Soybeans ended higher on Thursday with corn, wheat and hogs mostly lower and cattle mixed.
Soybeans Rally on China Soybean Purchase Agreement
Soybeans ended higher on Thursday making new highs for the move after some wild swings in the overnight session chasing the headlines from the trade framework announced between the U.S. and China.
The deal was reported initially to contain substantial ag purchases including soybeans and sorghum, but lacked any details. Treasury Secretary Scott Bessent later appeared on Fox Business News announcing China had agreed to buy 12 MMT of U.S. soybeans for 2025 and would buy 25 MMT annually for the three years following.
Mark Schultz with Northstar Commodity says once the dust settled the soybean market saw solid gains with January finally closing above the $11 mark.
“Watch to see how we close here. We went up against some pretty strong resistance. We’re above it now. We’ll see if we can make that close because you’re going to finish off the week and the month tomorrow. So key numbers to watch. You want to see it start November beans nearby close above $10.80 or better. And maybe then we got the start of something that’s breaking out to the upside.”
He says the soybean market has gone up 90 cents in about what, 13 days on this market. Yes, you reward the market with some beans at this point.
How High Will Soybean Prices Rally to Price in the Deal?
He says technically the soybean market looks good trading at levels not seen for more than a year.
Is 12 MMT and 25 MMT of Soybean Purchases a Game Changer?
To put it into perspective 12 MMT is equivalent to 441 million bushels and about half of what China purchased from the U.S. in the 2024-25 marketing year. However, it is better than zero so that was at least a victory according to Schultz.
The 25 MMT commitments are equal to about 919 million bushels, which is also no better than the annual soybean export totals for China in 2022 through 2024. It’s also below the 30 to 35 MMT totals China bought at the peak of their past business. There are also lingering question about if this agreement is binding or if China will be able to get around purchases due to commercial considerations like they did in the Phase One agreement.
How Will This Impact the Soybean Balance Sheets?
Schultz says this may not have a big impact on the soybean balance sheets because even if China buys from the U.S. it will mean less activity from other soybean export customers.
So U.S. ending stocks for soybeans could stay relatively close to the 300 million bushel estimate USDA released in the September WASDE.
Will China Buy Other Ag Goods?
Schultz says its possible China will buy sorghum and maybe wheat but he’s doubtful about corn as China is a net exporter of corn. He says if tariffs are lowered on beef China may renew some buying but he’s skeptical China makes big pork buys because of the low prices and big supplies in country.
Corn Corrects on Farmer Selling
Corn futures saw a correction selling and profit taking after hitting chart resistance but Schultz says more of the pressure came from an uptick in farmer selling. With the last 25% of the corn harvest needed to find a home producers are running into a storage crunch. Elevators in states like Iowa and Minnesota have stopped buying because they are full and already have piles on the ground. “We’re already seeing some elevators full and taking cash only on corn sales.”
Schultz also thinks the corn market was a bit disappointed there was no mention of corn in the China trade accord.
Wheat Sees Profit Taking
After a solid rally off of five year lows in all three wheat classes Schultz says the market saw some profit taking as it was overbought.
Plus, Schultz says recent rains in hard red winter wheat areas of the Southern Plains caused some selling pressure. “The wheat is for the most part planted. Now it gets the rain and now you go back to some warmer, drier weather after this should get the wheat crop off to a very good start.”
Cattle Bottoming?
Cattle futures ended mixed but were clearly in recovery mode for a second day. The news the Mexican border will remain closed to feeder cattle imports helped to spur Wednesday’s rally and there was some follow through buying on Thursday. Schultz is concerned that the funds are liquidating on strength with fear that President Trump is on a mission to lower beef prices.
Cash is King Right?
However, the futures have had a wicked correction off the highs by $25 on live cattle futures and over $50 on feeder cattle futures and got too far away from the cash fundamentals. Schultz says that was what started the rally and could help the futures recover at least part of the losses.
Lean Hogs Mostly Lower....Again
Lean hog futures were lower except for spot month December as technical selling and lower cash have continued to weigh on the futures. Schultz says he sees more downside risk in the market.
