DeLong Commentary

CBOT Pricing:

Soybeans posted losses of 12–16 cents as tensions escalated in the ongoing trade dispute between the U.S. and China (see below). Nov26 soybeans hit a day low of $10.025 in the mid-morning before trying and succeeding to hold above $10.00. Following a partial recovery, the Nov25 futures contract finished the day 16 cents down at $10.0625. The Jan26 contract finished at $10.2325, 15.25 cents down.

Corn followed soybeans lower, pressured by the broader weakness in the oilseed market. Losses ranged from 2 to 5.5 cents. Dec25 corn lost 5.5 cents to finished at $4.1275 and Mar26 ended at $4.2875, 5.25 cents down.

Market Headlines:

US – China trade update:

China significantly expanded its export controls on rare earth metals. As the producer of over 90% of the world’s processed rare earths and rare earth magnets, China added five new elements to its control list, increased scrutiny for semiconductor users, and added dozens of pieces of refining technology to its export-restricting control list. The country will also require foreign producers using Chinese rare earth materials to comply with its domestic regulations. Rare earths are essential in products such as electric vehicles, aircraft engines, and military radar systems.

In response, President Trump threatened to raise tariffs on Chinese goods and cancel a planned meeting with President Xi. The announcement had a notable impact on U.S. stock and commodity markets.

Trump administration farm aid package:

The administration was expected to unveil details of a new farm aid package this week to offset trade war losses. However, no announcement has been made, as the ongoing government shutdown has delayed the release. USDA Secretary Brooke Rollins stated that once the government reopens, the program will be rolled out to provide support for farmers.

Grain markets are in the dark amid the ongoing government shutdown:

The government shutdown has suspended the release of key reports, including the CFTC’s Commitment of Traders, export sales, crop progress, the monthly Crop Production report, and the WASDE report. This disruption has significantly reduced market transparency. There is some concern that when reporting resumes, markets could experience sharp corrections if actual data diverges from expectations.

US financial support for Argentina:

Treasury Secretary Scott Bessent announced that the U.S. finalized a $20 billion currency swap agreement with Argentina and purchase of Argentine pesos, to help stabilize the country’s financial system. The decision has drawn criticism due to Argentina’s history of defaults and currency devaluation. Some U.S. farmers have also expressed concern, citing Argentina’s tax holiday, which has allowed China to purchase Argentine soybeans more easily, bypassing US supply.

US – India trade update:

On Thursday, Indian Prime Minister Narendra Modi stated that he had spoken with President Trump about advancements in negotiations. The US has requested that India stop importing Russian oil—a demand India has so far rejected. Working toward a deal, India has offered concessions, including the purchase of US corn for ethanol production.

USDA Drought Monitor:

Above normal temperatures persisted across the Corn Belt over the past week, intensifying stress in areas already experiencing dry conditions. Drought conditions deteriorated further due to limited rainfall in Ohio, Indiana, Illinois, Minnesota, Michigan, Missouri, South Dakota, Nebraska, and Oklahoma. Portions of Iowa experienced slight improvement, but overall conditions remain strained.

US Areas Experiencing Drought:

• Corn: 31%
• Soybeans: 39%
• Winter Wheat: 45%
• Spring Wheat: 16%
• Cattle: 25%

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