Hope builds for a Chinese resolution next week. Cattle lose their tariff support.

Grains are firmer this morning, as we suggested in yesterday’s newsletter. Late afternoon trading in crude oil pushed sharply higher on the announcement of extreme sanctions against Russia’s main oil industry, which would at least lend support to the grains, which were firmer most of the night. Crude oil is presently up near $3.00 at 61.45, with metals rebounding from the recent selloff.

Grain markets continue to receive support from a broader “risk on” tone that is making its way through the commodity sector. While the lack of fresh news has previously weighed on prices, it is now beginning to have the opposite effect, as traders are running out of reasons to keep pressing the market lower. As more late harvested fields are brought in, yield reports continue to reflect stress from late season weather. A growing number of analysts are now revising their production estimates downward, although official adjustments from the USDA still appear to be weeks away at best.

This morning, one of the most notable developments is an announcement that the USDA will resume partial operations, including reopening local FSA offices. This return to service is expected to come with the release of roughly $3 billion in agricultural subsidy payments, which could directly impact cash grain sales by further reducing farmer interest in marketing grain at current prices.

Meanwhile, the White House is drawing pushback from several agricultural groups following its proposal to increase beef imports from Argentina. The opposition is not limited to the cattle industry, as broader farm organizations are voicing concerns about market implications and sanitary oversight.

Today’s trade will be heavily influenced by progress, or the lack thereof, in ongoing government budget negotiations and fresh developments in US-China trade relations. A high-level meeting between delegations is still expected this week. While the focus is primarily on rare earth materials and technology access, there remains some hope that agricultural trade, particularly soybeans, could be part of any broader agreement.

Cattle futures plummeted yesterday, closing sharply lower for live cattle and limit down on the feeder cattle. Today’s trade has expanded limits for live and feeder cattle, but whether they are utilized is questionable. A softer start is anticipated as the trade looks to understand the Trump Beef Plan.

Early morning comments yesterday that started cattle lower were that Mexico announced that they plan to be Screwworm free by the middle of 2026, a bold prediction, but selling started deferred feeder cattle on the comment. When Trump, just before noon central time, announced that the price of beef had been pushed higher by his tariffs, he was looking to reverse some actions by allowing Argentine beef quotas to be increased into the US, along with plans to protect and improve the business of ranching, expanding processing, and consumer transparency, along with building demand alongside domestic supply.

The technical break that occurred is ominous, as a second close below 241.00 for December live cattle and 363.00 for January feeder cattle will project a top of significance was put in place a week ago on Thursday. Index funds carry a considerable length of ownership that may choose to exit on recovery rallies, hampering rallies.