Market Update: Halloween Highlights and November Insights

Happy Halloween! It’s already November, and it’s kind of exciting to see kids buzzing with energy, gearing up for the celebrations, costumes, and, of course, the candy.

With the chill in the air, autumn is unmistakably here. We’ve had some much-needed moisture lately, just ahead of the first freeze. Sure, the rain held up the fall harvest a bit, but honestly, it seems to have been worth waiting for.

Speaking of waiting, the soybean market has been a bit wild. It looks like Chinese demand is back, and President Trump’s upcoming meeting in South Korea has sparked some optimism about more orders. November soybean futures have certainly been fluctuating—around 50 cents in range this week. I thought prices would rise, but it seems they dipped again as the week wrapped up. It felt more like buying rumors and selling facts, rather than the other way around.

That morning, I kept an eye on updates about the Trump-Xi meeting, which took place later in the day for Asia. There wasn’t an immediate press conference, but Trump touted the meeting as “amazing,” giving it a solid 12 out of 10. We’ve seen that kind of optimism before, and frankly, it hasn’t always led to tangible results. Still, while everyone expected no deal, we did hear about some commitments on soybeans, and that gave the market a little nudge.

As is common, China made some purchases ahead of the meeting and announced further ones the next morning. They’ve committed to buying 12 million tons by January, with a promise of at least 25 million tons annually for the remainder of Trump’s term. To put that in perspective, the average from 2020 to 2024 was about 30 million tons each year. Other agricultural goods, like grain sorghum, might have been discussed, yet no specifics were shared. We’ve also noted that bids for Brazilian soybeans have dropped by 50 cents per bushel since the U.S. deal, likely due to China’s market repositioning.

In a strategic move before the Trump-Xi summit, the U.S. Trade Representative decided to investigate China’s agricultural purchase commitments from the previous Trump era since many hadn’t materialized. This means, while commitments are out there, pricing might lead to some exceptions. It just goes to show these contracts are only as reliable as they appear on paper. China has a history of canceling orders, which makes this “agreement” somewhat murky.

Back in April, Trump visited China, leading to Xi planning a visit to the U.S. now, which brings us to a trade cease-fire. More details might unfold in April, but there’s certainly time to shape positions in the interim.

Moving on to the markets, January futures for soybeans set a new record on Friday, finishing above Thursday’s peak.

Interestingly, all grain charts spiked on Friday after an initial dip. The wheat contract is almost back to where trading started Sunday night as it rebounded from major moving averages. It closed just below Friday’s high, although it missed surpassing Thursday’s marks. A key resistance point seems to be the 100-day moving average, which is sitting just above. Unless we see some positive news, it might hold things back.

The dollar gained this week after a 25 basis point rate cut by Federal Reserve Chairman Jerome Powell, but he noted inflation concerns might hinder future cuts. Some officials, like KC Bundesbank President Schmidt, expressed their worries about inflation not being fully checked. Given the declining job outlook, the majority of the FOMC decided a rate cut was necessary. This whole situation is tricky, with the Fed’s dual mandate often conflicting with the need to adjust interest rates.

Meanwhile, the stock market reached new heights amidst some chaotic trading influenced by global events. It’s fascinating how these sentiments drift into other markets too.

The cattle market usually follows stock market trends, but this week was a bit different. The beef sector faced a tough week, influenced by various political narratives directly affecting beef prices. From the high on October 14th to this past Wednesday’s low, feeder futures dropped by $55.10 per CWT.

News about Mexico’s agriculture minister visiting the U.S. caused some market declines, especially when it was revealed the border wouldn’t reopen that week. Feeder futures did briefly hit the $13.75 expansion limit but managed to close higher by over $9.00 per CWT. There’s talk that the minister plans to visit the U.S. next week, although this week’s discussions were held via video. While the border remains closed for now, we can expect a drop in the cattle market once it reopens.

There are price gaps across the feed market that will likely be filled, but nothing is set in stone with the current environment. Headlines have influenced this market more sharply than anticipated, and it seems they might continue to do so. The lack of government reporting makes trading particularly susceptible to headline risks.

With the U.S. government shutdown extending over 30 days, rumors of a potential reopening next week are floating around. Whenever that happens, the markets will need to digest piles of data, which invariably leads to volatility. Upcoming negotiations between Russia and Ukraine will likely make headlines, along with discussions surrounding a potential re-establishment of the Israeli-Palestinian ceasefire, which almost fell apart last week. The situation in Venezuela is also escalating.

This week, the U.S. Senate passed a resolution to suspend illegal tariffs on Brazil and Canada, with both Republicans and Democrats supporting the bill. These tariffs directly affect the beef market.

Any of these developments could sway market sentiment, especially with just two months left in the year. The beef market, in particular, is likely to be sensitive to such discussions, compounded by the Trump administration’s ongoing commentary about lowering beef prices. I think there’s potential for a rebound to the 50-day moving average for both feed and feeder cattle futures. It might be wise to consider price protection here, unless unexpected news suggests otherwise.

Sidwell Strategies is equipped to help manage cattle risk through futures, puts, or a blend of strategies. If you’re considering entering the commodity markets, feel free to call or stop by my office. It’s never too late to establish a risk management and marketing plan—it’s crucial, no matter the size of your business.

Wishing everyone a productive trading week ahead! If you’d like to join our daily market updates via text, just let us know!