Corn and soybeans recover early Wednesday with wheat lower. Cattle are seeing red with hog futures mostly higher.
Soybeans Rebound After China Tariff Clarification
Soybeans were higher early Wednesday in recovery mode after profit taking the previous session. Mark Knight with Farmer’s Keeper Financial says the market is digesting clarification from China on tariffs. Beijing says it will lower the 24% retaliatory tariffs placed on U.S. imports on March 4 for a year, but the 10% tax will remain. The cut still leaves a 13% tariff on U.S. soybeans imported into China and leaves U.S. soybeans too high for private crushers.
U.S. Soybeans More Expensive Than Brazil
Knight says U.S. soybeans are more expensive than Brazil, especially after a $1.00 plus rally in the last couple of weeks.
As a result, China has reportedly bought up to 20 cargoes of Brazilian beans with half of that business for December delivery. Knight says that will make it difficult for China to buy the 12 MMT they’ve committed to securing before January.
Is it 12 MMT Really 12MMT?
Questions continue to circulate on whether or not the 12 MMT of soybean purchases are additional business to be done in the next two months or is this on top of the 6 MMT China has already purchased early in 2025?
Knight says so far China has not provided any clarity or agreement with the White House premise that the business is an additional 12 MMT, which would make 18 MMT total and put exports on pace to reach USDA’s 1.685 billion bushel target.
What Will it Take for Soybeans to Break Above Resistance?
January soybeans also hit resistance on the charts around $11.35 yesterday and will need a new catalyst to break though that level. Knight suggests it either needs to come from confirmation of Chinese purchases or lower ending stocks in the WASDE on November 14. That could come in the form of lower yields.
Corn Rebounds With Soybeans
Corn futures are rebounding with soybeans again Wednesday but have also run into chart resistance around the $4.35 level. To break above that mark Knight thinks USDA will need to provide lower yields and ending stocks in the November WASDE. However, he says early trade estimates are not that far from the September figures on yield.
S&P Global released their estimate on corn yield at 185.5 bushels per acre which is down just 1.2 bushels from September and is still a record. That puts production at 16.8 billion bushels.
Wheat Fades China Demand
Wheat futures were higher on Tuesday with fund buying and bull spreading which seemed to confirm the trade talk that China was looking to buy up to five cargoes of U.S. wheat. China dropped not only the 24% retaliatory tariff on wheat but the additional 10% tariff which may signal they need wheat. Knight says funds have covered a chunk of their short position with the $.50 rally so its unknown how much more they may cover.
Cattle Futures See Follow Through Selling
After a poor technical close cattle futures are seeing follow through selling on Wednesday. Live and feeder cattle futures saw a break below the bear flag formations and so more fund liquidation is taking place as a result. However, Knight doesn’t think the market will see a much bigger correction and suggests recent lows will hold.
