Soybeans recovered back above 11.00 overnight, with the grain trade still not convinced of more substantial sales
February 5, 2026
Grain futures had soybeans adding back to its gains overnight, putting it back over 11.00 after Pres. Trump’s announcement yesterday that China would buy another eight MMTs of beans this crop year. Logistics of adding 294 Mil Bu of soybean demand when the trade already swore it off because of the USDA having troubles with its carryout. Unless some crush is displaced, our carryout would fall to 60 Mil Bu, which many know cannot be allowed to go that low. That causes the price of beans to go up, to avert this situation. This new development creates the potential for beans to trade above $12.00 in the next two quarters. (Contrary to some very vocal bears out there.)
The fly in the ointment of this announcement is that it comes from a bloviating Trump after a phone call that he had with the President. Xi of China, and we need to see confirmation of this demand in an official statement from China. This also develops as soybeans out of Brazil have a slow start to the export program due to snarled logistics. There are still areas in Argentina, despite yesterday’s rainfall, that need rain soon to keep overall crop ratings from the largest producing region from dropping.
What is missing in the new development of China buying more beans for the old crop is that they need corn. Last week’s revelation from the USDA that 10% of their corn crop is not fit for animal feed or even ethanol usage will likely have them looking for over 300 Mil Bu in the coming quarters. Brazil will not have anything for them until late June, and Ukraine is not capable of providing that quantity (they had a drought last year). This means demand will shift to the US, helping appease Trump, keeping him from imposing big tariffs on China and allowing them to continue avoiding $100 billion in tariff increases. It’s going to take time for an exceptionally bearish grain trade that has to teach algorithm computers that it’s okay to leave their short positions and go long, as grains are part of the last basket of cheap raw materials in a world where Trump wants to get interest rates lowered, which can still ultimately weaken the US dollar. Pres. Trump travels to China in April, and it is anticipated that this buying could develop ahead of that trip.
Live and feeder cattle again pushed sharply higher in yesterday’s early session, with April cattle challenging resistance at 244, and March feeder cattle near 375 before the markets faltered into the close, settling with just a modest gain for feeder cattle, while April cattle settled just slightly lower on the session. The feeder index also drifted yesterday from $375 to $374.57. Negotiated fed cattle trade will be interesting as it develops either late today or tomorrow, as packers are deeply in the red, yet feedlots want to hold out for cash trade over $240. Box beef pricing is not returning to 400, which is what drove live cattle last fall to challenge 250. Consumer buying appears to slow as prices rise north of 380, prompting packers to seek additional ways to limit chain speeds.
Markets have a hot attitude, as sale barns are loud and robust, many cattle are being placed again at potential losses if everything doesn’t work out just right in the cash market and improve (which has been working out for the most part over the past two years). We are in the Black Swan hunting season of February/March, and it is a window when things tend to find a way to go wrong. The cattle market is bullish, but once you come to a place in your mind that it can only go up, that’s where hedges are even more important. Our recovery targets from the fall washout were for spot live cattle to reach 244-245, with March feeder cattle trading in the 365-375 range. We are there. Hedging is not fun in bull markets unless using LRP’s or put options. And even then, price and time are important.
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