Soybeans ended slightly higher Wednesday, with corn and wheat lower. Cattle and hogs ended mostly higher.
Soybeans Bounce Off Support on Flash Sales, Talk of More China Buys
Soybean futures made new lows for the move early Wednesday but ended slightly higher. Randy Martinson with Martinson Ag says early pressure came from follow through selling and more confusion on China’s purchase commitments. However, soybeans bounced off of strong technical support at the days lows. “We went down and tested a pretty strong support line. The market was able to hold. And I think there was some buy orders sitting there that helped to push the market higher,” he explains.
Soybeans also got some support from flash sales reported Wednesday morning totaling 17.2 million bu. Of that total 5.0 million bu. was bought by China, the balance by unknown destinations. Plus, Poland purchased 120,000 MT of soybean meal. Martinson says this helped stabilize the futures market. “There were also rumors of more Chinese buying several cargoes of U.S. soybeans this week which came in to help,” he adds.
Soybeans Fade China Buying Deadline Confusion
The soybean market was lower overnight and to start the day on Wednesday in reaction to more confusion about China’s soybean purchase commitments. U.S. Trade Representative Jamieson Greer testified at the Senate Appropriations Committee hearing Tuesday afternoon that China would make the 12 MMT of purchases by the end of the growing season. So does that mean the end of the marketing year? Martinson says no one knows for sure. “It would be nice for the administration to come in and clarify that because that’s where a lot of confusion is coming. And, you know, if they’re looking at the February time frame that would make sense because that’s about the time that South America beans get a lot cheaper, that we could understand. But saying this is going to last all the way till through the marketing year, that takes a long time,” he states.
Pushing off the timeline also puts the 25 MMT for the three following years in question according to Martinson. It also conflicts with Treasury Secretary Scott Bessent’s comments last Wednesday that the buys would be completed by the end of February. He points out that there is still no written signed agreement yet with China. “And China’s not really verifying all the information that’s coming from the administration either. So we kind of are flying a little bit blind there,” he says.
Is The Soybean Market Trying to Bottom?
With the soybean market holding the $10.80 level on the January contract is the market trying to carve out a low? Martinson says he is hopeful because soybeans have corrected nearly $.90 off the Nov. 18 high which is a healthy correction. “The next level down is going to be where the gap happened. And that is still, I think, another 20 cents down. So hopefully we don’t go down and test those levels.” The other headwind though is Brazil has been getting some rain and if they continue to see favorable weather it will cap a rally.
Corn Sees Technical Selling
The corn market was lower in tandem with lower wheat futures but also saw some technical selling and profit taking. The March contract ended slightly above the 200-day moving average on Tuesday but saw little if any follow through buying on Wednesday. Martinson says the market is stuck in a trading range and is capped by the 2.0 billion plus bushel carryout and big global wheat supplies aren’t helping. “Technically, you know, corn traded back up to the high end of its trading range. We’ve got a lot of supply, a lot of piles and bags that have to be cleaned up between now and March, especially here in the Western Corn Belt. So I think that continues to keep a little bit of a thumb on the corn market.”
What will it take to break out of the trading range and move higher? “Overall for corn, you know, I think to be able to hold these levels or to be able to get this market above that, it’s going to take a production cut in the January report,” he adds.
Wheat Sees Hangover From Increasing Global Supplies
The wheat market was lower on technical selling with March soft red winter wheat making new 7-week lows. The market looks like it is breaking down technically but it is also seeing the hangover from the December WASDE. Martinson says USDA raised wheat production in most of the major producing countries leaving a 3.5 MMT higher carryout verses November. “There is just too much wheat in the world,” he adds.
FOMC Lowers Rates, Dollar Weakens
The Federal Reserve’s Open Market Committee (FOMC) lowered interest rates the expected 25 basis points which saw a positive reaction in the stock market and sent the U.S. dollar index plummeting. “Of course, the Fed did vote to lower interest rates by a quarter point on a nine to three vote. So this one, well, of course, this ends it for this year. I think they’re showing in 26 the possibility of a quarter point decline yet.”
Trade Aid Coming
The market is trying to better understand the implications of the $11 billion of trade aid that will be disseminated to row crop farmers. Martinson says producers have until Dec. 19 to verify their acres at the FSA office. “Once that is done and complete and compiled, then it sounds like they’re going to come with the per acre payment rate that will be announced at the end of the month. And then the payment will come out sometime in February,” he explains. However, he thinks farmers are going to be disappointed in the results.
Cattle Price in Strong Cash
Cattle futures were mostly higher as the market is anticipating higher cash trade again this week according to Martinson. The market was up $9.68 last week and some early sales have already taken place at higher money. He says the weather is also helping to curb weights with snow and frigid conditions in many of the major feedlot areas. The key is futures have stalled out around the 50% retracement levels on live and feeder cattle futures and will need higher cash again this week to breach those levels.
Hog Futures Up as Seasonal Cash Low Close
Lean hog futures were higher again Wednesday still anticipating the seasonal low in the cash market. The lean hog index was up $.05 coming into the session at $81.84 and cutous were up $2.76 coming into the session. That is attracting some buying on the futures.
