Grain and livestock futures were mostly lower Thursday except feeder cattle.
Grains Slide on China Summit Disappointment
Grains opened the day session mixed and slid lower as the U.S. China Summit fails to excite.
U.S. Treasury Secretary Scott Bessent told Fox News that he and Chinese Vice Premier He Lifeng agreed to extend the trade truce reached in South Korea last fall for two months, to Jan. 10. “I don’t know whether a bigger deal can be done. I don’t know whether we will just roll the current deal,” Bessent said, according to Bloomberg.
Randy Martinson of Martinson Ag says the trade truce being extended for just two months is a disappointment.
“Everybody was hoping to see this get extended a little bit longer. This gives us, a little bit more time to do some more discussions. It also gives, China some time to get on the same page or at least to catch up on some of the promises they’ve made back in October.”
Bessent says the reason for just a two month extension is because China has been slow to reach the commitments on rare earth minerals, as well as this $17 billion of prorated other ag goods.
What Does the $17 Billion Entail?
Beijing has never publicly affirmed the size of any purchase commitments.
Martinson says it would be nice to have details of the $17 billion and known what products will be bought but China is unlikely to tip their hand as it would drive up market prices.
USTR Jamieson Greer said China has bought around $4 billion of the $17 billion commitment and speculation is it could be forestry products, while the market was hoping for corn, wheat, sorghum and other purchases.
Martinson says that too would be a disappointment.
“It seems like they’re leaning more towards building products or more towards the wood side of things to make that commitment. And they could do it if they bought a lot of building supplies from the U.S.”
China was also supposed to buy these goods before the end of 2026 and so if they need to fulfill this commitment they are going to have to do it in a hurry.
Will China Drop the 10% Tariffs?
The other item not mentioned by Bessent is China cutting the 10% reciprocal tariff on U.S. grain and soybeans which is concerning.
“You know, it’s looking less likely that it’s going to take place. I know that’s something that would certainly make U.S. soybeans more
attractive in China to the private importers. So it’s something that we’re still looking, I think, to try to push as far as the talks are concerned. But it doesn’t sound like China is interested in kind of engaging in that discussion,” he says.
Harvest Delays Spike Soybean Basis
Still supporting the soybean market has been the rally in soybean meal to 2.5 year highs as there is a shortage of meal with some soybean processing plants slowing or idling due to the wet weather.
The soggy Western Corn Belt is seeing harvest delays and there is more rain coming keeping new crop soybeans off the market.
So, soybean processing plants are scrambling to find old crop soybeans and its been showing up with basis pushes of up to $1.50 over the board.
Martinson says, “I mean, basis has tightened up dramatically as far as the crush plant is concerned. And they’ve even improved in the
elevator side of things because we also have, you know, the export market bidding for some soybeans as well, you know, for the Pacific Northwest shipments. So it’s been a very interesting, it’s certainly a different dynamic than what we saw last year at this time frame.”
With the positive soybean basis at harvest time he is hopeful that producers take advantage of it.
The plants in the West are also sourcing soybeans from the Delta and eastern Corn Belt via barge and rail.
Corn Eases on Black Sea Headlines, Harvest Pressure
Corn has also been down with wheat and crude oil the last few sessions as there is hope for peace deal with Iran or a cease fire on energy and ag infrastructure in the Black Sea region to move exports.
However, Martinson is skeptical that will happen. “So far, none of that has transpired. And I think there’s enough old crop coming in that’s taking care of the short-term needs.”
Harvest is also picking up in the south and eastern corn production areas which is putting some hedge pressure on the market as farmers are selling.
“I mean, prices are good, you know, a lot better than what we’ve seen last year. So I do think there is a harvest pressure going on, especially, you know, a lot of guys that are in up here that have done some combining that are just hoping to get the season done because of the drought situation, disappointing yields, and some quality concerns. A lot of the corn is moving to town,” he says.
The hot dry conditions in the south have pushed maturity and harvest pace and there are some standability issues that are pushing the pace of corn harvest.
Wheat Makes For the Move Lows
Winter wheat futures made for the move lows Wednesday and again on Thursday also chasing the Black Sea headlines.
However, Martinson says Putin is not going to agree to a cease fire or a grain export corridor.
“That’s his stronghold right now, and he’s making progress. I don’t think he’s going to give up the opportunity to control all of Ukraine. And
I think that is going to keep him in the war. It’s not looking at a ceasefire. And I can understand where Zelensky and Ukraine want to see some sort of a calming of the fighting taking place,” he says.
The other problem is the slow Black Sea wheat exports have not shifted any export business over to the U.S. with only 9.8 million bu. of export sales on the weekly report Thursday.
“We just have not seen any residual exports come to the U.S. Russia has now taken away their export tax, that’s going to make it a little bit
more palatable to try to move some product. They’re looking at moving it through other sources like the Baltics through some of their fertilizer export facilities. So they’re going to figure out a way to get that wheat out. And that, I think, is going to continue to keep exports away from the U.S.” he says.
The other pressuring factor is the southern plains is starting to get some moisture which he thinks will equate to a lot more winter wheat acres.
Weekly Exports Ho-Hum
While there was a flash sale of 4.4 million bu. of soybeans to China on Thursday morning, the weekly exports were rather uninspiring for all the grains with corn at only 33 million bu. and soybeans at 21.4 million bu.
Part of the slowdown may be a function of the dollar strengthening back to two and a half month highs.
Technical Picture
Both winter wheat classes broke support on Wednesday on the charts while corn is still holding support above $5.25 basis December and November soybeans are still well above $13.
Martinson says, “We’d have to get down to that $5.10 area to break it for the December corn. I think we’re looking at $13 on the soybeans. Both those levels are still holding, and if we get below those, then I think we’ve got some other issues we’ve got to deal with.”
Cattle Market Mixed Watching ICE Raids
The cattle market has been a roller coaster this week.
It started out strong on Monday with the record low placements in the Cattle on Feed Report, then broke Tuesday on fear of ICE raids at packing plants in western Kansas.
Wednesday the market recovered with false reports from Politico that the Trump administration was considering pulling or reducing the beef import plan due to backlash ahead of the mid-term elections. That was denied by the White House.
Thursday started with live cattle under pressure with more ICE raids in southwest Kansas leading to some packing plant harvest interruptions and as a result the slaughter figure for Wednesday was only 94,000 head.
Martinson says, “That market definitely trades headlines, and I think that’s part of it, you know. And, you know, right now that’s kind of the name of the game is get the product out and get it to the consumer. So that right now I think is helping to make the market trade back and forth on a daily basis.”
Cash is King
He says if the fed cash cattle trade develops at steady to higher money this week that is still the key.
“If we can get a higher cash trade, that certainly will help to bring some stability back into the market and I do think long run, you know, this market has gone down and tested some pretty strong support lines. I do think that we are looking at a little bit of a push coming again,” he adds.
While spring calves will soon be available the market is still looking at tight supplies and strong demand.
