Grains surged higher on Tuesday, with cattle mixed and hogs lower.
Arlan Suderman, chief commodities economist with StoneX, says a combination of factors supported the rally in grains, which all scored new highs for the move.
Soybeans were up 33 cents, corn up 6-7 cents and wheat 18-27 cents.
He says grain markets got an initial push from the sharply lower dollar and no immediate blanket tariffs being imposed, at least on China.
Trump did announced possible tariffs of 25% on Mexico and Canada if they don’t cooperate with securing the border by Feb. 1.
Meanwhile, unconfirmed rumors circulated in the cash market that China had purchased not only soybeans but corn.
“The soybeans would go to the reserve presumably. If they’re buying corn it would go to the reserve Maybe a goodwill gesture saying maybe we can work out a deal perhaps.”
Suderman says that fueled talk of a new trade deal between the U.S. and China, which he thinks its a distint possibility.
“Well I think that they could because I think they have more to benefit on the consumer good export side than what it would cost them on the agricultural commodity import side and so I think that we could see that and I see both leaders moving in that direction toward amiable discussions and so that’s a positive but I think it’ll take some time to unfold,” he adds.
He says there were also reports China had stopped receiving Brazilian soybean shipments from five firms after cargoes did not meet phytosanitary requirements.
South American weather was also supportive for corn and soybeans as rains over the weekend disappointed and extended forecasts are dry.
And weather premium was also being added to the wheat market with a lack of snow cover and bitterly cold temperatures causing winter kill concerns in Hard Red Winter wheat areas.
“Nearly two-thirds of winter wheat areas were hit,” he says.
The question will be whether or not the grains market can build on Tuesday’s momentum.
“The rally was driven by headlines that could just as easily change tomorrow, so I would be cautious,” he warned.
Live cattle futures ended mostly higher factoring in a third consecutive week of record cash trade with the 5-area weighted average coming in at $203.67, up $1.09.
Additionally, there was some light trade in the South at $201 and in the North at $320, both steady with a week ago.
Meanwhile, feeders ended lower in anticipation of the border reopening to Mexican feeder supplies.
Lean hog futures opened higher but reversed on fears of Mexican tariffs of 25% on their largest pork customer on Feb. 1.
