Grain and hog markets were sharply higher early Monday, with cattle mixed.
Grains and Hogs Soar on China Trade Details
Grain and hog futures were sharply higher on Monday morning as the White House released details of the China trade framework on Sunday.
It includes ag purchases of $17 billion for 2027 and 2028, with 2026 prorated and totaling $8 billion. This is on top of the 25 million metric tons of soybean purchase commitments they made in October of 2025.
Brad Koomia of Kooima Kooima Varilek says the $17 billion dollar of ag products was non-specific. So it is not known which commodities it will cover but he thinks the likelihood is soybeans, feed grains and beef. However, he is less confident about pork purchases.
“My reasoning is based on the idea that they haven’t bought pork for years already. Plus, the China hog herd has expanded after being decimated by African Swine Fever. What they do need is feed,” he explains.
What About Beef?
China re-listed 425 U.S. beef plants to export after concerns about ractopamine in U.S. beef.
They have been a large customer of variety meats, not muscle cuts, according to Kooima.
“We’re talking about stuff that a lot of us don’t eat anymore. Tongues. brains, offal product, but they seem to like that sort of thing. So maybe we can get a little bit of that. I don’t see that that part would be a market changer,” he adds.
If the plants test positive the plants will get de-listed and even if the U.S. can certify the beef is ractopamine free will China be able to afford U.S. beef?
Will China Follow Through?
Kooima says the real key is will China follow through with the purchases?
“China’s not reliable. “The worry is, is that like before, you know, they continue to posture and they don’t live up to what they say they’re going to do. So it is a game changer if they actually uphold it,” he adds.
Will China Drop the 10% Tariff?
The other unknown is whether or not China will drop the 10% tariff on U.S. soybeans.
President Trump said tariffs were not discussed, while Chinese officials says there was an agreement to drop some tariffs, with no specifics released.
“Hopefully we can work through at least some of this deal. I just worry that we’ll have this high expectation and then there’ll be some other we stub our toe on some other matter. And then, you know, then we got to retrace again,” he says.
Cash Cattle Continue to Set Records?
Live cattle futures put in higher weekly closes last week on the heels of record high cash trade in the country at mostly $265.
However, the futures continue to lag or show a big discount to the cash market. So when will that narrow?
Kooima says it may not. “I feel like the signal that we’re nearing the end of this thing is the change in basis, where the the cash much outperforms the futures and that’s happened. I mean we just put on $10 at the same time that the futures market, depends on which month,
but even the front month is below the contract high that we made two and a half weeks ago. And some of the back months are more like $5 below those highs.”
He says while the market is really good now due to tight supplies and May being the best demand month.
“There is a bit of a problem with the Choice boxes at only $389 and having no premium to the select is weird, seasonally completely wrong, which is a warning flag, I think, from a demand standpoint,” he explains.
So, while the cash may go up but the futures may not retest the highs.
Funds Liquidating in Cattle
The reason is the funds are liquidating in the cattle futures and open interest is declining, due to fears of increased beef imports.
“So it looks like you’re getting some of these fund managers or whatever that are saying, you know what, I’m thinking about taking my ball and going home. I don’t want to. want to be out here exposed to an announcement out of the White House, about fine-tuning a potential
executive order to alleviate the domestic beef shortage,” he adds.
He says the assumption is that will include relaxing the tariff rate quota on Brazil beef.
“We’ve been getting a ton of stuff out of there already to get this grinding meat,” he says, “Every time they get that blurb, the algorithms react to it and you get a futures reaction to it.”
The market is also concerned about the reopening of the Southern border to Mexican cattle or the possibility of a case of New World Screwworm (NWS) in the U.S.
CME Raising Cattle Futures Limits
On top of that, the CME raising cattle futures limits is also chasing out the funds.
“Bigger limits require bigger margin requirements, chases further the small speculator, increases volatility, all sorts of things. Some traders at least don’t like the algorithms, because they prey on that sort of market activity,” he says.
Cattle on Feed on Friday
The market is also gearing up for this Friday’s Cattle on Feed report which will likely start showing higher placements according to Kooima.
“Sure, because we’re comparing to such a small number from a year ago because the border has been closed that long now. I would say, yes, you’re going to see a marketing number that looks pretty dreary because we’re feeding cattle longer. And you’re going to see an on-feed number that’s above a year ago, too, for that matter,” he states.
Ft. Morgan Vote
Monday and Tuesday the Fort Morgan, Cargill plant workers will be talking about a deal and voting on whether they will strike or not.
However, so far the market does not care says Kooima.
“We’ve been on strike for or they haven’t been killing for a month for four weeks. And the market just does not even care about it. It barely gets
a mention. The numbers are that tight, okay? You know, in a different environment where we have more cattle to go around, this would be a much, much bigger and more bearish thing. One almost gets the feeling that management isn’t really bothered by the fact that they’re not killing,” he adds.
Grains Soar on China News, Iran War
The grains gapped higher over night and are soaring during the day session on the China trade details but also the Iran war rhetoric heating back up. That has energy markets higher leading to some inflationary buying.
“The sense that we’re back into this, what do we do when we go into an inflationary type of an economy? Corn, beans, wheat, those things seem to benefit in that kind of an environment,” he says.
