Soybeans and cattle ended higher Tuesday with corn, wheat and hogs lower.
Soybeans Firm on China and Aid Hopes
November soybean futures ended 4 1/4 higher on Tuesday with some short covering and buying on hopes of trade aid or an upcoming China trade deal.
Rich Nelson with Allendale, Inc. says, “A lot of us will question exactly what type of deal may be made at the end of this month or maybe we may not have a deal. So certainly we see what comes with that story here in these next few weeks, but for right now at least, it does give us this discussion with soybean pricing a little artificial support here in the short term.”
Deal or No Deal?
Even if the U.S. announced China soybean purchases at the end of October, is it too late to make a difference for this marketing year?
Nelson says the USDA Ag Attache to China indicates that China is booked on soybeans through mid-December.
“So if we do have a deal, we’ll get a part of December perhaps, we’ll get January and maybe a little bit February as well before that Brazilian new crop harvest really becomes a bigger factor as well. So there is going to be maybe a partial fill, but certainly not bring us back to what we hoped for at the start of this year,” he explains.
Is China Buying Soybeans With the Government Shutdown?
During the government shutdown in 2018 China bought soybeans under the radar, so are they buying now?
Nelson is doubtful.
“Personally would not suggest it. I think right now, at least with the current tariff structure that they’re facing regarding extra cost, it still does pay them to pay more attention to Brazil, at least in the very short term. So I don’t think we’ll probably see China do some sneaky buys in this case at least,” he states.
Too Little Too Late
So, Nelson says that means China will buy less from the U.S. for the 2025-26 marketing year and may be looking at new crop bookings to fulfill a deal.
That means USDA’s 1.7 billion bu. export target is too high.
“China is about 60% of our general export story. Now, we do have, of course, non -China buyers, which are about 40% of the world’s soybean market. So we can fill part of that need. But even when you do the math, as far as assuming, we’ll make some sales to China, and maybe we’ll do a good portion of the everybody else type of story, this still leaves a deficit of maybe three to 7 million tons. That’s equivalent of 50 to 250 million bushels,” he says. .
Is Aid Coming?
Treasury Secretary Scott Bessent suggested the Trump Administration was going to announce an aid package for farmers up to $15 billion.
However, with the government closed some suggested that might be delayed until a Continuing Resolution is approved.
Nelson says, “Now there’s some questions on when it’ll be maybe later on this week or perhaps pushed back a few weeks perhaps.”
Corn Sees Harvest Pressure
Corn eased on Tuesday as Nelson says the market saw some harvest pressure and lower wheat futures were also a drag on corn.
The market has been resilient despite last week’s 200 million bu. increase in stocks and with a void of other news from USDA due to the government shutdown.
No October WASDE
Despite the lack of a WASDE report on Thursday analysts still released average trade guesses.
Nelson says corn yield cuts were minimal and with the additional 200 million bu. of corn USDA found in the Quarterly Stocks report the average trade guess was over 2.2 billion bushels on ending stocks.
“But one positive news is the average trade guess is not suggesting that the feed residual side is really going to hit too much in the short term. So not many people pushing those numbers up to 2 .4 billion at least,” he adds.
USDA is slow to come down on yield in the October report and so the lower harvest reports would in all likelihood not shown up yet but instead could be reflected in a November WASDE, according to Nelson.
“Historically the October report does not see really significant yield declines. Usually these are limited to 0 .2 to 0 .8 % from the September numbers. And the average trade guests coming out here for this week’s discussion does reflect
the yields only dropping to 185 bushels an acre,” he says.
Wheat Falls....Again
Wheat futures once again fell to new lows for the move in all three classes on Tuesday.
Nelson says it mostly a function of larger U.S. supplies and competition from corn and sorghum which are all moving to lower prices to move into the feed ration.
At this price level it is likely farmers will plant less wheat and have likely already cut winter wheat plantings this fall.
Cattle Soar on Bullish News
Cattle futures had a strong day with several bullish factors driving prices.
Nelson says another New World Screwworm case 170 miles from the U.S. border drove some buying interest in feeder cattle futures.
Live cattle traders were also relieved that the call between President Trump and Brazil’s President Lula did not result in the 50% additional tariffs being lifted on beef imports.
Nelson says, “There were also no deliveries against the October live cattle contract.”
Can the Market Retest the Highs?
The feeder cattle futures are within striking distance of the record highs once again and Nelson thinks its possible the market could at least test those chart areas again.
Live cattle may need some help from an at least steady fed cash market this week.
Hogs Further Consolidate
Lean hog futures saw more technical selling and fund long liquidation following the recent chart damage.
However, Nelson says the cash market has also been softer which could cause further consolidation.
