Soybeans and bean oil ended sharply higher but off session highs, corn slightly higher with wheat lower. Cattle rallied to nearterm highs, with hogs mixed.
Soybeans Soar as Trump Says China to Buy More Soybeans
Soybeans were 26 cents higher in the nearby contracts and made new highs for the move as President Trump posted on Truth Social about positive talks between he and Chinese President Xi Jinping. Trump and Xi reportedly discussed consideration by China to purchase more agricultural products, including increasing U.S. soybean purchases for the current marketing year to 20 million MT. However, soybeans and meal ended well off highs with mid-range closes as traders want proof from China of the potential buys according to Joe Vaclavik of Standard Grain. However, he says the post infers there might be another 8 MMT of old crop soybean purchases.
“It raises a ton of questions. Is China going to come in and come in and buy U .S. soybeans smack dab in the middle of Brazilian harvest? When Brazil’s got a lot of soybeans, biggest crop, any ever harvest it, 180 million metric tons, whatever it may be. But you know what, if that’s what Trump, if that’s the deal that Trump made, it’s that in order for this truce to continue, we want another 8 million. I don’t know that 8 million is a huge deal in the grand scheme of U .S.-China relations. So maybe it is possible. I’m going to go with the idea that it’s possible and that it may happen. Because you know what, Trump, Trump made the deal for the first 12 million, it was later than farmers wanted it to be better late than never. But, and it happened. So I’m not going to, I’m not going to push too hard against the fact that maybe or the idea that maybe this could happen,” he explains.
Can China Even Buy Soybeans With Cheaper Brazil Soybeans Coming on Line?
Vaclavik says he’s skeptical. “You know, our main shipping window for soybeans at the United States is direct immediately post harvest. It’s October, November, December, and it starts to fade in January. So this could be, it could be a very interesting year. Are we going to see some massive contra -seasonal U .S. soybean shipping program, massive relative to a normal year in that maybe there’s going to be a bunch of stuff that goes to China that wouldn’t typically be going this time of year. It opens the door again to a lot of questions,” he adds.
Can the U.S. get those soybeans there logistically? “It’s a good question. River levels are not fantastic. I think we’ve probably got some additional capacity at the PNW. Growers in the Northern Plains know how bad basis has been. It’s because we haven’t been doing a lot of PNW business. So you’ve probably got potential to expand that a little bit. We are still shipping a lot of corn. I’m not going to worry about the capacity. I don’t see the sales first and we’ll figure
the capacity out later,” he says.
Will the China Business Make up the Shortfall in Exports?
Currently weekly soybeans export sales are 20% behind last year so could this additional China business make up the gap? Vaclavik says its going to be hard to catch up after a very poor start not only to sales, but maybe even shipments.
“You know, our main shipping window for soybeans at the United States is direct immediately post harvest. It’s October, November, December, and it starts to fade in January. So this could be, it could be a very interesting year. Are we going to see some massive contra-seasonal U .S. soybean shipping program, massive relative to a normal year in that maybe there’s going to be a bunch of stuff that goes to China that wouldn’t typically be going this time of year. It opens the door
again to a lot of questions,” he adds.
Can the U.S. get those soybeans there logistically? “It’s a good question. River levels are not fantastic. I think we’ve probably got some additional capacity at the PNW. Growers in the Northern Plains know how bad basis has been. It’s because we haven’t been doing a lot of PNW business. So you’ve probably got potential to expand that a little bit. We are still shipping a lot of corn. I’m not going to worry about the capacity. I don’t see the sales first and we’ll figure the capacity out later,” he says.
Soybean Demand Push
He says this is on top of more favorable biofuels policy and demand news this week. “So we had the 45 Z stuff out yesterday. There’s a lot of questions about how exactly the farmer is going to benefit. We know that the ethanol plant is going to benefit and that the biodiesel producer is going to benefit. Renewable diesel producer is going to benefit. How does it benefit the farmer? What sort of trickle -down effect does it have on the farmer? You’re going to get paid for low -C -I corn, low -C -I
soybeans? We’ll find out, I guess. And then the other piece is pending RVO news. We’re going to see more renewable or updated renewable volume obligations. The industry is very optimistic about it. They think they’re going to get what they
want, but we don’t know for sure,” he says.
How High Do Soybeans Need to Rally to Price This In?
It’s a great question. You know, it almost opens the door to like a new crop. I won’t call it acreage battle, but maybe shift in the dynamic a little bit. Like, given what we know today, and it changed today, but given what we know, we thought, We think we’re going to plant a lot of corn acres because soybeans don’t make money. Corn doesn’t make money either, but it’s a little bit better. It’s a little bit less bad, you know. This could turn you into a situation where, hey, maybe we need some soybean acres. Maybe that means corn acres a little bit lower. Maybe it could be overall positive for both crops,” he adds.
Corn Barely Budges
Even with soybeans up nearly 50-cents at one point during the session corn was not really able to follow staging a disappointing close of about a penny higher. But if soybeans go up, does corn have to follow here? He says, “Not necessarily, because corn can afford to lose some acres for this year. It could afford to lose a couple million versus what I think is probably reality right now. You could go from maybe what could be 96 down to 94. And then that gives you a fighting chance for some
kind of market, you know, later this year.”
Then the only other big thing that could move that market is what, Safrina corn problem or something weather -wise. He says, “Yes, the U .S. corn growing season, make no mistake about it. We talk about Brazil a lot as it relates to growing season, how it’s become a bigger deal. But when it comes to corn, the United States is king. We’re the biggest producer by a large margin. Our growing season is the one that matters most. So just as any year, if we run into a weather problem in the United States, the summer, the corn market will rally. It’s just that we haven’t seen that. We’ve gone a couple years without a weather problem now. We haven’t seen those summer weather rallies as we’ve been accustomed to over years.”
Wheat Can’t Follow Soybeans Either
Was the pressure from the higher dollar or taking out weather premium? “I just think in the United States, we’re oversupplied. The export market’s not great. Export pricing is kind of soft. We tend to key off of Black Sea export pricing because Russia is the biggest wheat exporter, and it’s just the market globally has just not caught a great bid the way that we’d like to see it.”
Fund Buying in Grains at Some Point?
With money flowing into commodities like precious metals, etc. is there any hope for funds to buy under valued grains? Vaclavik says, “I really hope so because as a grain market person like i’m just i’m begging for that kind of volatility to hit our markets even if just for a couple of days we saw some of it in the soybean market today but you’d like to see that maybe on a more extended basis. And with volatility comes good things and bad things, but at least we would have some good things, whereas right now it feels like we have no good things.”
New Highs for the Move Again in Cattle
How much farther can cattle futures rally after three days of new highs for the move and will the market take out the October highs? He says, “It is very possible. I don’t really think there’s very many obstacles aside from maybe something we don’t know. You know, a screw worm headline, a beef policy headline, an import headline, economic downturn. I mean, there’s a lot of little things that could come out and cause a nasty correction for sure. But I mean, the fundamentals appear to be just about as strong as ever.” The semi -annual inventory report with the beef cow numbers down a percent extends the marketing hole and higher prices for a longer amount of time. “Yeah, I mean, the guys here at NCBA said another, this is going to be another two, three years. And I don’t, I wouldn’t argue with that for a second.” So risk management is important he says. He says the biggest Black Swan is the border reopening and the possibility of getting NWS in the U.S.
