Soybean futures ended sharply lower on Friday, with the January contract down 33¢ for the week. Matt Bennett with AgMarket.Net says the poor close was tied to uncertainty about the China trade deal, particularly comments from U.S. Trade Representative Jamieson Greer suggesting the U.S. and China have not reached a purchase agreement on soybeans. Greer said on Fox TV Sunday that China has been complying with the terms of the bilateral trade agreements and the U.S. is constantly monitoring commitments made by China in a bid to maintain a stable trade relationship. Treasury Secretary Scott Bessent and Greer had a phone call with the Chinese VP in which they reviewed progress on commitments. Greer said China is moving in the right direction and has been compliant so far.
This comes on the heels of Bessent telling the New York Times that China was on track to make the 12 MMT of soybean purchases by the end of February 2026.
“We don’t know what the situation is, you know, Secretary Bessent says, hey, everything’s on track; we’re in great shape. Then other people say, well, we don’t even have a signed agreement. Clearly there’s a lot of muddy water here,” Bennett says.
China Buys 17 Million Bushels of Soybeans But Still Behind on Sales
Meanwhile China bought 17 million bushels of U.S. soybeans, which was confirmed by USDA with a flash sale on Friday morning. Trade estimates put total sales at 3 mmt and some are higher than that because they are including export sales to unknown destinations. However, Bennett says even if that is the running total, China is well off of its needed or promised commitments.
“We’re nowhere near the 12 million metric tons. Yeah, there’s a lot of chatter, a lot of talk that the combination of physical sales and purchases, as far as futures are concerned, they’re over halfway there. But that’s not really how the language was portrayed to all of us. It was that they were going to buy 12 million metric tons of soybeans.”
If there is a deal, and purchases can be made until the end of February, that is problematic with Brazil’s cheaper soybeans available by then, according to Bennett.
“There’s no question that from a sales standpoint, and it used to be from a shipment standpoint, you want to get that done before Brazilian beans came online. What are shipments going to look like for us here this year? That’s a big question mark for sure, but as far as sales go, they are great, but we certainly want to see those shipments as well. Unfortunately, if something would fall flat as far as this trade deal is concerned, we don’t have a signed agreement so that’s concerning for a lot of us in this industry that sales could turn into cancellations. We’ve seen that game before,” Bennett explains. “So far there are no China sales that have shown up on the weekly export inspections, which are up to date unlike the weekly export sales.”
Will $11 Hold in Soybeans?
Soybeans had a bearish close on Friday taking out the November lows, and the January contract lost 33¢ for the week. Will $11 hold in the nearby soybean contract?
“Typically, when you take this market that had been below $11 for a long time and go below $11 it’s not a good look for the market. ... This coming week is going to be a very important week,” Bennett says, referencing if the soybean market rolls over it could also hurt corn.
Corn Lower For the Week
March corn closed 3¢ lower for the week despite robust export sales. Bennett says corn was pulled down on Friday by the break in the soybean market.
“No doubt there was just a lot of spillover pressure there,” he says.
Corn was also unable to stay above the 200-day moving average on the March futures even with the infusion of flash export sales and strong export inspections.
“Overall, this export situation is fantastic. I mean, we’re running like 31 % ahead of last year. USDA’s got us forecast at 9 % ahead,” Bennett explains.
Will USDA Lower Corn Yield in the WASDE?
Usually the December WASDE is a benign report with no adjustments to production and minimal demand changes. However, Bennett says this year could be different because of the loss of the October report with the government shutdown.
“With not having an October report, as you just suggested, it definitely calls into question, do we need to make some revisions in December? I mean, typically they have October and November to make revisions, and quite frankly, December, they don’t do anything most of the time. This year might be different,” he says.
Will USDA Raise Corn Demand?
If USDA did lower yield, Bennett says it would likely be offset.
“I would assume if they see some sort of a production change on the way, on the horizon, then maybe they’ll go ahead and make some demand adjustments. I kind of feel like they’re going to stay status quo for the time being. If they would raise exports, again, I’ve got to think they’re going to lower feeding residual usage,” he says.
What Fuels a Rally in Corn?
Bennett says a lower yield, a rally in soybeans or both could be positive for corn.
“The other thing, of course, would be that the Safrina crop is not a banger of a crop. Obviously, that’s what we saw last year,” he adds. “If you look at the world balance sheet from the last USDA report, you’ll see for this marketing year, they’re saying that production is up 55 million tons, whereas carryout is going to be reduced by 10. Overall usage would go up more than the 55 million bushels. I’ll tell you what, that’s pretty impressive.”
Wheat Pressured By Global Supplies
Wheat saw spillover from the lower soybean and corn markets but is still pressured by big global supplies and an increase in Canada’s crop to a record 40 mmt.
“I just don’t see the wheat market being able to rally unless it gets some help from its friends over on corn and soybeans,” Bennett explains.
Cattle Futures and Cash up Sharply
Bennett says cattle futures had a sharply higher weekly close with February live cattle up over $9 and January feeder cattle over $15.
“Last week, we went down, made a low, and then just kind of shot up like a rocket,” he adds. “The bottom line is for cattle, we do have some gaps up above us. Can we go up and close those gaps? I think it’s certainly a doable thing.”
Bennett says he feels a lot different about the cattle market than he did 10 days ago. However, at the same time, he doesn’t see new highs on the horizon.
“I think what you’ve got is a big money player that was just a little bit concerned,” he adds. “Sentiment changed, it wasn’t necessarily fundamentals.”
Sharply higher cash also support the futures rally with Northern live sales at mostly $220 and dressed at $340. Plus, another case of New World screwworm was detected 120 miles from the Southern border, which should keep prices high for the time being.
