Grain and livestock markets ended higher on Monday.
Grains See Technical Bounce With Risk On Buying
Grains markets were all higher on Monday with risk on buying in the general market place according to Arlan Suderman with StoneX, Inc. Some of the buying was also tied to money flow and end of the year position squaring and profit taking he says. “You know, it’s a holiday period when things tend to thin out. A lot of traders want to take extra time off with family and they want to square positions,” he explains.
Grains Add Geopolitical Premium
Both energy markets and especially corn and soybeans were adding some geopolitical premium with news that over the weekend Russian attacks damaged Ukrainian grain infrastructure in Black Sea ports. Plus, the U.S. is pursuing a third oil tanker in Venezuela, which has become a concern for the crude oil market and sparked a rally on Monday which spilled over to support the grains or at least cause some short covering. “Geopolitical tensions are picking up in the Black Sea region. The risk is always there in the background that we could see an impact on grain flow through the Black Sea as well as crude oil. And some traders covering their short positions just in case such a headline happens when they’re off for the holiday, that providing a little bit of support for us today in both sectors. Venezuela tensions accelerating as well, and that too providing some support for the energy and commodities.”
Soybean Market Bottoming?
The soybean market in particular saw short covering by the funds who had liquidated their long position as the market tumbled $1.20 from the highs. Soybeans were oversold after being down another 27 cents last week and were due for a correction. While Suderman thinks it was good to finally see a bounce in the soybeans the question is can the market build on it to turn the chart signals. “If we do, then we can find some form of a low. I’m not sure we’re going to get that much added demand at these levels. I think China had already hedged much of what they planned on buying, but we could pick up a little bit of demand. The big question is, do we get the funds to quit selling, quit shorting this market? Do they start coming in like they’ve done on the corn and trading a sideways trading range and establish that sideways trading range? And for that, we need to start turning the chart signals and then the algos will start putting in the appropriate orders to kind of turn things around. But this is a market that’s trying to find some sort of bottom.”
China Buys Soybeans
China continues to purchase soybeans and the flash sales report showed 12.1 million bu. of U.S. soybeans bought for the 2025-26 marketing year and another 2.4 million bu. for the 2026-27 marketing year. Suderman says China’s total purchases are now at around half of the 12 MMT they have committed to. “Through December 4th and then the flash sales that have been announced since then. We add that all up. It’s about 5 .678 million metric tons. So it’s getting close to 50 % of what they committed to. Our contacts on the ground would suggest that we’re actually over 8 .5 million metric tons. So a lot of that hasn’t gone through the system yet,” he explains.
And he thinks China will at least try to come close to the entire purchase agreement. “Because soybeans are getting the more public attention, China is currently putting more focus on that trying to et along. I think as long as we maintain this current status with China of a transactional relationship that’s generally good, then they will try to keep their promises on the soybean side of it.”
However, that may still not be enough business for USDA to keep their 1.635 billion bu. export projection in the January WASDE. The reason is U.S. soybean prices are still more expensive than Brazil’s and so other export customers that could back fill aren’t likely to buy from the U.S.
China Soybeans Shipments Slow
China, however, has shipped hardly any of the soybeans they’ve bought and that is more concerning to Suderman, especially with South America’s record crop coming on line shortly after the first of the new year.
Corn Follows Crude Oil and Wheat But Still Stuck
Corn futures got spillover support from the higher day in crude oil and wheat but is still effectively range bound according to Suderman. “We are just seeing the market rally back up to the top end of the trading range,” he says. And that is where is seems farmer selling starts to set in making it difficult for March corn to break above the $4.50 level.
“At this point, I have to think that the speculators will come back in and short it, take it back toward the bottom of the range, unless we get some type of news event to change change those dynamics,” he says.
Exports Support Corn and Wheat
Export inspections and backdated sales for corn and wheat were also supportive to prices. Corn export inspections came in at 68.7 million bu. and year to date are now at 955 million bu. which is up 395 million bu. from last year. Wheat export inspections were solid at 23.1 million bu. also a ten week high. Year to date wheat shipments stand at 542 million bu. up 23% from last year.
Cattle Make New Highs for the Move
Live and feeder cattle futures made new highs for the move on Monday with continued fund buying and with the push of a bullish USDA Cattle on Feed Report. On feed totals were down 2% and placements were down over 11% and at the lowest levels since the series began back in 1996. Boxed beef values were also higher Friday and at noon. “I’m impressed by the way the mark came back. The cattle on feed report gave us assistance there. We look at placements 40 ,000 below the trade estimates and a record low for the month. And overall, the tight supplies of cattle. Unfortunately, we’re importing enough beef now to keep the consumer supplied,” he says.
Can Cattle Futures Fill Chart Gap Areas?
Cattle futures are grinding higher but running into chart resistance. So, the question is will the futures be able to push higher and fill the chart gaps, possibly opening the door to retesting October’s record highs? Suderman says, “First we need to be able to get above the current resistance and be able to sustain that move. That’s a challenge.”
Lean Hogs Higher, Await Hogs and Pigs Report
The lean hog futures were slightly higher with spillover from higher cattle and higher cutout values.
