Grain futures ended mostly higher on Thursday. Livestock saw a mixed close in cattle and higher in hogs.
Wheat Leads Gains in Grains
Grain markets ended mostly higher on Thursday with wheat leading the gains. Randy Martinson with Martinson Ag says wheat saw support on a combination of technical buying or short covering and the market was adding some weather premium. Frigid temperatures are forecast for the entire winter wheat belt and that is gaining the attention of some traders as funds are net short in the wheat market over 120,000 contracts.
Can Wheat Sustain a Rally?
Martinson says the problem is wheat will have a difficult time sustaining a rally with the burdensome global supplies. Wheat exports have been running above a year ago, but the pace is still not robust enough for to facilitate a large rally. “Especially when we’re looking at, you know, stable winter wheat acres. You know, I think some of those might be planted just for, you know, grazing out of calves once we get into, once the wheat starts to break dormancy. But overall, with the acres being unchanged and with world production being where it’s at, it’s going to be tough for the U .S. to get up, to see the prices push too much more,” he adds.
EU Tariff Fears Ease
Also helping support the grain market was Wednesday’s news of President Trump backing off from his threat to impose 10% tariffs on eight EU countries. The President worked out a longer term deal with NATO that seemed to satisfy his need to take over Greenland through military force. Martinson says “The European Union has come out and said that they’re going to go ahead and push through Parliament their trade agreement with the U.S. So I think all of that turned out to be somewhat supportive to the grains today as well.”
Corn Follows Wheat, E15 Support
Corn futures were slightly higher on technical buying but also got some spillover support from the rally in wheat. Plus, Martinson says while a bill to approve year-round E15 bill was not included in the spending bills going through Congress, the White House is still supporting the proposal “Part of it came from the idea that we’re still talking about the possibility having year -round E -15, and I think that dded a little support too. Now they’re looking at possibly trying to get it in front of Congress sometime in February,” he explained.
Can Corn Break Out of Its Range?
However, Martinson says the corn market has still struggled to take out resistance on the March contract at $4.25 in part because farmer selling picks up whenever the cash market approaches the $4 mark. Corn dropped 20 cents after the USDA report and has a new 10 to 15 cent range. He thinks the market will need a significant catalyst to break out of this sideways pattern. Export demand has been running at record pace and so has ethanol production, yet that is still not enough to work through the record 17 billion bu. of corn farmers produced this year. In the West many yields were above average and so there are still large piles of corn and storage bags that haven’t moved.
Soybeans See Support From China Hopes, Better Demand
Soybean futures have had a decent recovery off the lows following the January WASDE report. Martinson says some of that has been a function of better demand at lower price levels, especially from China. Another flash sale of 7.1 million bu. of soybeans to unknown destinations was announced Thursday morning.
He says the market has also been seeing progress on China’s purchase agreement of 12 MMT and is more comfortable China may buy 25 MMT in the next phase of the framework. “They said they’re going to be honoring the 25 MMT that they said they’d buy for the next three years. So I think there was a lot more confidence with the trade deal with China moving forward and that’s helping to relax some of uncertainty and concerns,” he says. In the short term, China may stay out of the market and buy Brazilian soybeans until August, which would be their normal purchasing pattern.
Soybean oil has also seen a move higher with optimism about biofuels policy. “EPA is coming out with new RVO numbers that will be supportive,” he explains.
South American Weather Concerns?
Soybean meal was also higher on Thursday and Martinson thinks the market is adding risk premium with dry conditions in Argentina and Southern Brazil. “Argentina continues to be probably the one that it’s drawing most of the attention because they continue to be extremely dry in the southern regions. Now, Brazil is talking about seeing the same scenario play out for the center south. So I think that some of the weather premium is coming back in. It was interesting that Conab lowered their soybean production earlier in their last numbers that they released. So it is starting to become a concern, and I think that is the market is starting to pay attention to it,” he states.
Soybeans Stopped at 200 Day Moving Average
However, for soybeans to continue to push towards the $11 mark the March contract will first need to close above the 200-day moving average, which has served as still chart resistance. “If we can all of a sudden start to see shipments pick up and see other countries demand, that would certainly help to keep that soybean market rolling.”
Acreage Questions Arise
Martinson says farmers are starting to make some decisions on their planting mix for 2026 and whether or not there are any crops that look profitable. He says corn could lose over three million acres but will still be over 95 million acres which may not provide much relief for the market. Soybeans acreage is expected to be up over three million acres but Martinson says the market may need to bid for more than that due to the tight ending stocks at 350 million bu. Wheat is also likely to lose acreage on both winter and spring wheat.
Cattle End Mixed Awaiting Cattle on Feed Report
Cattle futures ended mixed but still within last week’s trading ranges on the charts. Martinson says the futures market is chopping as trader position ahead of cash news and the USDA reports. The Cattle on Feed report is scheduled for Friday and expectations are for lower placements. This is a quarterly report and will show the break down of steers verses heifers placed in feedlots and will be closely watched for indications of heifer retention and rebuilding. Jan. 20 USDA will also provide the semi-annual Cattle Inventory Report. With favorable reports and strong cash trade he thinks the market could take out chart resistance areas and keep moving higher.
Hogs Continue to Hit Contract Highs
Lean hog futures had another day of higher prices and more new contract highs in the summer futures. Cash trade has been firming up helping to support the rally but Martinson says as summer months approach the $110 mark he won’t be surprised if they stall out due to hedge pressure.
