Grain and cattle markets saw sharp losses on Thursday with lean hog futures higher.
Soybeans Fall a Third Day Despite More China Sales
Soybeans were down sharply on Thursday on continued profit taking and fund selling, despite USDA confirming nearly 17 million bu. of additional soybean sales to China. This makes a confirmed total of close to 67 million bu.
Jim McCormick with AgMarket.Net says soybeans continue to sell off though as this business has already been priced into the market with the nearly $1.50 rally off the lows. “It’s definitely a little bit of by the rumor sell the fact. Remember we rallied on the anticipation of a deal being made a framework with Scott Bessent. We gapped higher coming out of that weekend when he announced it then we rallied again when President Trump said hey, they’re going to buy 12 million metric tons. And then we saw kind of a flurry of buying when people said, oh, wow, China actually did follow through because there was a little bit of question, would they? But now here we are. Three days later, we’ve seen a little bit of market correct a little bit.”
It has been more than 20 days since the U.S. and China framework was announced and it has still not been signed nor have there been details provided on the timetable for the sale and if they will be binding.
“Remember, President Trump said they’re going to buy 12 million metric tons by the end of the year. They’ve bought about a 1.5 million to 1.7 million metric tons. I’ve heard they could have bought maybe 2, 2.5 million max so far. That’s a far cry from the 12 million. So maybe that’s disappointing the market bulls a little bit and they’re just booking profits,” he added.
How Much Soybean Business is Needed to Shore Up the Market?
McCormick says the market will now need to see confirmation that China will buy the full 12 MMT of U.S. soybeans in the trade framework to recover and retest the recent highs. “Because if they don’t, even though the 12 million is half of what we thought they were going to buy at the beginning of the year, it would still be very bearish for the balance sheet.” he says.
China Using Soybean Buys as Leverage
Earlier this week President Trump said the 12 MMT of purchases would not happen by January but instead could be stretched out until spring. McCormick says the fact that the framework has not been finalized or signed indicates that China is dragging its feet and it may be a strategic move. He also points out all of the purchases have been by government owned entities. “This a China way to put a little bit of pressure on the administration? Because now that they’re essentially said, hey, we’re fulfilling the portion of our end of the deal. We’re buying your beans, Mr. President, like you ask, is this putting pressure on the Trump administration to sign that deal? And I’m going to be very cautious because we’ve seen many times or deals with China get so close to the finish line and go backwards.”
Biofuels News Adds Pressure
News reports that EPA is going to delay a proposal to only provide a half RIN credit to biofuels producers that import product or use imported feed stocks is also pressuring the soybean and soybean oil markets, plus the corn futures. The administration is considering delaying this provision as part of the Renewable Fuels Standard Renewable Volume Obligations for 2026 and 2027.
Where Do the Markets Find Support?
McCormick says the soybean market has not seen significant technical damage but is on the cusp of taking out key support on the charts. “We’re getting close to last week’s lows. I think that is going to be very, very critical right now. You take that out or the low made, essentially they had an explosive move higher when China actually bought the beans. That would be very technical weak, technically weak. Remember, there’s a massive gap on all these charts. It wouldn’t be a surprise to see it go down and fill that gap, especially if the trade gets the sense that China is not fulfilling all its, all its pledges.” he adds.
Corn Follows Soybeans
Corn futures were also lower following soybeans and saw fund and technical selling as the December contract fell below the 200 day moving average. The biofuels news was also negative for the market. However, McCormick says a record crop is also keeping a lid on the market and even if USDA lowers yield from the current 186 bu. in the January report the carryout will stay around 2.0 billion bu. “Even if it does come down three or four bushels they’re going to lower the yield, they’re going to lower the feed demand, and keep a 2.0 billion plus carryout. So, there’s just no reason for corn to get much over $4.40,” he states.
Wheat Futures See Pressure Despite China Business
Wheat futures were also lower in tandem with corn and soybeans and despite confirmation of 4.85 million bu. of white wheat sold to China. Again the market had been anticipating that with recent rumors. However, McCormick says the continued talk of a possible peace agreement between Ukraine and Russia is also applying pressure to the market.
Cattle Make New Lows
Both live and feeder cattle futures made new lows for the move on further fund liquidation and technical selling but lower cash also pressured the market. Some very light trade was reported today. So far this week, Northern dressed trade has been marked at mostly $345, $6 lower than last week’s weighted average. Southern live business has been reported at $222 to $224, $4 to $6 lower than the prior week’s weighted average.
How much lower will the market fall? McCormick says, “That’s the million dollar question right now. I mean, I’m going to argue, the cattle market had one heck of a run. I know the cattle producer want to hear. It probably overshot our skis, to be quite honest. So it was due for a correction. It’s just like when corn goes to $8, it’s unsustainable. The cattle market was unsustainable there. It was just a lot of spec money in it. We’re in the process of washing that money out. I do believe we will get a rebound back because the fact of the matter is nothing’s changed.”
Lean Hogs See Short Covering
Lean hog futures were up for a second day on more short covering as the market was oversold. He also chalks it up to cattle hog spread unwinding. However cash and cutout values have also been sliding. “Still an oversupply.”
