Grains ended higher on Monday led by soybeans. Cattle and hog futures were sharply lower, with a higher day in milk futures.
Soybeans Soar on Possible China Deal
Grain markets staged a rally on Monday and Naomi Blohm with Total Farm Marketing says soybeans led the charge on news over the weekend that the U.S. and China had reached a framework agreement that included “substantial purchases” of U.S. soybeans.
“We don’t have any details yet,” says Blohm, but the market was optimistic about any purchases as China has not bought any soybeans for the new crop market year amid the trade war.
January soybeans made new highs for the move, up nearly $.25 and closed right at $10.85, with March up $.22 at $10.95 1/2, right up against key resistance on the daily charts she says.
“And looking ahead towards the March contract, the March contract was able to get to $11, but the significance is that this resistance area that these soybean prices are at, it was the high not only from right now, but back in June and also from back in February. So it’s going to take some specific fundamental news to get the market to go through resistance,” she explains.
That news would include confirmation of soybean purchases on Thursday when President Trump meets with China’s President Xi in South Korea.
How Many Bushels of Soybeans Could China Buy?
But the size of China’s purchases of U.S. soybeans will also matter, according to Blohm.
“China needs about 10 million metric tons of soybeans yet for December and January, which is about 360 million bushels,” she explains.
A two month supply is less than half of the 800 million bushels of U.S. soybeans China bought in the 2024-25 marketing year.
Will a Deal Get Signed?
However, China has not officially confirmed that President Xi will meet with President Trump on Thursday at the APEC summit in South Korea, so it’s not a done deal yet.
Blohm says she’s hopeful, but cautious an agreement will get signed. “It wouldn’t surprise me if we see either President Trump or President Xi do something dramatic at the last minute because they like that attention and they like that flare. So I’m cautious. And so I feel like with beans at resistance levels on Monday’s trade, if we don’t see any fresh news, we’ll probably see the market pull back a little bit as the week goes on.”
Corn Follows Soybeans
Corn futures were up $.05 to $.07 following the rally in soybeans and wheat but also getting a push from strong export inspections at 46.8 million bushels, according to Blohm.
Here again December corn was stopped out around $4.30 which is a significant resistance area on the charts.
Blohm says to get above that level not only will soybeans need to see a chart breakout on a China deal, but the corn market will need confirmation of lower yields.
“I think national corn yield is probably down around 179, 180 bushels just based on client conversations,” she explains, “And our export data is also running well ahead of last year based on export inspections which should be able to pull ending stocks to around 1.8 billion bushels.”
Wheat Futures Higher on Short Covering
Wheat futures closed higher in all three classes with help from corn and soybeans but also seeing short covering by the funds and outright technical buying.
“When you look at the wheat chart, wheat is cheap. And if you look at a continuous monthly chart that goes back about 20 years, Last week, wheat had tested major support on a 20 -year chart of an uptrend line. So we’re seeing the bargain buyers come in,” she adds.
The market did get a bit of a fundamental push from strong weekly export inspections at 9.5 million bushels. Total commitments now sit at 421 million bushels, up nearly 20% from last year.
Cattle Futures Melt Down With Deferred Feeders Limit Down
Live and feeder cattle futures melted down on Monday on technical selling, with deferred feeder cattle futures closing down the expanded limits of $13.75.
Several of the deferred live cattle contracts also touched limited down the expanded $10.75 limit during the session but managed to close off those levels.
Blohm says,"The funds are taking their balls and going home as they are spooked by the move by the Trump administration to lower beef prices.”
Brazil Beef Tariffs to Ease?
Friday she says the market was concerned about the possibility of the U.S. resuming feeder cattle imports from Mexico as their Ag Minister is scheduled to meet with USDA Secretary Brooke Rollins to discuss reopening the border.
The final straw was word on Monday that the president of Brazil had been guaranteed by President Trump the two countries would reach a deal which could lower the 50% additional tariffs on beef imports and allow trim back into the U.S..
Where Do Cattle Futures Find Support??
Blohm says live cattle futures held their 100 day moving averages on Monday but the feeder cattle futures closed above those critical chart areas.
“December live cattle closed below the 100 -day moving average, almost limit down. And the feeder cattle finishing limit down on expanded limits, November feeders are now sitting on the 100 -day moving average,” she explains.
So she thinks the market is at a pivotal point where it could see additional pressure before seeing a bounce and the real question will be how much of a recovery could be in store?
Milk Futures Rally Over $1 in a Week
November Class III milk futures were up $1.20 last week and extended gains again on Monday.
Blohm says the milk futures are following strong cheese prices. “Yeah, it comes down to better cheese prices and some firmer butter values that have been out there. So the milk market had been oversold from a technical perspective. It had tested some recent lows and some bargain buying came in. Cheese demand is really hot, of course, heading into the holiday season, which has been supportive to the milk futures as well.”
She says the dollar plus rally the last week or so has been welcomed by dairy producers.
