Grains keep climbing, and feeder cattle should trade today.

The grain market followed through overnight with further gains, with soybeans again pushing double-digit strength on improving trade relations with China. But we still have not seen details of the framework with China. The bottom line is that if they buy any soybeans, it is more than what was expected a week ago.

The overall mindset across the commodity markets has shifted, and this is beginning to offer consistent support. Investors are taking a closer look at price opportunities as the tone moves from oversupply concerns to tightening fundamentals.

Fresh harvest data from across the US continues to roll in, and nearly every region is reporting final yields below expectations. Despite earlier optimism, many producers now believe their 2025 crops will not exceed last year's production levels. This is reinforcing concerns over tighter balance sheets heading into winter.

Cash markets are also firming. Even though country movement has picked up slightly, deliveries remain lighter than buyers had anticipated. This disconnect adds strength to basis values across grain and soybean markets, further tightening nearby supply. If current strength holds into the weekend after a possible ”buy the rumor-sell the fact” trade, it will be a rare show of bullishness during the heart of harvest. A higher weekly close on December corn, above 424.6, would create an outside-week reversal and draw more technical buyers into the market.

Something to watch for in wheat is that US dryness is developing in the southern plains. If rains do not occur next week, with 80% of the crop planted (84% would be the normal planting pace), more attention would be paid to it with the developing La Niña. Meanwhile, global trade remains light as the market feels like it’s well supplied for now.

We recommend rewarding this current rally with cash sales of 20% for corn in December at 434 and bean sales on the already January-basis contract at 1107.

Once we get the USDA back to work, the confirmation of much lower yields than reported in the September WASDE numbers and some Chinese demand will have carryout’s on retreat offering better prices into the winter. But for now, we need to take a ”bird in the hand is better than two in a bush” mentality and anticipate a selloff after any Chinese trade announcement.

In the wave of selling that carried over from Friday into Monday, almost all live cattle and feeder cattle contracts experienced limit down, except for the October contracts. The live cattle contracts experienced a mild bounce off limit status into the close. Synthetic option trading would imply that January feeders could open anywhere from 5-7 dollars lower this morning, when trading should find stability today.

A combination of tariffs of 50% on Brazilian beef getting reduced to 10%, along with the continued push from Mexico to allow for feeder cattle from northern Mexico into the winter months into the US is where the bulk of the selling is coming from. At this point, the Argentine beef imports have a negligible impact given that the tonnages are small compared to what Brazil could resume into the US. Index funds are caught in a market they no longer want to own, bringing the dramatic selling on news that has not yet been established as fact. We are currently setting up for a “sell the rumor by the fact” bounce.

Yesterday, boxed beef values showed a gain of $2.12 on choice, with select $3.69 higher. This helped live cattle in October level off at $10.00 below last week’s cash trade. Chart-wise, December cattle bottomed yesterday at 223 and recovered, with the 38% retracement on the continuation chart of the August 2024 low coming in at just under 220. The 38% retracement on the feeder cattle  continuation chart, which the January feeder cattle contract is on, comes in at 324.23, where options imply the prospective opening to come in near roughly.