Grains push new recovery highs overnight for wheat and beans.

Corn, soybeans, and wheat are starting the week on firmer footing as light new-month buying emerges. A key driver behind the strength is easing trade tensions with China. After several months of silence, China reportedly purchased seven cargoes of U.S. soybeans last week and showed interest Friday in wheat or possibly 240-400,000 MTs for December-February shipment. 

Additional support came from news that the U.S. is considering dropping tariffs on Chinese fentanyl-related products if China enforces stricter domestic laws.

The terms of the US/Chinese trade deal are still in flux and being negotiated, but it appears China will purchase up to 12 MMTs of US beans this crop year, which expires September 1, 2026, and then 25 MMTs the next three years after that. China reserves the right to “market terms” which have them shopping for cheaper beans whenever possible

Harvest progress is winding down in the United States, with roughly 10 to 15 percent of the corn crop still in the field. While last week’s rally encouraged a modest uptick in farmer selling, deliveries still fell short of buyer expectations. As a result, U.S. basis levels continued to firm last week across the board. This combination of tight deliveries and rising demand has started to weigh on domestic processing margins. Ethanol profitability has dropped to just a third of its summer highs, while soybean crush margins have declined by nearly a dollar per bushel.

Commodities, in general, were approaching oversold levels in early October, which helped bring buyers back into the market ahead of the Chinese talks. However, the stronger U.S. dollar is starting to limit the country’s price advantage over global competitors, especially in soybeans and wheat. Brazilian soybean offers remain cheaper than U.S. values, but actual availability from Brazil is uncertain at this time.

Broader macroeconomic concerns persist, with more layoff announcements adding to worries about commodity demand. Meanwhile, the U.S. government shutdown has now extended to 34 days, just one day short of the all-time record, with no resolution in sight. Even so, the USDA announced Friday afternoon that it plans to resume its monthly data releases, including the long-anticipated WASDE report, scheduled for release on the 14th, with the Cattle on Feed on Nov 21.

Overnight strength continues into the later hours, with spread trading showing up in soybeans and adding more support to the front end of the board. The U.S. dollar remains firm, and energy markets are mostly steady following the weekend OPEC meeting, which raised December production to expected levels. We are rolling into a new month, and with the explosive energy from October, we would not be surprised if grains find a stall out from the current rally in the opening day/days of the month.

Cattle futures ended lower last week but held early-week lows on a late-day drop on Friday, as President Trump again commented about beef without any resolution in the statement, which allowed it to bounce into the close. October live cattle expired at $236.60, still substantially above year-ago pricing of $193. The cash feeder index gave up nearly $20 for the week and ended at a 10-week low at $347.25.

Last week’s negotiated cattle trade was lower. Live sales in the north ranged from $228-232, which was off $5-9 on the week. Live sales in the South fared a bit better and were off $3-4 at $235. Cattle slaughter was at a six-week high at 573,000 head, still 52,000 head below a year ago. As always, futures will react much more violently in the cash trade, which implies increased import data, which does not bring in any more fresh meat today or possibly for a few weeks. 

We have yet to see a comment on reduced Brazilian beef tariffs, which can offer support if follow-through actions are not taken soon. Feeder cattle last week had multiple daily ranges of near $10.00. The president of Mexico, with a top trade negotiator, meets with the USDA Secretary. Rollins today about their proposed solution to Mexican feeder cattle coming into the US on their updated and supposedly improved protocols.