Grains are slightly higher Tuesday morning, with livestock mostly higher.
Grains Firm Looking for China Purchases
Grain futures were seeing follow through buy on Tuesday after sharply higher prices on Monday tied to a White House fact sheet confirming China would buy $17 billion of ag goods annually through 2028, on top of the 25 MMT of soybean purchases announced in October of 2025.
Lane Akre, economist with Pro Farmer, says much of this news is priced into grain futures so to continue to see momentum the market will need to see some proof of China purchases.
He says, “We saw that big selling last Thursday and Friday and we made up a big chunk of those losses but you have to remember Wednesday was saw for the move high closes and then we gave up a lot of that. So, we’re kind of back into what I would consider to be an equilibrium.”
The market has taken out the negative catalyst but continues to look forward says Akre.
“I don’t think it’s going to be easy for this market to work higher without some actual purchases from China or just some additional rhetoric on what this framework deal actually means,” he states.
Plus, there were no flash sales announced on Tuesday according to Akre, “But we haven’t seen any daily sales yet. Maybe they’re making some purchases that are below those daily thresholds, but they’re just not popping up quite yet. And until we see what products they actually start buying. I think it’s going to be hard to put in some fresh highs just based on this China demand news.”
How Soon Before Sales Show Up?
Akre expects some flash sales in the next week for many crops, except soybeans.
“We might be waiting until new crop for soybeans. And we don’t have abundant stocks by any means. We only had 81 million acres of soybeans last year and our ending stocks, they’re healthy, but they’re not overly abundant. And I think the way that the market’s pricing things right now, it’s going to be a while before China really reenters that book.”
However, Akre was disappointed there were no flash sales from China last week as historically China has made goodwill purchases ahead of the big trade summits.
“And I think that kind of played into a lot of that negative rhetoric that we saw on Thursday and Friday. Maybe we’ll see some sales pop up next Thursday if they’re buying under those daily thresholds and we’ve also seen that the export reporting system hasn’t exactly been what it was pre-DOGE so we’ve seen a lot of export adjustments,” he says.
No China Confirmation
China has not confirmed this $17 billion of additional ag business yet but Akre says there was early rhetoric saying that China is interested in
buying these U.S. goods.
“USTR Greer, he had talked about that U.S. agriculture is going to be very happy. And there’s still some positive signs to look forward to and this really does indicate that last Thursday and Friday was an overreaction. But when you hype up this meeting saying agriculture is going to be very happy and then you don’t mention agriculture at all in the first few days, there’s going to be a lot of frustrations,” he adds.
Does the U.S. Have 25 MMT of Soybeans or Other Crops to Sell?
Under the framework the U.S. is going to have to make 25 MMT of sales to China or 918 million bu. by the end of the calendar year.
Does the U.S. even have enough new crop soybeans to sell to China?
Akre says, “China is historically in the market for U.S. beans very early in the season especially new crop. Generally, about this time of the year, they’re already buying.”
He says that has been different under this administration but Chinese soybean shipments usually peak in November through January.
“So I think 25 million metric tons isn’t out of the realm of possibility for soybeans. For the other crops, this is going to be a very interesting year just because of the way the inputs have been and the shifts in acreages.”
The last two years sorghum and cotton acreage has fallen and cotton has been under 10 million two years in a row.
“And that’s largely because China hasn’t been a big player in the U.S. market. Well now we’ve got the $17 billion worth of purchases to kind of work through and a good chunk of that could go to corn but our corn export demand is already phenomenal. Some of that could go to wheat but we’re not going to have a ton of wheat this year just the way that the weather has played out and the wheat wheat book could end up getting very tight towards the end of the year,” he explains.
The extension of the Iran war is also constraining acreage around the world due to high input prices.
Crude Oil Cools
One of the factors limiting bigger gains in the grain markets on Tuesday was the cooling of the crude oil market with President Trump backing off his threat to escalate military action.
Akre says, “Yeah, crude is kind of near the recent highs from the past couple of weeks. We’ve really snuck up to this like $108 mark, and the deferred contracts are now starting to show some more signs of strength. I think the market’s starting to price in this conflict lasting longer than expected. We’re already in the third month and I’ve said it before the market has not respected the impact that this is going to have
long term on the crude market.”
The summer driving season is also ramping up and so demand will not be slowing down.
That will continue to support corn and ethanol grind though as well as strong exports of U.S. ethanol.
Fast Planting Pace
The market is also digesting the fast planting pace reported by USDA on Monday.
U.S. corn planting is at 76% on corn and 67% on beans. That’s well ahead of the five-year average.
“Soybean planting is basically setting records every year as guys have been getting in the fields earlier. So, not too big of a surprise there,” he says.
Yet there are concerns with cold temperature in the Northwestern Corn Belt and too much rain in Eastern Iowa and areas of Illinois which are forcing some replant.
Winter Wheat Rating Drops
Winter wheat ratings dropped 1% on Monday to 27% good to excellent and were at 43% poor to very poor.
These are historically, very low numbers, and so Akre thinks the market has some work to do to price that in.
“The wheat market currently isn’t lacking any bullish catalysts and the U.S. crops are facing a lot of headwinds. Yields are going to be sharply lower. We saw that sharply lower from last year. We saw that with the Kansas and Oklahoma wheat tours, projecting half a crop in Oklahoma,” he describes.
Akre says three years ago late season rain boosted the winter wheat crop from the low expectations.
However, with El Nino getting delayed that may mean the dry conditions will persist and cut the crop even further.
“the U.S. balance sheet is going to be getting tight and wheat we’re going to have to be very careful with where we’re sending our wheat because especially as the world wheat stocks are tightening, plantings are are shifting and 2027 isn’t shaping up to be an abundant year for wheat stocks by any means,” he adds.
Grains Hitting Technical Resistance
The grain markets are all hitting chart resistance at the upper end of the trading ranges and will need more bullish news to break out.
“Corn is basically butting up against the top end of the downtrend that we saw from last month’s highs. And if we can get a close July above $4.80, that’d be a really positive sign. Wheat has also it’s been making up those losses from last week. On the soybean side of things, we need just a little bit of a bump demand-wise, I think.”
Closing new crop Dec corn above $5 and keeping Nov soybeans above $12 is also important.
Cattle Relucantly Follow Cash
Cattle futures were slightly higher on Tuesday but have been lagging the record cash market.
Cash cattle trade averaged a new record of $262.85 last week, up $4.33 from the previous week.
Akre thinks some of it is traders rolling out of the front month contract but it is also concern about higher gas prices pinching food budgets.
Plus, the DOJ packer investigation and fear of higher beef imports are also planting a role.
“And that’s just driving funds to kind of expand these discounts to the cash market,” he adds.
Funds are also liquidating and taking profits with the bull market starting to mature, despite strong fundamentals.
“Right now I think we’re seeing one of those more irrational times where the fundamentals remain very strong. The cash market is obviously very strong. Demand remains very strong, but we’re seeing bigger than normal discounts. And I just, I think it’s one of those more irrational periods more than anything.”
Hogs Trying to Bottom?
Lean hog futures were lower Monday on higher grain and feed prices and seemingly unimpressed with the China deal leading to any additional U.S. pork export business.
The market is holding last week’s lows says Akre but is still trying to confirm a bottom.
“We’ve been having contra-seasonal cash market weakness in the CME Lean Hog Index, and that’s been undercutting futures for late spring and now early summer. And I think that’s been a lot to do with the weakness that we’ve seen,” he says.
However, he thinks the bottom is close at hand.
