Bio-fuel Policy Concerns and Small Chinese Purchases

Confirmation of a small bean sale to China from the USDA this morning and concerns over bio-fuel policy were enough to pressure beans to sharp losses through the day and to pull both corn and wheat lower in its wake. Other news was slow and with the month-old rally built almost entirely on the hope of large Chinese bean purchases, the bulls will need daily confirmation from the USDA to keep finding buyers at thirty-month highs. Old crop corn has been a stubborn follower with both 2026 corn and bean prices participating only fractionally, the structure of the bull market is changing as we head into option expiration on Friday and the abbreviated Thanksgiving trade week featuring December contracts first notice day.

News and Notes:

• US and SA weather forecasts remain non-threatening with Brazil’s forecasts reaching into early December when early corn pollination begins. Currently, there are few concerns about Brazil’s crop potential.
• The daily January bean chart is on Page 2 and shows today’s sharp losses after yesterday’s reversal from new highs. The 35-cent reversal from Tuesday night’s highs to today’s closing lows is the largest 2-day pullback since the post end of the trade war rally and does show after the $1.50 rally, further rallies will need more bullish news which could come from confirmation of larger Chinese bean purchases. The funds have been long beans for the last several weeks but a break below the 20-DMA (blue line at $11.17) would spark stop loss selling as the late arrivals to the rally begin to lose money on their positions. Another consideration is that China likely holds 60,000-75,000 long futures positions in the January and March contracts and if they fulfill their purchases through the cash markets they will be heading toward the exits.
• A big part of beans weakness today was a decision by the Trump administration to delay cuts to RINs on imported biofuel. This would potentially further delay and cut more domestic use of bean oil for bio-fuels and the sustainable aviation fuel market. With the potentially massive supply of beans in 2026, cutting demand for bean oil and crushing beans would be a big obstacle for the bulls.
• Last week’s ethanol grind was large but not a record as 321 Mga were produced. This year’s ethanol production pace is consistent with USDA forecasts to use 5.525 BBU of corn.
• Government payments that were expected by year-end, have hit some uncertainty as the USDA is reconsidering the size of the payments since prices have improved sharply since the Chinese trade deal was struck. The payments were originally thought to be in the $10-$14 billion range, but that total is now in doubt. If the USDA is only considering current price and not the total impact of farmers having to sell during harvest at much lower prices, this will add insult to injury to farm income.
• Cattle prices were again sharply lower today on more concern of lower tariffs on beef imports and President Trump’s desire to lower beef prices. Live cattle future prices are now $30 off their highs and made new 5-month lows in today’s trade.

If the markets can only rally when Chinese buying is the top headline, then this rally will continue to struggle. In between their cash purchases this week and probable Exchange for Physical with their massive bean futures purchases over the last month, the cash and futures buying have probably run their course. Any test of the recent highs must be used to finish 2025 sales that cannot be stored on farm and build a solid base of 2026 sales at prices well above where we started in 2025.