BROCK MORNING COMMENTS
LEADING OFF: Grain and oilseeds mostly lower this morning amid rising fear in financial markets and uncertainty about U.S. trade policy as tariff threats return to center stage. Corn is down a penny and wheat is down 2 to 3, while soybeans are down 1 to 2 cents at the morning break. Cotton is up 25 points.
Investors are watching a meltdown in bonds in Japan, with the 40-year-rate rocketing to 4%, the highest since it was introduced in 2007, Bloomberg reports. The move is widely attributed to an approaching snap election and a pitch by the Prime Minister to cut the sales tax on food, a plan that has re-ignited fears about the country’s debt. It’s debt-to-GDP ratio is already the highest among advanced economies. The Japan meltdown is driving yields higher elsewhere, including the U.S.
In other markets, gold is up more than $100 and the dollar index is down 0.3%. Gold is surging, up by more than $100, and major equity futures indexes are pointed to a lower open for the stock market. Natural gas meanwhile is soaring, up by 15% with help from a bitter cold U.S. weather outlook for this week.
Meanwhile it was a busy weekend for diplomats trying to maintain a relationship between the U.S. and Europe, as President Trump has dialed up the threats over his desire to control Greenland. On Saturday he announced the U.S. would impose a a 10 % tariff starting Feb. 1 on imports from eight European nations (Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands, and Finland), with an increase to 25 % by June, unless there is a deal for Greenland. He also told Norway’s president that his stance was driven by the fact he was not awarded the Nobel Peace Prize. European and particularly Danish officials have said they will not give or sell Greenland to the U.S., and Danish troops arrived in Greenland Sunday night. For the markets, the most important development is European discussions of possible retaliatory measures for increased tariffs. With Trump headed to Davos on Wednesday, there will be plenty of headlines about Greenland this week, and about Trump’s proposed “Board of Peace.” This morning Trump threatened to put 200% tariffs on French wine in response to President Emmanuel Macron saying France would not join the board.
CORN: The South American weather outlook may look a little more supportive for prices than it has recently. Eastern Argentina and southern Brazil have been drying down and will continue drying for another 8-10 days, World Weather Inc. says. It sees a “gradual depletion” of soil moisture and says rain currently in outlook for the very end of January and first week of February will be “very important.” Still, western and northern Argentina, along with center-west Brazil and some of northeastern Brazil will get timely rains over the next two weeks to support crops.
Futures ended last week on a strong technical note, with front-end contracts posting their highest closes in 4 session and 2026-crop contracts charting bullish outside trading days. But it was still an ugly week overall, with nearby March corn posting a loss of 14 1/4 cents and its lowest Friday close since August. March futures now have nearby chart resistance at $4.27 1/4, with further resistance near $4.35 and nearby support at $4.17 1/4-$4.20. The fact open interest has been rising on recent price weakness, indicating fresh selling entering the market, is worrisome.
SOYBEANS: China has reached the “trade deal” soybean purchase target of 12 MMT from the U.S., both Bloomberg and Reuters reported today. After Treasury Secretary Scott Bessent said last year that the purchases would be made by the end of February, today’s news could be seen as a welcome but mild surprise. But the broader concern about U.S. export demand remains, and with China the question now becomes whether it would attempt to meet the 25 MMT target for 2026 and 2027. That 25 MMT target was announced by the U.S., but China has not formally acknowledged that target, or the deal generally.
There were no “flash” export sales for soybeans announced coming out of the three-day weekend this morning. USDA did however report a soybean meal sale of 190,000 metric tons to the Philippines.
Soybean futures action the past two sessions has looked constructive with March futures solidifying chart support near $10.40. Mar. futures did chart an outside week down last week but ended above midrange for the week with a small loss of only 4 3/4 cents.. March beans posted their highest close in 5-sessions Friday but still need to close above $10.71 1/4 to invalidate Monday’s bearish reversal and signal they have put in a significant low. It has nearby support at $10.47 3/4 and key support remains at $10.37 3/4-$10.38.
Brazil soybean exports are seen down 3% in 2026, Safras & Mercado said Monday. It projects exports at 105 MMT. Total soybean supplies are seen up 5% in 2026 while demand overall is seen down 1%. Last week Safras projected Brazil’s crop at 179.28 MMT, up from a prior estimate of 178.76 MMT.
WHEAT: The central and eastern U.S. will experience a blast of Arctic air this week, which could underpin hard red winter wheat prices this morning. World Weather Inc. says there’s some concern about bitter cold in Nebraska, Kansas and a part of the central Midwest, where snow cover to protect from cold damage could be minimal.
The flip side of the winter weather pattern is that it is also expected to bring a potentially crippling storm across the South, with heavy snows forecast from Oklahoma clear across to North Carolina. Parts of the Delta region will see heavy rains and much of Tennessee and North Carolina are expected to snowfall of 4 to 12 inches. As we’ve noted recently, drought covers virtually the entire southeastern quadrant of the U.S., so from that standpoint the moisture is welcome for HRW and SRW wheat.
In demand news, Jordan’s state grains buyer purchased about 60,000 metric tons of hard milling wheat to be sourced from optional origins in an international tender on Tuesday, traders told Reuters.
LIVESTOCK: After plummeting on Friday, we expect volatile trade this week as traders track the New World Screwworm (NWSW) situation. Worries that New World Screwworm (NWSW) will reach the U.S. after Mexico reported 8 new cases on Thursday in the northern border province of Tamaulipas drove Friday’s losses. Live cattle fell by more than $3 and feeder cattle was down $6 to $8. Nearby live cattle contracts posted large bearish reversals on Friday as did most feeder cattle contracts. There were rumors that it has already been found in the U.S., but federal officials continue to say that it is not here yet.
