Grain and livestock futures ended mixed on Friday
Soybeans Fall on SCOTUS Tariff Ruling, China Fears
Soybeans hit new highs for the move early Friday with the help of a rally in soybean meal but then reversed lower as the Supreme Court of the United States ruled that the IEEPA tariffs were illegal. Shawn Hackett with Hackett Financial Advisors says the market fears that China will use the ruling as leverage to get out of its trade framework struck with the U.S. on Oct. 30 and that could include its soybean purchase commitments. “I mean, I think it’s a legitimate concern. Anytime you’re taking a levered position and you’re taking it off the table, you worry that maybe the other side’s going to back away from their commitments,” he says.
There were further concerns that this might mean the planned meeting between President Trump and Chinese President Xi scheduled for early April could be canceled.
Does the April Meeting in China Still Happen?
However, Hackett is actually fairly optimistic that the April meeting will take place and that China may broaden its agricultural buying portfolio. “I tend to feel that the truce that the Chinese and the United States have put together is longer lasting than that. We just need to see evidence over the next few weeks that everything is still good. This meeting is still going to happen. And we still expect a broadening of this China trade deal to include other ag markets. Until we see that, I think the
market’s going to be a little worried that maybe we’ve put too much premium into the soybean market with that unknown in the market now.”
Soybeans Post Higher Week
Despite, that soybeans did post a higher weekly close and technically look strong but are up against long term chart resistance according to Hackett.
“Right now, if you look at the chart technically, the three -year and five -year moving average on the July contract is $11.60 to $11.80. I think the last rally late last year went into that same range. So we’re in major chart resistance. I don’t think we can get through that, Michelle, until we get hardcore evidence that not only is this meeting going to happen, but that we can expect bigger things. And we need to see that until we do. I think the soybeans market could be in a corrective phase.”
Will China Buy Beans Ahead of April Meeting?
The wild card is if China starts buying soybeans ahead of the April meeting as a goodwill gesture and Hackett agrees that is possible.
“I absolutely believe they will do that. If we’re going to go ahead with this and we’re going to have this meeting and we’re going to broaden this trade deal, I would have to believe that they’re going to show some goodwill and purchases showing
that they’re moving the ball forward ahead of this meeting. So I would expect as they come out of this New Year’s holiday, Chinese holiday, to see them back in buying soybeans and supporting the idea that all is still the Supreme Court, you know, voting against these reciprocal tariffs.”
Biofuels Optimism Also Support Beans and Bean Oil
The soybean oil futures saw a bit of a correction as well on Friday but have been hitting new contract highs on optimism on biofuels demand with upcoming decisions on 45Z and the RVOs. Certainty regarding biofuels policy will be needed to keep the momentum going. “I mean, we’ve been struggling to get clarity on the renewable diesel, the biofuel here in the U.S. and it looks like we might finally get that clarity and it might be actually on the better side of what expectations were, helping the domestic bean crush for sure.”
He says the rally in crude oil due to geopolitical concerns with Iran are also supportive to the biofuels space.
Wheat Ends Higher Friday, Sees a Chart Breakout
Wheat futures ended higher on Friday and for the week, working on a chart breakout. While some of the rally has been fund short covering, Hackett says wheat is also adding risk premium. “We have significant unrest in Iran. There’s worry about the Straight of Hormuz that could be closed or restricted. We’re not getting good signs from Russia, Ukraine de -escalating. It looks like it’s re-escalating. And we have these Palmer Drought severity indices in the U.S., they keep getting redder and redder going as we get into the post -dormancy season. And the market’s starting to worry that a dry spring here could really hurt yields and maybe provide a weather spark that we haven’t seen in the wheat market in quite some time. So I think it’s appropriate in the market doesn’t yet appear to be done putting that premium in.”
Will Corn Continue to Follow Wheat?
Corn was slightly higher on Friday trying to follow wheat, but it has been a reluctant follower. Hackett says that is because farmers are selling old crop corn on the cash market ahead of first notice day. “We’re seeing aggressive cash selling right now on in corn that’s keeping the market depressed, keeping it from following wheat, keeping it from following soybeans higher. And in addition, the weather down in Brazil for the second crop corn, 75 % of the production down there has been excellent. And it looks like it’s going to continue to be excellent. So a lack of weather worried down in South America, along with active cash selling here domestically, is keeping that market from rallying and that’s probably going to continue at least into the first half of March.”
Best Hope for a Corn Rally?
Hackett says the best hope for a corn rally may be if China starts buying corn as part of the trade deal with the U.S. “If an expanded trade deal is going to include the corn market, that certainly would change the view
of demand of the balance sheet. And then of course we got to get to the planting intentions report and the quarterly grain stocks report at the end of March to see if the USDA’s outlook is correct or not.”
China has recently bought 45 cargoes of U.S.sorghum and is buying Australian wheat. So, Hackett thinks there is quality problem with China’s crop and they are going to need corn from the U.S. “So I think not only is there a need for it, but I just think
it makes sense on increasing the goodwill between the United States and China that they would expand in the corn market. And we certainly have some corn to sell at a price that China would find it fairly attractive at this point.”
Will China Buy Cotton?
Will China also buy cotton as part of that trade deal? Hackett is optimistic about the prospects. “We know that they continue and have always been one of our largest, if not the largest buyers of U.S. cotton, is the Chinese. If you looked at a chart, all of a sudden in the last week, week and a half, we’ve seen a significant rally off of almost a V off the lows here. And it looks to me like we might, the market might be sensing that we’re going to be seeing some increased cotton purchases.” he adds.
Growing Season Forecast
While there is growing drought in winter wheat areas of the U.S., Hackett says is watching growing season weather as the U.S. transitions from a weak La Nina to a weak to moderate El Nino. “The IRI which comes out with dynamic models and statistical models, came out yesterday of all the models and showed there’s a 60 % chance that we’re going to see in El Nino developed by July. The last three months in a row, we’ve seen those numbers go up every single month from 40 % to 50% to 60%, suggesting that we are likely to have an El Niño type of July, which usually means, cooler weather with timely rains. The last time we went through this was 2023, and that’s exactly the weather we had, and we wound up having a pretty decent
crop. So I think we’re looking at a pretty good crop year, especially for the core, you know, growing season, when yield is most impactful to corn and soybeans.” he adds.
Cattle Fall Ahead of Report and Cash Trade
Cattle futures close sharply lower on both live (off 92 to 175) and feeder (off 225 to 272) cattle contracts. The markets saw caution ahead of the USDA Cattle on Feed Report and with a lack of cash trade.
At the time of this close only a small amount of trade had been reported. Northern dressed deals were marked at $388, $7 higher than last week’s weighted average, basis Nebraska. Private sources reported Southern live business marked at $249, $1 higher than the previous week.
The just released February 1 on feed report listed 11.5 million head, down 2% from February 2025. Placements in January totaled 1.74 million head, 5% below last year; marketings in January totaled 1.63 million head, 13% less than the prior year; other disappearance in January totaled 55,000 head, 8% under the same time last year. Today’s slaughter totaled 89,000 head, 3,000 more than last week, but 19,000 less than a year ago. There are no cattle reported to be slaughtered on Saturday. This brings the weekly total to 516,000 head, 25,000 lower than the prior week, and down 49,000 head from 2025.
