Grain markets ended higher on Wednesday with cattle and hogs lower.
Grain Markets See Corrective Buying
Grain markets were higher on Wednesday with gains led by soybeans and wheat. Garrett Toay with AgTraderTalk attributes the rally mostly to corrective buying after the selloff to end 2025 and with a $1.40 break from the highs in soybeans.
“We’re essentially back to the midpoint of the range from where we were Christmas Eve. So, you know, the week between Christmas and New Year’s was was pretty rough on the markets, just pretty thin. And the markets were able to get pushed around. So, kind of a reversion to the mean trade, if you will and consolidative. We get down to lower end of the range. We know demand and corn is strong. So, we’re still remained in the range near term,” he adds.
Can the Markets Build on the Rally?
March soybeans closed above the 200-day moving average but Toay says it was not decisively higher and so the market will need to take out the next resistance area to extend the rally. Garrett says he would be more confident of additional buying if the January WASDE and final crop production report weren’t right around the corner.
“I don’t think the market’s going to be to have so much conviction either way around the 200 day, especially with the report on Monday. Beans could see a little bit more follow through here just because I think the pipeline is a little bit tight and I don’t think corn has a story. The market’s aware of where the farmer will sell in corn. Beans are a little bit bigger question.”
Soybeans Also See a Push From Demand
Soybean futures also rallied with continued talk of China buying another eight to ten cargoes or 600,000 MT. However, there is also a push from soybean processors. Toay says a lot of farmers sold soybeans during or shortly after harvest and now that much of that product has been shipped or processed. So, he thinks soybean processors need to restock the pipeline. “It will be interesting to see how much the processor has to bid up to get some of the stored soybeans out of producers hands,” he adds.
China Nearly Done Buying Soybeans?
Rumors have circulated this week about additional purchases by Sinograin, from ten to 14 cargoes for March-May delivery. Some firms have estimated China has bought around 10 MMT of the 12 MMT they committed to. However, Garrett says that will likely shut off soon with Brazil’s crop coming in the next 45 days. “Brazil prices are cheaper than the U.S. so China will soon shift over to South America’s new crop,” he says.
South American Weather Watch
Weather forecasts in Brazil have been largely favorable but there are some emerging issues with dryness in parts of Argentina. Still, private estimates for the Brazilian soybean crop continue to inch higher as StoneX raised production to 177.6 MMT. “I think, ANEC out of Brazil today said that they’re looking at 2026 soybean exports down about 10 million metric ton ton from what they were last year. That’s essentially what Sinograin’s buying out of the out of the U.S. right now,” he states.
Corn Awaits the WASDE
Corn has been in a holding pattern awaiting the Jan. 12 WASDE and final crop production numbers from USDA. At this point, Toay says basis levels don’t suggest the market is anticipating any big changes in ending stocks. “I don’t think you are going to see a yield cut big enough to get anyone too excited, especially considering the fact that you’ve you’ve got a feed residual number that’s six hundred million bushel larger than this point last year. So, there’s some demand baked in there that could potentially offset production cuts.”
Toay says USDA’s 125 million bu. cut to corn carryout last month due to increased exports may be too high. “But given the Brazil export numbers in December, it looks like the USDA cut Brazil exports a little bit too soon because, they only have to export another four million metric ton over two months, to hit the USDA forecast.”
Corn Caught in Tug of War
Corn also closed above the 200-day moving average on the March contract Wednesday. It has been trading sideways between $4.35 and $4.45 as it is caught in a tug of war between end user buying at the bottom end of the trading range and farmer selling at the top. Toay doesn’t see any story emerging that can change that narrative. “So, you know, my concern is beans have rallied a little bit. You’re going to see some crop rotations and some acres shift back to beans but you know, the number I’ve kind of been throwing around is four million acres. If we shift shift four million acres from corn to beans, you’re still at 95 million acres of corn, which is going to be pretty big,” he adds.
Wheat Sees Short Covering
Wheat futures also saw corrective buying and fund short covering as the funds are short more than 130,000 contracts in the three classes combined and wheat just came off of new contract lows in SRW wheat hit on Friday. “I don’t think the wheat market really wants to be too short under $5. The funds are short, probably too short given the geopolitical issues out there perhaps.” Toay discounted reports of weather issues in China and the U.S. to drive some premium into the market.
Fund Rebalancing?
Some of the advisory firms have been talking about buying in the grains tied to fund rebalancing to start a new year, but Toay isn’t in that camp. “The index funds do rebalance. It does kind of favor corn here a little bit, but it’s it’s spread out over five days, and it’s it’s pretty mechanical. I don’t think it’s typically a market mover,” he says.
Cattle Lower on Profit Taking
Both live and feeder cattle futures saw profit taking on Wednesday according to Toay. He says the February live cattle contract hit chart resistance around $237.45 both Monday and Tuesday and that also triggered some technical selling. “This is just some back and fill,” says Toay. Who thinks the market was awaiting cash trade for direction.
Hogs Lower As Well
Lean hog futures were also lower seeing some profit taking and consolidation along with the cattle market. While negotiated cash was up $10 coming into the session the cutout values were down $2.59 which may have also weighed on futures.
