BROCK MORNING COMMENTS
LEADING OFF: Corn and soybeans made new lows overnight and remained on the defensive after USDA sent the complex plummeting yesterday, particularly corn. While there’s always the potential for revisions to USDA estimates and projections will change, there’s a finality to the bearish 2025 crop estimates and Dec. 1 stocks that will cast a shadow over the markets as the trade starts looking ahead to spring planting. At the morning break, corn is down 3 to 5 cents and soybeans are down a nickel, with soybean meal also remaining under pressure. Wheat so far has held above yesterday’s lows but is down 1 to 3 cents. USDA was more friendly to the cotton and rice markets yesterday, and both are higher this morning.
In outside markets, crude oil is up about 80 cents, and the dollar index is firm. Gold is mixed. U.S. equity futures are mixed as earnings season gets under way and investors continue to sort through the federal investigation into Fed Chair Jerome Powell, which has raised concerns about Fed independence. Meanwhile volatile situations persist in the Black Sea region and Venezuela, while the main story this week appears to be Iran and the mass protests against the regime. Yesterday President Trump said he was placing a 25% tariff on any country doing business with Iran, a move that would affect U.S. trade relations with China. Looking ahead, the U.S. Supreme Court is expected to issue a judgement tomorrow on challenges to the tariffs Trump has put in place.
This morning’s CPI report for December offered hope that inflation was slowing. The core CPI, excluding food and energy prices, was up 2.6% from a year ago and 0.2% from last month, in both cases 0.1 point below expectations.
USDA did offer some positive news this morning with two flash export sales: 168,000 metric tons of soybeans, to China; and 152,404 metric tons of corn, to Mexico.
CORN: Not much positive to say after USDA’s very surprising increases to 2025 yield and harvested acres yesterday, which helped push Dec. 1 stocks and the 2025-26 carryout projection far above expectations. Odds are now very low that we will see better selling opportunities in early 2026 than we saw in November and December. With record large Dec. 1 stocks, a significant price rally is unlikely without some significant crop problems next spring/summer. Bulls can also hope for weather problems in South America, where the season has been mostly smooth outside of some dryness in southern Argentina. Conditions for Brazil soybeans have been highly favorable, but it is plausible that that a sloppy harvest there could delay Safrinha crop plantings, which would then make that crop more vulnerable to late-season heat. But that is merely a hypothetical scenario at this point.
Although the price action including a large daily reversal down is extremely bearish looking from a technical standpoint, it is quite possible most of the bearish news has been factored in with Monday’s plunge. It’s difficult to see March futures falling below $4.00. Contract low support for Mar. corn is just 11 1/2 cents below today’s close at $4.10. USDA also now forecasts the average 2025-26 on-farm average price of corn at $4.10, which is up 10 cents from its December estimate.
SOYBEANS: While USDA’s revisions for soybeans weren’t quite as surprising as they were for corn, there was nothing bullish in the reports, which raised production, lowered exports, and hiked the carryout projection to 350 million bushels from 290 last month. With South American weather continuing to look favorable, bullish arguments for soybeans are confined to reduced acreage prospects this spring and hopes of an uptick in domestic demand.
Last week may have been a good week for soybean futures, but this week got off to a horrible start with all of the 2025-crop futures contracts posting large bearish reversals off of 8-session highs. Most-active March futures did hold above their Jan. 2 low and now have nearby chart support at $10.38-$10.43 1/4. We would not count on that stopping the market. Longer-term support on the weekly most-active soybean futures continuation chart is at about $10.06-$10.07.
China’s state stockpiler Sinograin sold all 1.1 million metric tons of soybeans offered at its first auction this month, as it resumes efforts to draw down inventories ahead of incoming U.S. shipments. The beans are from the 2022–2025 crops, with delivery mainly in March and April, as some crushers look to cover near-term needs. The sales follow three auctions in December, in which each successive auction resulted in lower prices and fewer soybeans sold. Reuters reports that China sold only 900,000 of the 1.5 MMT offered in December.
WHEAT: Russia’s IKAR consulting firm raised the country’s grain export estimate for 2025-26 to 60.2 MMT, from a prior estimate of 57.8 MMT, although it also warned the target may not be met due to a poor crop in the South. IKAR increased its wheat export forecast to 46.5 million tons from 44.1 million. “We have doubts that this potential (for 2025/26) will be fully realized due to the peculiarity of this season, the lower share of the south in exports, which complicates logistics in an environment of low global prices,” said IKAR head Dmitry Rylko.
China stepped up its wheat imports from Australia and Argentina in December, taking in 620,000 metric tons according to shipping data, Reuters reported. It was the largest monthly shipments to China from Australia since April 2024, and most from Argentina since 1997. The amount of buying was greater than expected. Both countries are wrapping up large harvests and have cheaper prices as a result. Reuters also mentions speculation that China is buying more wheat because of toxicity in its corn crop, which is requiring more wheat use in feed rations.
LIVESTOCK: Cattle futures were higher yesterday in choppy trade. Live cattle have support from a firm cash market tone, although it will likely be Thursday or Friday again before significant trade develops this week. Strong wholesale beef prices are supportive – the afternoon Boxed Beef report showed Choice up $1.48 and Select up $5.88. Feeders have some support from the collapse in corn following yesterday’s bearish USDA report.
Lean hogs were lower to start the week amid cash market weakness and technical selling. Nearby February lean hogs posted their lowest close in 6 sessions and have likely topped out, but the downside is uncertain. The market remains about $2.40 premium to a weakening CME cash lean hog index. Last year, the cash index bottomed out on Jan. 13, but it seems poised to take out that low.
