Grain and livestock futures all ended lower on Thursday.
Risk Off Commodity Wide Selling
Ted Seifried says the ag markets saw risk off selling across the commodity wide tied to economic fears regarding record layoffs for the month of October and fear in the stock market that the AI bubble is close to bursting. He says there may have also been some hangover from the SCOTUS hearing on IEEPA tariffs as the high court questioned the role of the President versus Congress in invoking taxes. If the tariffs are found unconstitutional the U.S. may have to pay back some of the revenue collected from the tariffs and have less leverage in trade negotiations.
Soybeans See Profit Taking
The grain markets were all in overbought territory as well, especially soybeans after a $1 plus rally and saw some overdue profit taking. Soybeans ran up into chart resistance again after attempts early this week to break above the $11.35 level on the January contract, so funds liquidated in soybeans and in the meal market.
He says despite the $.27 cent losses in soybeans there was no technical damage done to the charts. “Soybeans held the upward trending channel and the short -term 10-day moving average in soybeans.” However, with the volatility of the soybean market this week he also wonders if this is topping action?
Soybean Bulls Also Looking for China Purchases, Deal Clarity
Seifried says the soybean bulls may also be looking for some clarity on the details of the soybean purchases from China and whether its 6 MMT or 12 MMT. “We need to see the sales, because if we’re going to get 12 million metric tons of exports to China in this calendar year, these sales need to be happening now because these boats need to be getting loaded now.” he explains.
Beyond the initial eight cargoes bought by Chinese government owned agencies there have been no additional purchases by private crushers. He says with Brazilian beans cheaper than the U.S. there is no reason for China to buy without political motivation. Plus, China left a 13% tariff on U.S. soybeans and has bought up to 20 cargoes of Brazil beans so far for December leaving some to question whether China will uphold the deal,” he says.
Longer term he says the 25 MMT purchases in 2026-2028 are also a disappointment. “That’s not even average for what we’ve had for the last five years. It’s not even average for what we’ve had for the last 15 years of our exports to China.”
Corn Sees Profit Taking Following Soybeans
Seifried says corn broke above resistance on the charts but when soybeans and meal tumbled the corn market followed. “We held this recent range that we’ve been trading in in corn and actually closed right on top of yesterday’s low, didn’t close below it.”
He thinks there may also be some fear going into the November WASDE report. “I do think the yield number should be coming down, although it might not be coming down as much as what some people are thinking. You know, we saw two private estimates here this week that really didn’t have corn coming down at all, for that matter, hardly at all. In the case of one of them, it went higher than their previous estimate,” he explains. Plus, USDA also has to add in the 207 million extra bushels from the quarterly stocks report.
However, he has been impressed with the underlying demand for corn for ethanol production and export inspections are well ahead of last year’s pace.
Wheat Fades China Buying
Wheat futures have been higher the last few sessions on word that China buyers were interested in U.S. wheat purchases. The market got confirmation of 120,000 MT of white and hard red spring wheat and sold off in a classic “buy the rumor sell the fact” move. Plus, he says the market may be disappointed with the amount after the hype surrounding China purchases. “So now the feeling went from oh they could be coming in to buy a a fair amount of U.S. wheat to, oh, they made some token, you know, purchases to kind of, you know, show their adherence to a trade deal, but now they might be done, right?”
Again, wheat held chart support areas. “We came right back down to the 100-day moving average, which is, you know, a big pivot area for support,” he adds.
Cattle Futures Make New Lows for the Move
Cattle futures made new lows for the move under expanded limits on technical selling and fund long liquidation. Without a Commitment of Traders Report Seifried says he’s uncertain how much of their long position the funds have liquidated but he thinks its possible there could be more downside before the market bottoms.
Seifried says the selloff has been most fear of the plan to lower beef prices touted by President Trump which has created uncertainty in the market. However, the fundamentals have not really changed in the cattle market.
