Markets Pause, but the Headline Risk Hasn’t Gone Away

The grain and soy markets started the week with a quiet mixed trade as a lack of major market moving news was available to excite the traders. After last week’s surprise announcement about large Chinese purchases, market participants are still trying to separate fact from fiction from potential to digest if the markets have more bullish or bearish momentum or just more neutral and choppy trade. With cattle fighting off the surprise beef import deal with Argentina to trade modestly higher today, traders are prepared but tiring of the lack of consistent policy direction exhibited by all of our elected representatives. Tuesday’s February USDA report has not historically been a major market moving report unless a South American weather problem exists, which is not the case this growing season.

News and Notes:

- Rain continues to fall and be forecast for Argentina and S Brazil to help destress the corn crop into the final stages of development. There is very little concern for a late season weather problem in Argentina and weather premium is slowly being extracted from the corn market. Brazil’s bean harvest and safrinha corn planting are rolling along at record paces with yields on the first 25% of the crop running at or above the pre-harvest estimates.

- The April daily live cattle chart is on Page 2 and despite President Trump’s executive order to import more beef from Argentina with a lowered tariff and the cattle industries pushback over the weekend, cattle prices traded higher today. Cattle have taken every punch that Washington has thrown at it as “wanting” lower beef prices and a practical solution are two entirely different things. As long as the Mexican border for beef imports stays closed because of screwworm, cattle prices will have support on every break and should stay between the 200-DMA (black line) at $225.73 and the October breakdown point at $239.50. The increased volatility should remind everyone that cattle prices are subject to the next tweet and the President’s focus on winning the November mid-term elections at all costs.

- The basic facts of the beef import deal with Argentina is that we will import stripped beef to grind into hamburger. While the headline looks concerning, the perception is bearish, but the reality is just another political tactic to appease the anti-inflation crowd.

- China was announced as a buyer of 9 MBU of US beans this morning. Although the sale gave some validity to President Trump’s announcement of more Chinese purchases, there will have to be 25 more purchases of this size to get to the 280 MBU total allegedly agreed to. Over the weekend, the US agreed to sell billions of military defense industry equipment to Taiwan, which will surely upset China who wants to take back over Taiwan. The trade is hopeful the Chinese bean purchases will occur, but also understandably skeptical.

-Bean oil has been trading impressively over the last week because of India’s interest on importing US bean oil as part of the trade deal. Higher bean oil prices and additional demand are great, but the crush will produce more bean meal than normal demand can consume, which is bad for corn used in animal feed. It seems like every positive has created a negative in the ag markets for the last year.

-  The February USDA report will be out tomorrow at 11 central with limited changes or market impact expected. Historically the only update that has shown some variability is the expectations for the Argentina and Brazilian yields. After January’s shocking increase to 2025 US corn yield, this report should be very calm.

Making a statement like this should be a quiet week while Commander in Chief Chaos is in office is asking for trouble. With the American farmer the target of both positive and negative policy announcements for the last several months, the trade is getting used to just waiting for the next tweet for their AI algorithms to chase the headlines. The bean rally will need to see almost daily confirmation from the USDA that China is buying beans to hold on to the rally and continue to give farmers information while they are still making crop rotation decisions on whether corn or beans works best for their operation for 2026.