Grain and livestock markets saw significant declines on May 14 following disappointment over the absence of new agricultural purchase agreements during the first day of the U.S.-China summit.
The drop in prices is important for farmers and market participants who had anticipated potential trade deals with China. The lack of concrete agreements has led to profit taking, fund liquidation, and concerns about future price trends.
Don Roose with U.S. Commodities said soybeans were most affected by the selling. “We had some optimism that we were going to get some kind of a big trade deal with China. So, we went in with a lot of optimism and I think as we look at it so far there just really isn’t anything new or anything concrete. In fact, it seems like some of the other bigger focuses on like jets and some of these outside things versus the ag products,” he said.
U.S. Treasury Secretary Scott Bessent indicated that while China does not need old crop soybeans now, an earlier agreement for 25 million metric tons remains verbally in place but lacks written confirmation. Roose added, “Yes, that’s the only thing that we’ve picked up here so far is that the old agreement, the verbal agreement that they had, the 25 million metric tons for the next three years each year is going to be in place. And by the way, that’s pretty much what we’ve had over history or at least the last 10 years. So nothing really big on that one either.”
Roose also pointed out increased competition from South America’s record soybean crop: “And now we have to compete in the world market and it seems like China is pretty well bloated with soybeans.” He noted recent government export projections may be uncertain given current global conditions.
Market participants questioned earlier claims about large Chinese purchases due to more competitive Brazilian prices. Roose said economics favored Brazil: “Yeah, you know…Brazil’s sitting somewhere…let’s just call it 80 cents cheaper than we are at the Gulf…the Chinese…say they’re really looking forward to trade…that makes sense for this around the world from a price standpoint.”
On tariffs between both countries possibly being lifted within six months, Roose said these remain rumors: “We’ll see if tariffs come off 10% on each side…” However, even without tariffs South American grains remain less expensive than those from U.S., making sales challenging.
Technical analysis showed significant chart damage across grain markets after Thursday’s sell-off; new crop soybeans moved into a downtrend after nearly a month trending higher according to Roose: “So from our standpoint, we did a lot of damage.” Corn and soybean oil also turned lower while wheat held steady but vulnerable.
Roose warned further declines could occur if funds continue selling their record long positions: “When you have a market turning into a downtrend and you’re overbought…you’ve got them moving…you’ve got to be pretty concerned here.” He expects short-term premiums may hold due to external factors such as war but sees downside risk longer term depending on acreage reports and weather developments later this season.
Weather forecasts suggest rain could help dry areas across parts of Corn Belt though regions like western Texas may miss out entirely according to his assessment.
Wheat futures fell alongside corn and soybeans despite recent highs; production cuts appear largely priced into current values according to Roose who said exporters are “just really not interested here at this price.” Kansas Wheat Quality Council Tour results were better than expected which might influence further adjustments.
Livestock markets also weakened; cattle futures ended lower despite record cash trades earlier in week while lean hogs continued struggling amid larger-than-expected supplies—issues compounded by demand uncertainty as beef rally slows down per Roose’s comments throughout his interview segments.
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