Soybeans and livestock ended mostly higher Tuesday, with wheat and corn mostly lower.
Soybeans Rally on Talk of China Buying
Soybeans recovered on Tuesday on market talk that China was looking to buy soybeans off the Pacific Northwest. Jim McCormick with AgMarket.Net says there is no confirmation of that business yet, “The question is are they buying part of the 12 million metric ton that President Trump said they committed to buy back in the falll or is this part of the 8 million metric tons the President encouraged them to buy a few weeks ago. There is no clarity from the USDA or from the Chinese what’s going on, but it’s a good sign to see them in the market.”
Soybeans Need China Business
McCormick says the soybean market needs that demand. " So President Trump is going to be in China here in a few weeks, so it does make sense that maybe this deal will get done. We do need it to get done because right now, even with the 12 million metric tons that China has bought that we believe, we’re not going to hit the USDA’s current export goal. If they would buy eight of it, four of it would just help us match the original export target we have right now. So let’s hope the deal gets done.”
U.S. Loses Leverage as SCOTUS Stirkes Down IEEPA Tariffs
With the IEEPA tariffs struck down by the Supreme Court, he says there is concern that the U.S. doesn’t have as much leverage with countries in striking trade deals. “That’s really the question for everybody right now, because when it was struck down, now the question some of these countries had. Remember, some countries made a deal. They said, hey, you lower our tariffs, I will invest in the United States. There were other countries, they had higher tariffs that did not make that deal. Now with what’s going on, how I understand it, everyone has the same tariff. So now the question these countries that had said, hey, I got the lower tariff for investment in the United States, are they going to want to renegotiate that deal with President Trump?”
Plus, does the U.S. have less leverage in getting China to buy the additional 8 MMT of soybeans? McCormick says, “Well, I think he has a little bit less leverage, but the fact of the matter is this, Michelle, both gentlemen need each other. And what I mean by that, President Trump’s ratings are not the best. That’s face it, they need approval ratings. His base is the farmer. The farmer is very upset about the trade war, so he needs these beans to go there. On the other hand, Chinese economy is still incredibly weak. You’ve seen some purging of the Chinese military leadership. So it shows me, it says to me that there’s some uncertainty going on in China. So I think both of these gentlemen would like to have this deal extended another year so they can kind of take that, you know, take that off their plate and deal with the other challenges that their countries are dealing with.”
Will Soybeans Retest the November Highs?
So far soybeans have not been able to take out the November highs and will need proof of China business to do that. “I think you need to, because like I said, you know, you need those buys to hit the current USDA’s target. So if we don’t hit that China does not buy, this market looks like it’s overvalued. And I would argue it is a little bit overvalued. Because you’ve got to remember, The prices rallied up as the Chinese got priced into the market. But what we’re doing, we’re pricing everybody out of the market. Brazil’s selling beans roughly a dollar plus below our price. So anybody else who wants to get a deal are not going to come to the U .S. shore. They’re going to come to the Brazilians.”
Bean Oil Hits New Contract Highs as RVO Heads to OMB
Soybean oil futures hit more new contract highs as there was more market talk that the RVO proposal might be headed to OMB. However, he is skeptical about how this plays out and that bean oil has priced this news in. “I am a little bit leery of a classic buy the rumor sell the fact if it does not come in as positive is the bean oil market’s pricing. Time will tell. But, you know, it’s good here. It’s going to the OMB because we’re going to get some more, get our teeth into what actually they have
decided to do.”
Corn Capped Ahead of First Notice Day
Corn ended slightly lower Tuesday following wheat and with farmer selling ahead of first notice day. “If you are long the board, you’ve got to get out or you’re risk delivery here on Friday. The problem of the farmer market is if they’ve got a basis
contract, they’ve an HTA, free D .P, and it’s against the March contract. They’ve got to make a decision. Are they going to roll those positions out to May? Or are they just going to price the grain? A lot of them are pricing the grain, plain and simple, because they do need the money for this time of year.”
Wheat Sees Profit Taking
Wheat saw some profit taking Tuesday after the recent rally. “Wheat markets have been down to tear recently. The funds are short, a lot of wheat. With the uncertainly in the Middle East, it seemed like it just unnerved the fund positions that I just don’t want to be short wheat if something gets out of control in the Middle East.” He thinks the funds are concerned about being short and getting caught like they did in 2022 when the Black Sea war broke out, but there is one difference. “Remember, Russia was invading the breadbasket of Europe. And there was a real fear of what would any grain get planted, would any grain come out of the Ukraine. This is more of a situation of logistics.”
Cattle Market Rebounds
The cattle market rebounded on Tuesday after a couple days of profit taking with outside markets showing more stability. “Also, consumer confidence came in a little bit better than what people were thinking. And, you know, optimism, maybe what President Trump’s going to say, you know, in the State of the Union address but in general, Michelle, the supply of cattle is very, very tight. The consumer continues to like his beef. What can you say they’re willing to pay up for it? And right now, the
goal of the market is to essentially get prices high enough to kill off demand, plain and simple.”
Watching for Plant Strike
The markets are still nervous about the plant strike at the JBS beef facility in Greeley, CO and McCormick says, “They’ve essentially agreed to go on strike if their demands are not met.”
Hogs up a Sixth Day
Lean hog futures were up for a sixth day with some triple digit gains on fund buying and strong consumer demand for protein. He says the recent correction was just a pullback in a bull market and now the rally has resumed.
