DeLong Commentary

CBOT Pricing:

Soybeans traded a 44-cent range today. Prices initially moved lower following the Trump/Xi meeting, after President Trump stated that China would purchase US soybeans but did not specify the quantity. Early in the morning, Treasury Secretary Scott Bessent announced the purchase quantities (see below), prompting soybeans to recover and post gains. The Nov25 contract finished 11 cents higher at $10.9125 on its first position day, while the Jan26 contract settled 13.25 cents higher at $11.0775. Soybeans have gained $1 per bushel since mid-October.

Corn ended the day 0–4 cents lower. The Dec25 contract reached $4.37 early in the session but failed at the 200-day moving average, closing at $4.3025, down 3.75 cents from the prior settle. The Mar26 contract settled 3 cents lower at $4.4375. Corn continues to trade sideways.

Market Headlines:

China soybean purchase: 

Treasury Secretary Scott Bessent announced that China has agreed to purchase 12 million metric tons (440 million bushels) of U.S. soybeans during the current season, running through January. China also committed to buying at least 25 million metric tons of soybeans annually over the next three years. In 2024, the United States exported nearly 27 million metric tons of soybeans to China.

Bessent added that several Southeast Asian countries have agreed to purchase an additional 19 million metric tons of U.S. soybeans, though he did not specify details about those agreements.

US President Trump and Chinese President Xi met to discuss trade:

The two leaders met in Busan, South Korea, last night for their first face-to-face talks since 2019. President Trump said he and President Xi agreed to reduce tariffs on China in exchange for China’s commitment to crack down on the illicit fentanyl trade. Trump stated that tariffs on Chinese imports would be cut from 57% to 47% by lowering the 20% tariffs on trade involving fentanyl precursor chemicals to 10%. He added that President Xi would work “very hard to stop the flow” of fentanyl.

Furthermore, China agreed to suspend for one year the export controls it introduced this month on rare earth elements. These materials play essential roles in the production of cars, aircraft, and weapons, and have been one of China’s strongest sources of leverage in the trade war.

Both sides also agreed to pause the tit-for-tat port fees on shipping, which had been implemented to counter dominance in maritime trade and ocean freight.

Following the meeting, Trump said in a Truth Social post that China would begin the process of purchasing U.S. energy. He appeared to reference a major deal in Alaska involving a proposed $44 billion LNG pipeline promoted by his administration.

The two parties also reached an agreement to expand agricultural trade and expressed a shared intent to resolve issues related to the TikTok app.

US-Mexico border will remain closed to Mexican feeder cattle imports:

Yesterday, US Agriculture Secretary Brooke Rollins and Mexico’s agriculture minister met via video conference. Despite progress in containing the New World screwworm outbreak, the border will remain closed, with no timeline set for reopening. The closure has been in place since May. The US has invested $21 million in building a new sterile fly facility in southern Mexico, to assist in the eradication efforts. The announcement contributed to a rally in cattle futures.

The Federal Reserve cut interest rates for the second time this year:

On Wednesday, the Federal Reserve lowered its benchmark interest rate by a quarter of a percentage point to a range of 3.75%–4.00%, the lowest level in three years. Fed Chair Jerome Powell cautioned against assuming another rate cut will occur during the December meeting. Traders now project a 67% chance of a December cut, down from 90% earlier this week.

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