Grains ended higher Monday with soybeans taking the lead, cattle also rallied, hogs end mixed.
Soybeans Soar on Talk of China Purchases
Soybean futures soared on Monday to close nearly $.33 higher on the January contract. Craig Turner with StoneX said there was unconfirmed market talk of six to nine cargoes of soybeans being sold to China through the Pacific Northwest on top of the sales confirmed in the daily flash sale report from USDA on Friday.
Bloomberg reported state-owned agriculture trader Cofco Group booked nearly 20 cargoes of U.S. soybeans on Monday for delivery in December and January. That’s nearly 1 MMT. While Reuters reported 14 cargoes.
After $.22 cent losses in January soybeans on Friday, Turner says the market saw renewed buying after President Trump reported meetings between the U.S. and China on Friday went well and the trade framework between the two countries would be signed before Thanksgiving. The President and Treasury Secretary Bessent also said China would be buying U.S. soybeans.
However, Turner says the 12 MMT of soybean purchases may not all take place before the end of the year and may be strung out through spring. “We’ve seen the Trump administration kind of back away from the 12 million metric tons to be done by January, but there is a sense, you know, a lot of it can be done by January, but there’s also a window in June, July, and August where we can kind of after Brazil’s and South America’s season where we can see more exports there,” he adds.
Record NOPA Crush
NOPA also reported a record crush figure for October at 227.65 million bu. That was up 15% from last month and 14% higher than a year ago. Stocks of bean oil were registered at 1.305 billion pounds but just a slight increase from last month.
Is $12 Next?
Soybeans soared into new highs for the move and 17-month highs and technically soybeans don’t spend much time in the $11s. “If we add on 20% inflation, you know, past post -COVID, the old $8 to, let’s say, $11, is really a $9 .60 to $10 on the low side, which would imply somewhere in the mid -$12 to $13 is kind of like the new the new $11. So I wouldn’t be surprised if we did get into the $12s.”
Turner says if China is going to buy 12 MMT this year, which is 440 million bushels, and 25 MMT the next three years he thinks prices are too low and will need to move higher to ration demand. “I can see us moving into the $13 to $14 range,” he says.
Corn Follows Soybeans Sees Strong Export Inspections
March corn settled up $.04 and erased about half of the losses from Friday following soybeans but according to Turner also got a push from demand. Export inspections totaled 80.9 million bu. for the week and for the marketing year now total 624 million bu. up 73% from last year. Plus, the flash sales backlog reported by USDA on Friday indicated 4.148 MMT of old crop export sales, with Mexico the largest buyer at 3.215 MMT. So end users are seeing U.S. corn at a value level. “This makes USDA’s record export projection over 3.0 billion bushels very achievable,” he says.
Wheat Sees Chart Breakout
Winter wheat futures were up $.13 to $17, also recovering from Friday’s losses. The market staged a chart breakout following corn and soybeans. However, Turner says there was also technical buying behind the move. The market has shrugged off USDA’s larger U.S. and global ending stocks from Friday’s reports.
Fund Money Flowing Into the Grain Markets?
Turner says without a Commitment of Traders Report it is difficult to know for sure that the managed money funds are buying in the grains and just how much has been short covering versus new positions. However, he says it feels like money is flowing into the grain markets the last few weeks with a renewed push from the trade developments.
Cattle Extend Gains as Brazil Tariffs Only Dropped 10%
Cattle futures reversed a lower opening and closed higher with live cattle up $2.12 to $2.67 and feeder cattle up $1.17 to $5.72. The market saw technical buying after holding chart support. However, Turner says there was also more clarity on Friday’s announcement by the administration about lowering tariffs on nearly 200 food products to curb inflation, including beef. Specifically for Brazil the tariff reduction is only 10% which still leaves a 66.4 % tax on imports of beef into the U.S. The market had feared the entire additional tariff of 50% imposed in mid-August would be removed, so the news allowed the market to rally.
