Soybeans rally higher Friday following Trump’s posts about potential purchases

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Friday saw soybeans boost 20 cents by mid-morning, while total growth for the week was sitting at about 80 cents, putting soybeans over $11.30 a bushel.

That movement led the conversation during the Agweek Market Wrap on Friday, Feb. 6, between Randy Martinson, president of Martinson Ag Risk Management and Tyler Donaldson of the Red River Farm Network.

Donaldson and Martinson concurred that the movement had a lot to do with President Donald Trump’s posting on social media about a positive conversation with China President Xi Jinping on Wednesday.

“That’s really what’s been driving the market,” Martinson said.

He noted that the market is so jumpy around this because if this were to happen, there would be rationing required because the U.S. does not have another 8 million metric tons to go to China.

“You look at that, that’s about 294 million bushels,” Martinson said of the potential purchase. “Our ending stock sits at 350 (million bushels) so it would chew through a lot of the stocks that we have left, because this is new business. This is not anything that is being allocated at this point.”

The week’s rally began with news that the 45Z tax credit unknowns were gaining some clarity. One area in particular importance was that the credit would be for the U.S., Canada and Mexico, meaning producers could not get the credit when importing from other countries.

“So now we’ve tightened up the feedstuffs that can be used for biofuels, which is going to increase our demand for soybean oil and canola oil,” Martinson said.

Martinson said that if the old crop soybean market can go higher, it could surpass the $12 mark. The rally is not expected to spill into the new crop because it’s likely that producers will be planting more soybean acres in the coming season.

On the flipside, wheat and corn remained flat during all the soybean bewilderment. But corn has some potential to rebound as demand remains strong for this record crop. There is a lot of wheat and corn on hand, but with E15 remaining a central topic, the opportunity for more corn demand is not out of reach. This scenario could lead to a bit of a race for acres for the next growing season.

“And it’s coming all at the perfect time, because we’re setting the base price for crop insurance right now. So this is a good time to see the markets rally.

This week was also full of trade deal talks, including conversations about deals with India, South Korea, the European Union, El Salvador and Argentina.

These deals have the potential to demand a lot from U.S. crops. The deal with India sounds like a boon for biofuels, as it would limit their energy imports from Russia and lean more on the U.S.

Donaldson brought up tariffs, which Martinson said remains a piece of the conversation. Interestingly enough, the talk about the legality of tariffs has been quieter in the last couple of weeks. The Supreme Court is still expected to rule on that topic soon.

Cattle news

The cattle markets this week are watching as meat packer JBS in Greeley, Colorado, has voted to strike, but no strike has occurred yet. Martinson said if anything can bring down the cattle markets right now, it’s manmade efforts. Slowing down processing would have a role.

Even so, the latest reports have cattle numbers remaining at record lows, while demand hangs in there.

Screwworm also has made it back into the news with a larvae found in an imported horse. Protocols put into place helped to stop the movement and quarantine that animal quickly. Also the release of sterile flies closer to the northern border of Mexico is a sign of more work being done to control the movement.

(The Agweek Market Wrap is sponsored by Gateway Building Systems.)]]>