The market is starting to see our traditional market fundamentals again having more of an impact on price discovery. One of these that is growing in interest is U.S. weather with some trouble areas starting to pop up ahead of the spring planting season. Widespread flooding has been seen in the Ohio Valley with the Ohio River rising to its highest level since 1997. Flooding has also been reported in Illinois and Indiana. While these have not greatly impacted plantings, they do reduce the chances of early fieldwork which tend to be associated with higher yields, especially on corn.

South American analysts are already starting to up their projected soybean demand forecasts because of the U.S. trade tariffs. This is especially the case for Brazil where a record crop was just harvested. Argentina is now set to start the harvest of a large crop as well. Add to this Brazil is in the works with China to allow distiller grain trade in the very near future. The combination of these factors has caused the Safras group to predict high soybean trade with China in late 2025, further cutting into U.S. market share. China already imports a minimal volume of U.S. soybeans, and any further decease may be small.

Chinese officials continue to take steps to become more self-reliant on commodity demand. The Chinese Ag Minister announced that 97 GMO corn and 2 GMO soybean seed varieties have received preliminary approval for production in the country. They must now be biosafety certified, which is highly likely. China’s corn and soybean yields remain well below those of the rest of the world, and by using new technology alone it will greatly reduce import needs.

China now plans to develop what it is calling “high standard” farmland. Chinese officials believe that through the use of technology and improved farming practices the country will be able to increase yields enough to further reduce import needs. It is believed that by 2035 all of China’s production agriculture will benefit from these improvements. 

China released its March soybean import data with a surprisingly low number. For the month China imported just 3.5 million metric tons of soybeans, a 36.8 percent decline from March 2024. This was also the lowest monthly import volume since 2008. A slow start to the Brazil soybean harvest and export program is the cause of these low arrivals. For the first three months of 2025, China has imported 17.1 mmt of soybeans, an 8 percent decline from the same period in 2024. 

Livestock futures have started to show an elevated amount of trade volatility. This is in part from the tariffs the U.S. has placed on Asian importers who tend to be primary beef and pork export destinations. The main one of these is China who is a primary importer of both, but recent tariff increases have all but halted trade between the two countries. China has also had a sizable rebound in domestic pork production, easing the need for imports from all sources.

Domestic consumer demand is also a concern for the red meat market as we are already seeing personal consumption slow, albeit still elevated from normal. 

One of the greatest concerns in the outside markets right now is the value of crude oil. Crude oil has been under considerable pressure recently and led to the idling of some U.S. drills. This is from futures dropping to a point where production is unprofitable. Crude oil exports have provided the U.S. with considerable income, enough to help reduce the total U.S. trade deficit. 

OPEC has now stated they see a reduction in global energy demand, including crude oil. While low priced crude will benefit U.S. consumers, the lack of export demand may cause more harm to the U.S. economy than good. 

Cattle and hogs have started to show more reaction to U.S. trade relations. The U.S. domestic supply of red meat is at its lowest level in several years, with pork at its lowest volume in nearly three decades. This will allow the loss of U.S. exports on beef and pork to be absorbed in the short term, but if export demand remains slow, the market will be quick to react. 

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and is believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor is it intended to be relied upon for specific trading in commodities herein named.