Grains end higher making fresh highs for the move, cattle also end strong, with a lower day in hogs.
Soybeans Continue to Rally
January soybeans were $.19 cents higher Monday and made 16-month highs after technically scoring a higher weekly and monthly close. Fundamentally the market also got a push with more details being released over the weekend from the White House on the China trade framework.
However, Arlan Suderman, chief commodities economist with StoneX, Inc., says the market is rallying on the White House interpretation of the deal which assumes China will buy 12 MMT in the next couple of months on top of the nearly 6 MMT it purchased earlier in 2025. However, he says China has not confirmed that.
Is it 12 MMT or 18 MMT Total for 2025?
If the White House interpretation of the agreement is correct that would equal 18 MMT of U.S. soybeans exported to China, if not it could only be 6 MMT of business. Suderman says that is a big difference.
“If it is 12 MMT of additional business than USDA can reach its export target on soybeans of 1.685 billion bushels. If not that could mean a 400 million bushel soybean ending stocks figure, which is not bullish by any means,” he explains, “and would justify the recent rally.”
How Will USDA Incorporate the China Sales Into Soybean Ending Stocks?
USDA announced it will be releasing crop production and WASDE reports on November 14 and will take its first shot at incorporating the China deal into the soybean balance sheets. Suderman says, “I think since the White House interprets it as 12 million metric tons a new business. I think they’ll probably keep their export target right where it’s at at 1.685 billion bushels. I think 10 to 12 million metric tons of new business is what it requires in order for us to hit that target.”
When Will China Drop the Retaliatory Tariffs?
The White House white paper also states that China agreed to lower the retaliatory tariffs placed on various ag products on March 4. However, Suderman says so far there is no indication of if or when China will lower those levies. “So far we have seen no evidence they are lowering the tariffs which is keeping private exporters from buying and so right now only Sinograin has bought U.S. soybeans for their reserves,” he says.
Is the China Deal That Great?
Suderman says he has concerns that after the 1-year deal expires on rare earth minerals that China will find a way to get out of complying with the agreement which will put the 25 MMT a year soybean purchases through 2028 in jeopardy.
While 25 MMT a year isn’t much more than China has bought annually the last few years Suderman says without the agreement he thinks China was on a mission to only buy Brazil soybeans and forego any purchases from the U.S. “This may delay that until the U.S. can get its biofuels production ramped up,” he adds.
Will China Uphold the Deal?
So far there has been no confirmation of language in the agreement similar to the “commercial considerations clause” in the Phase One deal that allowed China to wiggle out of compliance and purchases.
Market Awaits Supreme Court Ruling on Tariffs
The market is also awaiting the Supreme Court decision on the legality of the IEEPA tariffs. Suderman says he was actually surprised China agreed to the deal with the U.S. prior to the court decision. He thinks the only reason President Xi didn’t stall was either his legal staff told him the tariffs would be upheld or his standing within his own country is shaky and he needed the deal to shore up support.
Corn Follows Soybeans Hits Resistance
Corn saw additional fund and technical buying but has also followed the rally in soybeans. However, on Monday the market likely got some assistance from wheat which rallied on news Chinese importers were looking to buy U.S. wheat.
However, the corn market is into stiff chart resistance and Suderman says it will have a difficult time getting through that area with the large amount of corn that farmers in the U.S. and South America still have to sell.
Wheat Pops as China Looks to Buy U.S. Wheat
Wheat futures ended higher on fund short covering but also got a renewed push from news Chinese importers were getting bids for U.S. wheat for December through February delivery. Suderman says if China drops the tariffs it makes sense that they would buy U.S. wheat, most likely soft red winter. This would be the first wheat sales to China in over a year.
Has the Cattle Market Bottomed?
Live and feeder cattle futures both ended higher Monday with triple digit gains still trying to recover after the $60 selloff from the highs in feeders and the $25 correction in the fed futures. Boxed beef prices were also higher at noon lending strength.
Suderman says the futures market is still consolidating after funds liquidated on fears of President Trump’s plan to lower beef prices. So, he says it may be too soon to call a bottom until technically the market can close above the October 29th highs.
Lean Hogs Make New Lows
Lean hog futures made new lows for the move as technical selling continued and the December contract hit a 3.5 month low. Suderman says the market has seen fund liquidation with lower cash values also dragging down the market.
