The government looks to be reopening this week

Grain futures opened the week on a firmer note, supported by optimism over the US Senate procedural vote to provide a resolution to the U.S. government shutdown. Broader markets viewed the development as a positive signal for the overall economy, helping lift commodities as well. Gold surged over $100 this morning, reflecting a renewed wave of investor interest in safe-haven assets.

While macroeconomic headlines like the shutdown resolution are being monitored, traders in the ag sector are laser-focused on one key issue this week: Chinese demand. Following the trade agreement reached two weeks ago, China purchased U.S. soybeans and wheat, but has since gone quiet. Market uncertainty deepened last week amid rumors that China might resell the seven recently booked soybean cargos. Adding to the concern, China continues to book Brazilian soybeans for December shipment, raising doubts about the country’s commitment to purchase 12 million metric tons from the U.S. this year, especially with tariffs keeping U.S. offers uncompetitive.

Further attention is also turning toward Friday’s upcoming WASDE report, the USDA’s first update in two months and the first U.S. production revision since harvest began. Pre-report expectations vary widely, and the market will spend the week digesting private estimates as they come in.

Interior basis remains mostly firm to start the week, suggesting steady domestic demand. However, softening export bids hint that international interest may be weakening, further complicating market sentiment ahead of the report. China’s ag ministry raised its estimate for 2024/25 soybean imports to 109.37 MMTs but left its forecast for 2025/26 imports at 95.8 MMTs. The decline is based on the anticipated slaughter of China’s hog herd to balance supply.

Support this week in soybeans could come from Chinese buying, avoiding the actual pickup of the 12 MMTs of soybeans this year, doing it primarily through futures contracts to satisfy near-term commitments, and then taking delivery next summer.

Live and feeder cattle futures achieved Friday the ability to not only open higher, but finally close higher than they open. Showing that last week’s action found a value that can neutralize the recent price decline for a bit. Pres. Trump’s announcement to have the Justice Department look into beef prices that the Packer level might offer initial softer start this morning, but given Packer losses as of late, it’s doubtful it leads to anything.

The cash feeder Index was down only $1.29 last week, keeping it at a substantial discount. Meanwhile, the negotiated fed cattle market found sales in the north at $230, while sales in the South were off $4 at $2 32. Cattle slaughter fell to a 4-week low of 555,000 head, down 66,000 from last year. Choice last week was off $1.73, while select showed a gain of $2.44.

Technically, today live cattle need to sustain last week’s low of 218 for December cattle on weakness, and feeder cattle have significant support at 310-311. Holding together today and closing higher on the session would indicate we have a significant low in place from the liquidation event I got underway two weeks ago.