Tariffs on Canadian Dairy, A Cattle Market Rebound, and A Report on Equipment Sales

Today we start with a look at the 50% tariffs President Trump imposed on Canadian dairy, and whether the recent uptick in the beef market is here to stay. We wind up with a look at the market for big tractors and combines.

Transcript

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Hello and welcome to ChatBDC. Here's the top stories from Black Dirt Daily Today, which is Wednesday, July 22nd. Today we're going to focus on tariffs on Canadian dairy, an update on cattle markets, and a look at equipment sales. So let's get to it. Starting off with tariff news and an article from Progressive Farmer, the White House announced Monday new 50% tariffs on Canadian goods entering the U.S., including alcohol, dairy products, cars, seeds, floriculture products, flower bulbs, lumber, and animal products, as the administration seeks to pressure Canada over what it calls discriminatory treatment of U.S. exports. Canada is the second largest market for U.S. dairy products, just behind Mexico. In 2025, U.S. dairy exports to Canada were valued at $1.31 billion, according to data from the USDA's Foreign Ag Service. The list of tariffed goods, if not exempted from previous Section 232 tariffs, include specialty export goods such as powdered and concentrated milk and cream across various fat levels. Administration said in its announcement that Canada gives EU dairy exporters more favorable access than U.S. exporters, particularly because Canadian retailers can access the EU's cheese tariff rate quota under comprehensive economic and trade agreement between the EU and Canada, but cannot access the comparable U.S. quota under USMCA. They argue the discrimination limits market access for U.S. cheese exports, costing American dairy producers sales and revenue. The move intends to both offset the alleged discrimination and to encourage Canada to change its dairy TRQ allocation policies. The National Milk Producers Federation and U.S. Dairy Export Council have long held Canada's dairy TRQ as a trade irritant, arguing for years that Canada is not fully honoring its USMCA dairy market access commitments. Switching over to cattle with sticking with DTN Progressive Farmer, an article by Shalee Stewart, the Monday, July 20th reversal in the cattle complex came as a breath of fresh air to the marketplace, as it had been 15 consecutive days since the market had seen a higher daily close in the live cattle futures. But with this change in direction, the question now becomes was that the bottom or does more pressure await? Unfortunately, that's a question only time is going to be able to tell, but there's a lot of weighing there's a lot weighing heavily on the complex right now. For starters over the last month, packers have quickly regained control of the vast majority of the market's leverage as they've not only been able to work fed cattle cash prices lower, but they've also successfully built up inventory. Everyone in the cattle feeding business knows that when temperatures get hot and supply is growing by the month, feedlot managers are going to be willing to let cattle go to keep themselves somewhat current. One of the other factors that's negatively weighing on the complex is the seasonal boxed beef decline. Just last week, choice cuts averaged $371.21, which was down just over $12 from the previous week, and select cuts averaged $359.95, which was down a little over $5 from the previous week. And the week's total movement of cuts, grinds, and trim amounted to $585 loads. Until Labor Day nears, it's tough to tell how much lower the market could fade. Needless to say, there's plenty of burdens for the market to face right now, more than anything. Traders are desperate to see increased fundamental support, but it may be a while before that develops again. Wrapping up with equipment news from Farm Progress, weighed down by geopolitical tensions, new equipment sales remain low while original manufacturers continue to cut back output to meet slackened demand. Bottom line is, well, the bottom line, most farmers have good reason to stick to window shopping. Even with $44.3 billion in direct government payments, which is nearly $14 billion more than last year, net farm income is expected to fall by $1.2 billion, according to USDA's Economic Research Service. Kurt Blades, who is senior vice president at the Association of Equipment Dealers, says the June data reflects a market that is still navigating significant economic headwinds. Referencing the organization's latest industry report, Blades noted an 18% drop in tractor sales and a slight 3.9% increase in combine sales, but, however, the jump in combine sales is a blip in the grand scheme. Plenty of new and newer inventory remains parked on dealer lots. Instead, farmers are increasingly heading to auctions. With the supply of used equipment limited, auction houses report less inventory, which leads to increased prices. There's a whole lot more to that article, and I suggest you check that out through the link to the article on BlackDirtDaily.com. Well, that's all for now. As always, thanks for tuning in. If you found it useful, just drop a comment and let everybody know. Be sure to check out BlackDirtDaily.com as well for the full stories behind these topics, and don't forget to sign up for that Black Dirt Daily newsletter. I'll be back tomorrow with more business news across Ag and Financial Markets. Until then, I'm Mike Hopperman, and goodbye for now.