Grain markets ended higher Friday as well as cattle, with hogs setting back.
Grain Markets Rally on Three Factors
Grain markets closed strong on Friday and posted higher weekly closes across the complex. What drove the rally? Jim McCormick of AgMarket.Net points to a few notable factors.
1. U.S. Weather - Bitterly cold temperatures across much of the United States played a large role. For corn the spike in natural gas prices slowed down ethanol production and soybean crush at many plants. He says it was more economical for them to slow processing activities and sell the natural gas for a profit rather than run at full capacity. Specifically the slow down in ethanol production also meant less DDGs on the market which was supportive of the soybean meal market. For winter wheat the sub-freezing temperatures led to winter kill concerns and the market needed to put in some weather premium and with the funds short in wheat it caused a short covering rally.
2. South American Weather - Hot dry conditions have persisted in parts of Argentina and Southern Brazil and McCormick says the 10-day forecast doesn’t bring much relief to those areas. That could slightly trim yields on the soybean crop and with Argentina the top soybean meal producer in the world the meal market caught a bid. Argentina is also a competitor in the corn export market against the U.S. Conab recently lower Brazilian soybean production by 1 MMT but even on Friday another private firm raised its estimate to 187 MMT. This means the hot dry weather is going to have to linger beyond 10 days to have much of an impact on Brazil’s record soybean crop.
3. Strong Exports - Weekly exports for corn were at a marketing year high of nearly 158 million bu. on Friday morning. McCormick says this is the biggest week for sales since 2021 and was above expectations. “Clearly the lower prices after the bearish WASDE stimulated some export demand,” he says. Soybean exports were also a marketing year high of nearly 90 million bu. and China accounted for nearly 48 million bu. of that total,. This is starting to help the U.S. catch up on their accumulated export total which currently stands at 22% below a year ago. Even wheat exports were strong at 22.7 million bu. for the week ended Jan. 15.
Can Grain Markets Continue to Rally?
Grains closed higher on Friday and for the week with March corn up 5 3/4 cents, March soybeans gaining 10 cents, March hard red winter wheat added 13 1/2, March soft red winter wheat gained 11 1/2, March hard red spring wheat was up 11 cents.
March corn closed above $4.25 chart resistance and now will need to get above $4.35 to extend the rally. Soybeans were less technically inspired getting stopped out at the 200-day moving average around $10.68 and closing below that level. March hard red winter wheat had the best technical breakout making new highs for 2026. With a close above the 100-day moving average and with funds short in the wheat complex it triggered some short covering. However, McCormick is not confident there is a sufficient catalyst to keep the momentum going in any of the grain markets because as soon as prices rally the U.S. becomes non-competitive on the global level.
Cattle Futures See Breakout With Higher Cash
Cattle futures opened lower and extended losses early in the session with some profit taking and caution heading into the USDA Cattle on Feed report. However, cash trade broke lose before the report at higher money which fueled a recovery in the futures. Cash trade in the South was at $233 to $235, steady to $2 higher than last week with few at $236. In the North dressed cash trade broke at $370, up $5 from last week’s weighted average, while live sale prices ranged from $233 to $236.50. Live cattle even broke out above last week’s highs and closed above those levels. McCormick says this could open the door to additional fund buying on Monday especially as the USDA Cattle on Feed report did not have any major surprises.
USDA Cattle on Feed Close to Expectations
The on feed total was at 96.8% of a year ago and in line with trade expectations, placements were 5.4% below a year ago which was slightly negative compared to estimates, while marketings were pegged at 102%, so in line with the 101.5% pre-trade guess. These numbers are not likely to get much reaction on Monday according to McCormick. Closer analysis does show Texas placements were 110% but it is compared to a year ago when the Mexican border was closed to feeder cattle imports. The quarterly breakdown showed 61% steers and 39% heifers, which is a strong indication that heifer retention and herd rebuilding is starting to take place.
Lean Hogs Pause
After moving into new contract highs in the April and deferred lean hog futures early Friday the market turned lower. This coincided with the reversal and rally in the cattle futures so there could have been some spread unwinding. However, McCormick chalks it up to profit taking and some hedge pressure at strong price levels for this time of year, especially in the summer months which were near $110.
