Soybean futures in Chicago fell on Monday under pressure from weak Chinese demand for U.S. supplies, as traders awaited any signs of progress with the resumption of trade talks between the United States and China in Madrid.

Corn prices also declined on expectations for a record U.S. harvest, while wheat held steady ahead of a closely watched Federal Reserve interest rate decision.

Matt Ammermann, commodity risk manager at StoneX, said: “The focus has returned to the outlook for massive U.S. corn and soybean crops reported by the USDA on Friday, which are naturally bearish for markets. Markets are watching closely to see whether trade talks between the U.S. and China in Madrid will reopen the door for U.S. soybean and grain exports to China, which have essentially been halted since the trade war began.”

He added: “But it’s clear that U.S.-China relations remain tense, and China simply has no problem relying on alternatives, including Brazilian soybeans, which it has been able to purchase since the trade war began, allowing it to diversify away from the United States.”

On Friday, the U.S. Department of Agriculture said American farmers will harvest a record corn crop this fall, surpassing the previous record from two years ago by about 1.5 billion bushels, after planting the largest acreage in 92 years.

The USDA estimated U.S. soybean production at 4.301 billion bushels, up from 4.292 billion bushels in last month’s forecast. It also raised its projection for ending soybean stocks after cutting export forecasts to the lowest level since the onset of the U.S.-China trade war.

Wheat, meanwhile, traded in a tight range with limited fresh news but found some support on expectations that a potential U.S. rate cut this week could weaken the dollar, boosting U.S. export competitiveness.

Corn

At the close of trade, December corn futures fell 1.5% to $4.23 per bushel.

Soybeans

November soybean futures slipped 0.3% to $10.42 per bushel.

Wheat

December wheat futures rose 0.4% to $5.25 per bushel.

Amid the diplomacy and a series of summits hosted by Chinese President Xi Jinping last week, Beijing and Moscow appeared to make a major breakthrough by unveiling an agreement to build the long-anticipated “Power of Siberia-2” gas pipeline.

On September 2, Alexei Miller, CEO of Russian energy giant Gazprom, announced the signing of a legally binding memorandum of understanding, grabbing headlines and signaling that ties between Beijing and Moscow are deepening despite Western pressure.

But energy experts speaking to RFE/RL expressed doubts about the project’s future, pointing out that key details—such as the price of gas, export volumes, and who will bear the construction costs—remain unresolved.

Erica Downs, a senior researcher at Columbia University’s Center on Global Energy Policy, said: “The legally binding memorandum is not a supply contract, and therefore does not mean the project has received the green light. It creates the impression of progress, but it is not a done deal yet.”

The latest agreement in Beijing seemed to be just one step in ongoing negotiations over the ambitious pipeline, which aims to carry gas from Russia’s Yamal Peninsula to northern China via eastern Mongolia.

Since Russia’s full-scale invasion of Ukraine in 2022 and the loss of its key European energy market, Beijing’s leverage in these talks has only grown. China appears to be biding its time to see whether the Kremlin will offer attractive concessions on prices and volumes, as well as how the project fits into its complex rivalry with the United States.

Downs added: “China is simply postponing a decision until later, to see whether it will actually need this pipeline. If Beijing secures low prices and flexibility on supply volumes, the project could be appealing as an insurance policy. If not, it has alternatives.”

Does China Need “Power of Siberia-2”?

For Moscow, the need is clear: the 2,600-kilometer pipeline would offset part of the European market it lost after the war. For China, however, the options are abundant.

With negotiations dragging on for years, Beijing pursued a diversification strategy in gas imports to avoid reliance on a single supplier. Russia is already China’s largest pipeline gas supplier through the “Power of Siberia-1” line, which went online in 2019 under a $400 billion, 30-year deal. Russia has also become China’s third-largest supplier of liquefied natural gas (LNG) after Australia and Qatar.

At the same time, Beijing has reduced import dependency by boosting domestic oil and gas production and massively expanding renewables, with Chinese companies becoming global leaders in solar power and electric vehicles.

As a result, demand for imported gas has fallen and is expected to keep declining over the next decade, reducing the need for “Power of Siberia-2,” which could transport 50 billion cubic meters annually. Beijing could instead rely on modest capacity increases in existing pipelines with Russia—something Miller also announced in Beijing—rather than build a new line.

Joseph Webster, a senior fellow at the Atlantic Council, told RFE/RL: “Even in the best-case scenario, the project won’t start before 2030. That means five more years of technological progress in renewables and batteries, which will further reduce the need for the pipeline.”

Adding to the uncertainty, Beijing has yet to confirm Miller’s announcement, with Chinese state media remaining largely silent, merely echoing Russian and international reports. After Xi met Russian President Vladimir Putin and Mongolian President Ukhnaagiin Khurelsukh in Beijing, Chinese media only quoted Xi calling for a focus on “physical connectivity” among the three countries.

What Could Make the Project a Reality?

Benjamin Schmitt, a researcher at the University of Pennsylvania and fellow at the Center for European Policy Analysis (CEPA), argued that the project’s commercial logic is weak, calling Miller’s remarks mere “theater” from the Kremlin to showcase close cooperation with Beijing.

“Beijing doesn’t need this pipeline, but it also doesn’t see a reason to oppose it publicly,” Schmitt said.

Two factors, however, could shift the equation: significant Russian concessions on pricing and volumes, or changing geopolitical conditions for China.

On pricing, Miller said gas would be cheaper than Gazprom charges European buyers due to the pipeline’s route and distance, but offered no details. Reports suggest China has demanded prices close to Russia’s heavily subsidized domestic levels and wants to commit to buying only half of the pipeline’s capacity (25 billion cubic meters annually) rather than the usual 80% for such projects.

With low prices and flexible commitments, the pipeline could become appealing as an energy-security measure—especially amid renewed tensions in the Strait of Hormuz, a vital chokepoint for Chinese LNG shipments, and a deepening trade war with the United States, the world’s largest LNG supplier.

China has already halted U.S. LNG imports since February, and access to cheap Russian gas strengthens its hand in renegotiating LNG contracts, many of which expire in the 2030s.

For now, however, Beijing and Moscow must first overcome the long-standing deadlock that has stalled “Power of Siberia-2.”

“All we’ve seen so far is political messaging, not a real project,” Schmitt concluded.

Gold (XAU/USD) rose on Monday to a new record high of $3,685 an ounce, surpassing the previous peak of $3,674, and moving closer to the $3,700 mark as markets await this week’s Federal Reserve policy decision.

The precious metal continues to gain as traders price in an almost certain rate cut at the September meeting. The CME FedWatch tool shows a 95% probability of a 25-basis-point cut, versus just 5% odds of a larger 50-basis-point cut.

Technical outlook for gold:

Gold appears poised to test the $3,700 level in the near term, though the future path will depend on the outcome of the Fed meeting. If the decision is accompanied by dovish guidance, prices could break above this level and pave the way toward $3,750 and $3,800. However, if the Fed strikes a hawkish tone, profit-taking could emerge, pushing gold lower.

US stock indices rose on Monday as investors closely watched the upcoming Federal Reserve meeting.

Wall Street received support from comments by US President Donald Trump on Truth Social, saying that talks with the Chinese were going well, noting an agreement had been reached with Beijing regarding TikTok.

The Fed meeting will begin on Tuesday and conclude on Wednesday, with broad expectations for a 25-basis-point rate cut, amid Trump’s pressure to accelerate borrowing cost reductions.

According to the CME FedWatch tool, markets are pricing a 99.6% probability of a 25-basis-point cut, versus only 0.4% odds of leaving rates unchanged.

In trading, the Dow Jones Industrial Average was flat at 45,832 points as of 16:39 GMT, while the broader S&P 500 rose 0.5% (31 points) to 6,615. The Nasdaq Composite gained 0.8% (188 points) to 22,328.