23:57we need to know. Alright. Hey. Thank you much. I appreciate it, and we'll talk with you again next week.
Todd Gleason: 24:02And then Alright. Of course, at the Beef House.
Eric Snodgrass: 24:04That sounds good.
Todd Gleason: 24:05That's Eric Snodgrass. He is with Nutrien Ag Solutions, and Agribal joined us on this bright edition of the closing market report. Stay with us if you can. Commodity week is next. If not, it's up online right now at willag.org.
Todd Gleason: 24:21I'm Todd Gleason.